UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER: 0-21823
FIBERCORE, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0445729
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
174 Charlton Road, P. O. Box 206
Sturbridge, MA 01566
(Address and Zip Code of principal executive offices)
(508) 347-7744
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
---------------------------------------
(Title of Class)
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
Yes X No
--- ---
and
(2) has been subject to such filing requirements for the past 90 days.
Yes No X
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].
The aggregate market value of voting stock held by non-affiliates of the
registrant as of February 28, 1997: $19,328,375.
Number of shares outstanding as of February 28, 1997: 35,316,676.
DOCUMENTS INCORPORATED BY REFERENCE
None
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FIBERCORE, INC.
TABLE OF CONTENTS
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Page
<S> <C>
PART I ............................................................................................................. 3
ITEM 1. BUSINESS ................................................................................ 3
ITEM 2. PROPERTIES .............................................................................. 16
ITEM 3. LEGAL PROCEEDINGS ....................................................................... 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS ................................................................................. 16
PART II ............................................................................................................ 17
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS ............................................................. 17
ITEM 6. SELECTED FINANCIAL DATA ................................................................. 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..................................................... 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ............................................. 26
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ..................................................... 56
PART III ........................................................................................................... 57
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT .............................................................................. 57
ITEM 11. EXECUTIVE COMPENSATION .................................................................. 59
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT .......................................................................... 62
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .......................................... 64
PART IV ............................................................................................................ 66
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K ............................................................................. 66
SIGNATURES ......................................................................................................... 69
2
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<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
FiberCore, Inc. ("FiberCore" or the "Company") is engaged in the business of
developing, manufacturing, and marketing single-mode and multi-mode optical
fiber and optical fiber preforms for the telecommunications and data
communications industry.
The Company's products include single-mode and multi-mode optical fiber and
optical fiber preforms. Preforms are the basic component from which optical
fiber is drawn and subsequently cabled. The Company has developed a patented
preform production process which management believes to be more cost effective
than existing production methods in use. Through its wholly owned subsidiary,
Automated Light Technologies, Inc. ("ALT"), the Company manufactures patented
cable monitoring systems, a patented long range fault locator, cable protection
devices, and electro-optical talk sets.
In June 1994, the Company formed a wholly owned subsidiary in Germany,
FiberCore Glasfaser Jena GmbH ("FCJ"), which leased a manufacturing facility in
Jena, Germany ("the Jena Facility") for a fixed monthly sum, and acquired
certain equipment located in that facility from SICO Quarzschmelze Jena GmbH
("SICO"). Until the year 2001, the Company's ownership of the equipment is
subject to the right of the German government, from which SICO purchased the
equipment, to repossess the equipment in the event the Company ceases
production. The agreement pursuant to which the Company acquired the equipment
provides for the issuance of 2,221,141 shares of Common Stock to SICO in
exchange for the equipment. The Jena Facility is an existing 26,500 square foot
optical fiber manufacturing plant which has been in operation since 1986.
On July 18, 1995, FiberCore, Incorporated, the predecessor to FiberCore,
Inc., incorporated under the laws of the State of Nevada in November 1993,
merged into Venturecap, Inc. ("Venturecap"), an inactive corporation, organized
under the laws of the State of Nevada in 1987. Venturecap issued 3.671307 shares
in exchange for each outstanding share of FiberCore, Incorporated and, as a
result, Venturecap issued a total of 24,617,133 shares for all of the
outstanding shares of FiberCore, Incorporated. After the merger, Venturecap
changed its name to FiberCore, Inc.
On September 18, 1995, the Company acquired Automated Light Technologies,
Inc. ("ALT"). ALT, a Delaware corporation organized in 1986 and engaged in the
business of manufacturing equipment which monitors and identifies faults in
fiber optic cables, cable protection devices, and electro-optical talk sets.
In January 1996, the Company established a subsidiary, InfoGlass
Incorporated ("InfoGlass"), through which it intends eventually to conduct its
North American fiber optic business. The Company is currently planning the
construction of a U.S. manufacturing facility to be operated by Infoglass,
although there can be no assurance that the Company will obtain the financing
necessary to construct this facility.
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The following is an organizational chart depicting the principal
subsidiaries of the Company, all of which are wholly-owned by the Company,
except Fiber Optic Industries (Pvt.) Ltd. ("FOI") (30%) and Middle East Optical
Fiber Cable Co. ("MEFC") (15%):
<TABLE>
<CAPTION>
COMPANY CORPORATE STRUCTURE
FiberCore, Inc.
Headquarters
(USA)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOI (Pvt) Ltd. FiberCore Glasfaser Jena GmbH InfoGlass, Inc. FiberCore Mideast Ltd. ALT, Inc.
(Pakistan) (Germany) (USA) (Asia) (USA)
30% Owned by FCI 100% Owned by FCI 100% Owned by FCI 100% Owned by FCI 100% owned by
MEFC FCI
15% Owned
</TABLE>
Company and ALT sales by product group for the last three years were as follows
(includes sales of ALT prior to its acquisition by the Company):
(dollars in thousands)
YEARS ENDED
DECEMBER 31
--------------------------------------
1994 1995 1996
---- ---- ----
Optical Fiber and
Preform........................... $ 231 $ 3,009 $ 7,907
ALT Products...................... 476 246 189
------- --------- ---------
Total....... $ 707 $ 3,255 $ 8,096
======= ========= =========
RECENT DEVELOPMENTS
In April 1995, the Company issued a note to AMP, Incorporated ("AMP") (the
"AMP Note"). The AMP Note is a ten year $5,000,000 convertible note. AMP, a
company listed on the New York Stock Exchange, with worldwide sales in excess of
$5.0 billion in 1995, is a manufacturer of electrical and optical connection
devices, systems and other equipment including fiber optic cable. Principal plus
accrued interest on the AMP Note at a rate of LIBOR plus one percent may be
converted into Common Stock through April 17, 2005. Until April 17, 2000, the
conversion price is $1.16 per share; thereafter the conversion price is equal to
the price per share paid by a third party investor in the private sale of Common
Stock immediately prior to such conversion. The AMP Note is collateralized by
the Company's patents, patent applications, licenses, rights and royalties
arising from such patents. The AMP Note is subject to prepayment on demand in
the event the Company is the issuer of securities to be sold by the Company
under an effective registration statement. On November 27, 1996 AMP converted
$3,000,000 of principal plus $540,985 of accrued interest into 3,058,833 shares
of Common Stock of the Company.
In July 1996, AMP entered into a five year supply contract (renewable at
AMP's option for an additional five year period) with the Company whereby AMP
has undertaken to purchase from the Company at least 50% of AMP's future glass
optical fiber needs. On November 27, 1996, the Company
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obtained an additional $3,000,000 loan at an interest rate of prime plus 1%,
adjustable on the first business day of each calendar quarter, from AMP to fund
the expansion of the Jena Facility. In exchange AMP received a 10 year note and
common stock purchase warrants exercisable for up to 1,382,648 shares of Common
Stock at $1.45 per share and expiring on November 27, 2001. In connection with
the new AMP loan and the expansion of the Jena Facility, the Company has been
awarded a grant from the German Government of approximately $2,700,000 and has
received a loan from Berliner Bank of approximately $5,100,000, which has been
funded contemporaneously with the new $3,000,000 AMP loan. The Company also
agreed to issue AMP additional shares of Common Stock in the event the Company's
share price does not exceed $2.17 for 30 consecutive trading days by November
27, 1998. The issuance of additional shares under the new AMP Loan would have a
dilutive effect on the Company's other shareholders and could adversely affect
the market price of the Common Stock. As part of the new $3,000,000 loan from
AMP, Mohd A. Aslami, Charles DeLuca, M. Mahmud Awan and AMP entered into a
Voting Agreement pursuant to which they agreed to vote together to elect a slate
of directors to the Board of Directors of the Company. The proposed slate of
directors initially consists of Mohd A. Aslami, Charles DeLuca, Hans F.W.
Moeller, one nominee of AMP and three outside directors, one of whom is Dr. M.
Mahmud Awan. The Voting Agreement also requires a classified and three year
staggered Board of Directors. Such Voting Agreement would remain in effect until
the earlier of (i) termination of the new AMP loan agreement, or (ii) an
underwritten public offering by the Company which generates at least $5,000,000.
Since October 1995, Middle East Specialized Cables Co. ("MESC") has purchased
734,262 shares of Common Stock for an aggregate purchase price of $1,000,000.
MESC will also be issued 312,061 shares of Common Stock and will be granted
Warrants to purchase 550,696 shares of Common Stock at an exercise price of
$1.63 per share through April 13, 1997, upon delivery of a supply agreement,
valued at $33 million between the Company and MEFC, a joint venture between the
Company, MESC and others. On exercise of the Warrants MESC will receive an
additional 238,635 shares of Common Stock.
On November 1, 1995, the Company entered into an International Distributor
Agreement with Techman International Corp. ("Techman"). Under such agreement,
Techman will be issued Warrants for the exercise of up to 1,000,000 shares of
Common Stock. The Warrants will be exercised and the applicable shares will be
issued ratably by the Company as commissions on Company sales generated by
Techman up to $200,000,000. Dr. M. Mahmud Awan, a director of the Company, is
president and sole shareholder of Techman.
On January 11, 1996, pursuant to a Share Purchase Agreement, Techman agreed
to purchase for $1,000,000 a total of 734,260 shares of Common Stock, and
Warrants exercisable at $1.63 per share into 550,696 shares of Common Stock
expiring on January 11, 1998. Additionally, Techman would be issued 312,061
shares of Common Stock upon the delivery of a supply agreement between FOI and
the Company. FOI is a joint venture between the Company and Techman. In 1996,
the 734,260 shares and the 312,061 shares, above, were issued to Techman in
exchange for the payment of $1,000,000 and the delivery by Techman of a twenty
year supply agreement between the Company and FOI, which management believes
could generate revenues of up to approximately $93 million over five years,
although there can be no assurance such revenues will be received. The Company
used $450,000 of the proceeds as an additional capital contribution in FOI. The
Company maintains a 30% ownership interest in FOI.
5
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On July 31, 1996, the Company borrowed $500,000 under two loan agreements
with the spouses of the Chairman and Chief Executive Officer and the Executive
Vice President of the Company. The loans are in the amount of $250,000 each,
bear interest at the prime rate plus one percent (currently 9.25%) and are due
on June 30, 1999. In conjunction with the loans, each lender received Warrants
to purchase 115,220 shares of Common Stock at a price of $1.81 per share. The
Warrants expire on July 31, 2001.
FIBER OPTIC PREFORM MANUFACTURING TECHNOLOGIES
Optical fibers are solid strands of hair-thin, high quality glass which are
usually combined to form cables for transmitting information via light pulses
from one point to another. The fibers consist of a core of high-purity glass
which transmits light encased within a covering layer designed to reduce signal
loss through the side walls of the fibers. Information transmitted through
optical fibers is converted from electrical impulses into light waves by a laser
or light emitting diode. At point of reception, the light waves are converted
back into electrical impulses by a photo-detector.
Communication by means of light waves guided through glass fibers offers a
number of advantages over conventional means of transmitting information. Glass
fibers carry significantly more information than metallic conductors and, unlike
metallic conductors, are not subject to electromagnetic or radio frequency
interference. Signals of equal strength can be transmitted over much longer
distances through optical fibers than through metallic conductors and require
the use of fewer repeaters (devices which strengthen a signal). Further,
fiber-optic cables, which typically consists of numerous optical fibers encased
in one or more plastic sheaths, are substantially smaller and lighter than
metallic conductor cables of the same capacity, so they can be less expensive
and more easily installed, particularly in limited conduit or duct spaces.
There are two basic types of communication optical fibers: multi-mode fiber
and single- mode fiber. Multi-mode fiber has a larger core (the area where the
light travels) than single-mode fiber, carries less bandwidth and is more
expensive. It is generally used over relatively short distances in wiring
buildings and groups of buildings. The electronics and the connectors required
to work with multi-mode fiber are less costly than the electronics required for
single mode-fiber. For example, the light source for multi-mode fiber can be
light emitting diodes, while single-mode fiber requires laser light sources.
Single-mode fiber is used in long-distance trunk lines (cables between cities)
and fiber-to-the-curb (cable from a central office to the curb in front of an
office building or home).
The three basic technologies widely used to manufacture multi-mode and
single-mode optical fiber are:
1. Outside Vapor Deposition ("OVD"), otherwise known as the "Corning process."
2. Inside Vapor Deposition ("IVD"), which is also known as Modified Chemical
Vapor Deposition ("MCVD") or the "AT&T process". Due to its flexibility and
relative ease of operation, this process is the most widely used around the
world by independent manufacturers.
3. Axial Vapor Deposition ("AVD"), also known as the "Japanese process". This
process is similar to the Corning process.
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The basic production unit from which fiber "is drawn" is a preform. A preform
is a cylindrical high purity glass rod with a high refractive index glass
material in the central part of the rod (the "core") and a low refractive index
glass material in the outer part of the rod (the "clad"). The rod can be less
than one inch to several inches in diameter and one to several meters in length.
From one such preform many thousands of meters of optical fiber can be drawn.
The OVD and AVD processes both manufacture 100% of the glass composing the final
preform and are comparable in terms of machine speeds that manufacture glass per
unit of time. These speeds are significantly higher than those of the IVD
process. In contrast, the IVD process manufactures only about one-third of the
total glass required in the manufacture of a preform, with the balance of the
glass being purchased in the form of a tube at costs significantly lower than
that of either OVD or AVD, thus balancing the overall expense.
Optical fiber cable is produced from optical fiber by first coloring the
coated fiber and then encasing the fiber in a protective jacket.
PROPRIETARY MANUFACTURING PROCESS AND PRODUCTS
The Company manufactures both multi-mode and single-mode preforms and fiber,
but does not manufacture optical fiber cable, although MEFC, in which the
Company has an interest, intends to draw fiber from preforms and to manufacture
fiber optic cable.
The Company's patented technology can be best described as a "rod-and-tube"
process, or as a hybrid of the OVD, IVD and the AVD processes. The Company's
process takes advantage of available high quality doped(1) and undoped fused
silica rods and tubes during the manufacturing process to produce more
efficiently single-mode optical fiber preform and single-mode fiber at a
substantially reduced cost than the alternative processes.
Specifically, the Company's process places a high-purity "core" glass rod
inside a high-purity glass tube or "clad", which has a lower refractive index
than the core, and collapses the tube over the rod to form an intermediate
preform. The Company purchases the glass tubes and manufactures the "core" glass
inside of the purchased glass tube. The composite material is subsequently
converted to a glass rod referred to as an intermediate preform. Such
intermediate preform can also be manufactured by any of the other existing
processes. This intermediate preform is placed inside another purchased tube and
collapsed together to form a final preform, which has the proper ratio of
core-to-outside-diameter-glass. The preform is then drawn into finished fiber by
placing it inside a "draw furnace", heated to approximately 2000 degrees
Celsius, and "stretched" into tens of thousands of meters of hair-thin, flexible
glass fiber. The Company believes that its patented process offers
manufacturing-cost and capital-investment advantages over the processes
currently in use by competitors for the manufacture of optical fiber, because
(i) the machine time necessary to produce a given size preform is significantly
less, thereby allowing the Company to produce more preforms in the same time
period; and (ii) the Company purchases the tube while manufacturing a much
smaller portion of the clad and all of the core which accounts for approximately
5% of the preform, while the OVD process, for example, manufactures 100% of the
preform, requiring substantially more capital investment.
- --------
(1) Doping means adding other glass materials, such as germanium dioxide to the
silica glass.
7
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Prior to its acquisition by the Company, the Jena Facility was used to
manufacture multi-mode fiber and preform for the Eastern European market. The
Company's lease of the Jena Facility provides a potentially efficient, low-cost,
existing manufacturing operation. Management believes the time and cost required
to achieve manufacturing efficiencies at the Jena Facility can potentially be
minimized as a result of management's knowledge and experience in fiber
production and machine design.
ALT PRODUCTS
The Company's ALT subsidiary has four principal products, all of which are
manufactured at the Company's Sturbridge, Massachusetts facility and are
marketed by independent sales representatives.
ALT's Fiber Optic Cable Montitoring Systems ("FOCMS") facilitate the
continuous monitoring of fiber optic and copper cables. The FOCMS consist of
sensors housed in a protective cover placed at cable splice points and connected
to a central monitoring system. ALT holds two United States patents covering
this technology. ALT purchased one of these patents and know-how relating to
fiber optic cable monitoring systems on September 7, 1986, from Norscan, a
Canadian company. Norscan retained the right to use the technology in Canada and
the rights to a Canadian reissuance of the purchased patent and has had the
technology in operation on the Trans Canada fiber optic network since 1988. ALT
intends to make the technology widespread in other regions worldwide. A dispute
exists between ALT and Norscan with respect to Norscan selling FOCMS products,
in competition with ALT products, that utilize technology other than the
technology assigned to ALT pursuant to its agreement with Norscan. ALT contends
that, in so doing, Norscan is violating a non-competition provision of Norscan's
agreement with ALT. Failure by ALT and Norscan to resolve this dispute could
materially adversely affect the future sales of ALT products.
ALT also manufactures patented long range fault locators, which are generally
used in pairs. Typically, each device is applied at a point on a fiber optic
cable, less than 100 miles from the other unit. These devices can detect and
locate cable faults between the units.
In addition, ALT manufactures cable protection devices, which are applied at
cable splice joints prior to cables entering a building to protect against
hazardous electrical currents that could otherwise be carried by metal sheaths
encasing optical fibers, and electro-optical talksets, which are used by field
personnel to communicate over optical fiber, twisted pair-cable (regular
telephone cable), and metal sheaths encasing optical fibers and copper cables.
Customers for the FOCMS and other ALT Products have included telephone
companies worldwide, including MCI Telecommunications Corp., AT&T and Pacific
Telesis.
ALT also has developed flood and leak detection devices for the home. ALT is
not actively marketing these products because of lack of resources, but may
attempt to market such products in the future.
RESEARCH AND DEVELOPMENT
The Company conducts research and development activities at its Jena Facility
and Sturbridge offices. The Company's research and development activities
consist primarily of optical fiber
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manufacturing process improvements and fault locating technology improvements,
as well as the development for sale of new fault locating products. The Company
is currently conducting research in Germany under two grants from the German
government totaling approximately $107,000.
The Company incurred costs of $420,000, $75,000 and $90,000 for research and
process development for the fiscal years ended December 31, 1996, 1995, and
1994, respectively. The principal purpose of the research activity is to improve
the production process for the manufacturing of fiber preforms, with
concentration on reducing production time and reducing raw material consumption
per unit of product. ALT's expenditures are principally for product development
and enhancements of its products.
Three of the Company's employees devote over 90% of their time, and two
employees devote over 50% of their time to research and development, which
includes process and product development.
SALES AND MARKETING
The Company's initial marketing efforts are being primarily targeted at the
overseas markets, particularly toward developing nations whose
telecommunications infrastructure is in the early stages of evolution and where
competition is not well established. The Company is initially targeting the
large fiber optic cable manufacturing companies in Asia, the Middle East, the
Pacific Rim, and certain European and Eastern European markets.
The Company's sales and marketing objective is to develop long-term,
strategic relationship/supply contracts for both preform and fiber products as
rapidly as practical, emphasizing the cost advantages of the Company's patented
technology.
JOINT MARKETING ARRANGEMENTS
Pursuant to an agreement executed in June 1994 and subsequently amended on
June 17, 1995 (the "Royle Cooperation Agreement"), which expires in June 1999,
the Company has been making joint proposals to sell fiber and preforms with John
Royle and Sons, Inc. ("Royle"), a manufacturer, distributor and value added
installer of cable manufacturing systems with customers and sales channels
worldwide. Gregory Perry, a shareholder and a former director of the Company, is
Director of Fiber Technology at Royle.
The Company is attempting to enter into joint ventures with potential foreign
and domestic partners, including cable manufacturers, to build modern plants for
producing optical fiber and optical fiber cable. Most of these plants will
require preform as "raw material". In 1995, Royle and the Company, each through
subsidiaries, entered into such an agreement (the "Mideast JV Agreement") with
Middle East Fiber Optic Manufacturing Company Limited ("MEOFC"), a Saudi Arabian
company. Pursuant to the agreement, the parties jointly own MEFC, a Saudi
Arabian joint venture company. MEFC will engage in the manufacture and sale of
optical fiber and optical fiber cable both inside and outside of Saudi Arabia.
The Company and Royle each contributed $500,000 to the venture and each holds a
15% interest in MEFC. MEOFC contributed $2,330,000 and holds a 70% interest.
MEFC has placed a $5,500,000 purchase order with Royle for fiber optic cable
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manufacturing equipment, and intends to purchase fiber and preforms from the
Company. The Company and MEFC have entered into a long-term supply agreement for
MEFC to purchase and the Company to supply fiber and preforms totaling
approximately $33,000,000 over the next five years. Shipments under this
agreement are expected to commence in 1997. The Company may not transfer its
interest in MEFC to any entity other than Royle or MEOFC without the permission
of such parties.
In connection with the Company's participation in MEFC, on October 5, 1995,
MESC, a Saudi Arabian Company in which the owners of MEOFC have an interest,
purchased 367,131 shares of Common Stock at an aggregate price of $500,000. In
November 1996, MESC purchased a second block of 367,131 shares of Common Stock
for an additional $500,000. The proceeds of this sale ($500,000) was used as the
Company's capital contribution to MEFC, described above.
The Company is seeking to increase market penetration in optical fiber
markets through strategic alliances and/or joint ventures similar to the MEFC
joint venture. Currently, negotiations are underway with several potential new
joint venture partners. These relationships are being structured so that the
Company provides the preforms and the related technology requirements and the
partner provides the financing, operating and local marketing expertise. In this
way, it may be possible for the Company to rapidly obtain market penetration
with little, if any, capital investment. Discussions regarding similar joint
ventures and/or strategic alliances are underway in India, China and several
other countries, although there can be no assurances that such discussions will
lead to the consummation of any transactions.
CUSTOMERS, INVENTORY, BACKLOG AND ADVERTISING
A key element of the Company's marketing strategy is to maintain sufficient
raw material and finished goods inventories to enable the Company to fill
customer orders promptly. This strategy requires a substantial amount of working
capital to maintain inventories at a level sufficient to meet anticipated
demand.
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CUSTOMERS REPRESENTING OVER 10% OF SALES
The following table is based on the combined sales of the Company and ALT for
all periods presented.
<TABLE>
<CAPTION>
Optical Fiber and
Preform Business ALT Combined
---------------- --- --------
<S> <C> <C> <C>
1996
Leonische Drahtwerker AG 57% -- 56%
Pinacl 15% -- 15%
Deats Construction Co., Inc. -- 48% Less than 10%
Henkle E. McCoy -- 19% Less than 10%
MCI -- 16% Less than 10%
1995
Leonische Drahtwerker AG 62% -- 57%
Deats Construction Co., Inc. -- 11% Less than 10%
Henkle E. McCoy -- -- Less than 10%
MCI -- 11% Less than 10%
Sterilite 11% -- 10%
Condumer, Inc. 10% -- Less than 10%
1994
Leonische Drahtwerker AG 28% -- 9%
Deats Construction Co., Inc. -- -- --
Henkle E. McCoy -- -- --
MCI -- 36% 24%
Sterilite -- -- --
Condumer, Inc. -- -- --
AT&T -- 10% Less than 10%
Traylor Brothers -- 19% 13%
SICO 72% -- 23%
</TABLE>
The Company believes that only the loss of Leonische Drahtwerker AG and
Pinacl would have a material adverse effect on the Company.
11
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The Company currently has a backlog of orders approximating $18.6 million and
supply agreements, which, in management's opinion, are sufficient to consume the
Company's current production capacity and the current expansion of capacity at
the Jena Facility. Accordingly, sales of optical fiber and preforms are being
made by only one full-time salaried employee who is engaged in sales as only a
portion of his duties. The Company, however, plans to commence the use of
independent local sales representatives in some international markets during
1997 to coincide with the Company's planned additional expansion of the
Company's production facilities beyond the current expansion of the Jena
Facility. Assisted by local representatives, management intends to host seminars
in key countries to identify the best possible sales opportunities and to
establish potential relationships with key managers of local cable and telephone
companies. In addition, other management executives are engaged in negotiating
long-term supply agreements with current and potential customers. Sales of ALT
products are made by one salaried full-time Company employee based in
Massachusetts, who is engaged in sales as only a portion of his duties, as well
as by a number of independent sales agents.
The Company does not currently engage in extensive advertising. Commencing
in 1997, and in conjunction with the use of local sales representatives, the
Company intends to advertise in trade journals. The advertising effort will
focus on developing an overall corporate image as well as name recognition of
the product and awareness of its competitive advantages. Advertisements will
also include reader response cards to generate sales leads for direct follow-up.
In addition, the Company intends to exhibit at selected industry trade shows.
COMPETITION
FIBER PREFORM
Management believes that there is limited competition in the sale of preforms
to cable manufacturers who draw their own fiber. Such competition, however, is
expected to grow. At present, the competition for single-mode preforms on a
world-wide basis is limited to two United States manufacturers, SpecTran
Specialty Optics ("SpecTran"), formerly Ensign Bickford Optics/Lightwave
Technologies, Inc., and Alcatel U.S.A. SpecTran's product sales are for unique
fiber applications. Alcatel U.S.A. is marketing single mode preforms and has the
capability to market multi-mode preforms now and in the future. In Europe,
Lycom, Alcatel and Nokia, Shin-Etsu from Japan and DaiWoo from Korea are
marketing single mode preforms.
The predominant practice of most fiber manufacturers is to make fiber optic
preform only for their internal use and not to sell preform to other fiber-optic
manufacturers. Management believes these large companies will not enter the
preform market since demand for fiber currently exceeds supply and fiber
manufacturers have an inherent disincentive in selling preforms; they have
already invested heavily in plant, equipment and technology to convert preforms
into fiber and/or cable, and by selling preforms they would be giving up
value-added margins. The disadvantages associated with selling preforms to third
parties for companies like Corning and AT&T do not apply to the Company,
because, unlike those companies, the Company's customers are not vertically
integrated, and require preforms which are in limited supply.
12
<PAGE>
Due to the current high demand for fiber, the Company has initially
concentrated on manufacturing and selling fiber and currently plans to increase
its fiber manufacturing capability. Because competition in the production of
preforms is somewhat limited, the Company plans to focus its future
manufacturing and marketing efforts on the preform segment of the market.
FIBER
The competition in multi-mode fiber products is limited to a few
manufacturers in North America and Europe. They include Corning, AT&T, Alcatel
and SpecTran in the United States and Plasma Optical Fiber and Alcatel in
Europe. Management believes that Corning, AT&T, and Alcatel generally supply the
bulk of their production to their own cablers or joint venture partners.
The competition in the single-mode fiber market is much more extensive than
in the preform market or the multi-mode fiber market. Most of the competition
for fiber comes from Corning and AT&T. Both Corning and AT&T have several joint
ventures throughout the world, but, it is believed by management, generally play
significantly smaller roles than their partners. Competition in the fiber market
is primarily based on availability and quality. With some exceptions, the
Company's fiber is generally priced at comparable levels to fiber manufactured
by the larger producers.
ALT PRODUCTS
The Company's management believes there is limited or no direct competition
for its FOCMS product line except Norscan. Most other competing technologies and
products are more complementary to the Company's products than true competitors
because these products and the Company's products are both needed to perform
short range and long range fault locating.
Numerous companies manufacture cable protection devices. The Company
believes, however, that it has the only product approved by U/L Laboratories, an
internationally recognized certifying organization.
Numerous companies manufacture field talksets that enable personnel to
communicate over either twisted pair, metal sheath or optical fiber. The Company
knows of no other company that manufactures a product that enables personnel to
communicate over all three media, although many companies have or can acquire
the technology to create such a device.
PRODUCT WARRANTIES
Customers may obtain refunds for any defective fiber and fiber preforms
shipped by the Company within 90 days of delivery. The Company extends one year
warranties on ALT Products.
PATENTS
The Company is the registered owner in the United States of U.S. Patent No.
4,596,589 relating to optical fiber fabrication. The patent, which expires in
2003, was acquired in 1993 from Gregory Perry, a co-founder of the Company and
currently a consultant to the Company on an as needed basis. The existing patent
provides a more efficient method for fabricating a single-mode optical fiber
preform
13
<PAGE>
by substantially reducing the time and cost required to produce the preform. The
patent also provides an efficient method of attaching cladding material around a
single-mode fiber core. The Company has filed an application in the United
States and European Common Market improving upon the process covered by the
above patent, and intends to file in other foreign jurisdictions, as well as
filing further improvement patents for its process.
In addition, in conjunction with its acquisition of equipment located at the
Jena Facility, the Company acquired the right and title to all SICO patents and
expertise developed or owned by SICO relating to fiber optics. In the event the
Company were to default on its obligations to SICO, the Company's title to these
patents could revert to SICO. Without the use of SICO patents and technology,
the Company's expense in manufacturing optical fiber and optical fiber preforms
could increase substantially.
The Company is the registered owner in the United States of three patents
covering its cable monitoring systems and fault locating methods. The Company
acquired the first such U.S. patent, Patent No. 4,480,251, which covers cable
monitoring systems and expires in 2001, from Norscan. A patent issued by the
United Kingdom for the same technology was also acquired by the Company from
Norscan. The Company has filed international patent applications covering this
technology in various other countries around the world, although none have yet
been granted. Pursuant to the Company's agreement with Norscan, Norscan has the
right to a Canadian patent reissuance and may otherwise use the technology in
Canada. The Company has improved upon Norscan's technology and obtained a
European patent and United States patent, Patent No. 5,077,526, which expires in
2008 covering the improvements. The Company also owns a United States patent,
Patent No. 4,947,469 expiring in 2007, and a European patent covering a cable
fault location method. In addition, the Company owns a United States patent
covering the provision of backup power to optical communications systems.
The Company's ability to compete effectively will depend, in part, on its
ability to protect its patents. There can be no assurance that the steps taken
by the Company to protect its intellectual property will be adequate to prevent
misappropriation or that others will not develop competitive technologies or
products. Furthermore, there can be no assurance that others will not
independently develop products that are similar or superior to the Company's
products or technologies, duplicate any of the Company's technologies, or design
around the patents issued to the Company. In addition, the validity and
enforceability of a patent can be challenged after its issuance. While the
Company does not believe that its patents infringe upon the patents or other
proprietary rights of any other party and is unaware of any claim of such
infringement, other parties may claim that the Company's systems do infringe
upon such patents or other proprietary rights. There can be no assurance that
the Company would be successful in defending against such a claim of
infringement. Moreover, the expense of defending against such a claim could be
substantial.
INTERNATIONAL OPERATIONS
The Company is subject to all the risks of conducting business
internationally. These risks include unexpected changes in legislative or
regulatory requirements and fluctuations in the United States dollar and the
German mark, and other currencies in which the Company is doing business from
time to time. The Company has limited foreign currency fluctuation exposure and
does not currently engage in foreign
14
<PAGE>
currency hedging transactions. The business and operations of the Company's
Germany subsidiary, FCJ, are subject to the changing economic and political
conditions prevailing from time to time in Germany. Labor costs, corporate taxes
and employee benefit expenses are high and weekly working hours are shorter
compared to the rest of the European Union, the United States and Japan. The
Company's participation in MEFC and its investment in FOI are subject to the
risks of doing business in Saudi Arabia, and in the Middle East in general.
These risks include, but are not limited to, the threat of regional conflict. In
1996, 1995 and 1994, FCJ accounted for 98%, 90% and 100% of the Company's sales,
respectively.
TRADEMARKS
FCJ is the owner of the registered trademark Infoglass(R) under which it
markets its optical fiber products. ALT is the owner of the registered trademark
Floodhound(R) which is used in the sale of the Company's water leak detection
devices. These products are not currently marketed by the Company.
SEASONALITY
The Company's business does not have strong seasonal fluctuations and the
Company does not expect material seasonal variations to revenue.
RAW MATERIALS
The Company presently can purchase all its raw material requirements for its
optical fiber and preform business. The major component of a preform is silica
glass tubing which is available in various sizes. Various high purity gases such
as oxygen, nitrogen, argon, helium, chlorine and chemicals such as silicon
tetrachloride, silicon tetra fluoride and germanium tetrachloride are used in
the process of manufacturing preform. During the years 1994 and 1995, the
Company's optical fiber and preform business purchased approximately 90% of its
key glass tubing raw material from one supplier. This supplier accounted for
over 46% of the Company's glass tube requirements in 1996. If the Company
becomes unable to continue to purchase raw materials from this supplier, there
can be no assurance that the Company will not face difficulties in obtaining raw
materials on commercially acceptable terms, which could have a material adverse
effect on the Company. To limit future shortages of key materials, the Company
successfully identified other suppliers of this material. The Jena Facility has
the capability to manufacture the high-purity synthetic core glass using a first
purchased cladding tube, as well as adding additional purchased cladding tubes
using the Company's patented production process.
The Company's ALT subsidiary uses raw materials widely available from
numerous suppliers.
EMPLOYEES
At December 31, 1996, the Company employed 66 persons, of whom 4 are
executives, 7 are engaged in administration, 50 are engaged in manufacturing and
5 are engaged principally in research and development; of the Company's
employees 57 are located in Jena, Germany. The Company is not party to any
collective bargaining agreements and the Company does not maintain a pension
plan. The Company considers its relations with employees to be satisfactory and
believes that its employee turnover does not exceed the industry average.
15
<PAGE>
ITEM 2. PROPERTIES
The Company subleases 5,000 square feet of office space as its headquarters
in Sturbridge, Massachusetts. The Company is currently planning to relocate its
headquarters in the Sturbridge area although no site has, as yet, been acquired.
The Company's optical fiber and preform manufacturing facility is located in
Jena, Germany. The facility is leased from SICO. It occupies approximately
26,500 sq. ft., including 17,200 sq. ft. of clean room manufacturing space,
6,100 sq. ft. of office and storage space and an additional 3,200 sq. ft. of
outside facilities for gas storage tanks. The Company owns all machinery and
equipment at the facility, subject to certain restrictions. The lease expires in
2000 and is renewable for additional terms aggregating 25 years. The Company
maintains casualty and liability insurance on the Jena Facility. There is no
assurance that in the event of a loss, policy limits will not be exceeded.
ITEM 3. LEGAL PROCEEDINGS
The Company's FiberCore Jena subsidiary, SICO and SICO's president, Mr.
Walter Nadrag (who was previously the Managing Director of FiberCore Jena) are
defendants in a lawsuit in Germany brought against them by COIA GmbH, a former
customer, claiming damages of approximately $200,000 arising from FiberCore
Jena's alleged failure to comply with a sales contract. The Company believes no
sales contract existed and is aggressively defending this action. In addition to
the above, the Company is subject to various claims which arise in the ordinary
course of business. The Company believes such claims, individually or in the
aggregate, will not have a material adverse affect on the business of the
Company.
The Company's ALT subsidiary is in a dispute with Norscan, a Canadian company,
with respect to Norscan selling FOCMS products, in competition with ALT products
and in violation of a non-competition agreement between ALT and Norscan.
Although no litigation has commenced as of the date of this report with respect
to this dispute, ALT would be the claimant in any lawsuit brought in connection
with this matter. Failure by ALT and Norscan to resolve this dispute could have
a material adverse affect on the future sales of ALT Products.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
16
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's stock is traded on the Over the Counter (OTC) Bulletin Board.
There were 230 holders of record and 389 beneficial owners of Common Stock as of
February 28, 1997. The public market for the Common Stock on the Bulletin Board,
where the stock trades under the symbol FBCE, is limited. Set forth below for
the periods indicated are the high and low closing prices for the Common Stock
as reported on the Bulletin Board. The prices prior to July 18, 1995 reflect the
price of Venturecap, a predecessor to the Company, which traded under the symbol
VTUR.
STOCK PRICE AND DIVIDEND POLICY
<TABLE>
<CAPTION>
Period High Bid Low Bid
------ -------- -------
<S> <C> <C>
1995
1st quarter No Reported Trades No Reported Trades
2nd quarter (first reported
bid on May 11, 1995) $4.94 $2.55
3rd quarter $4.45 $2.75
4th quarter $3.25 $2.37
1996
1st quarter $3.12 $2.00
2nd quarter $7.25 $1.75
3rd quarter $7.44 $3.00
4th quarter $4.13 $2.63
1997
1st quarter
to March 14, 1997 $6.25 $1.06
</TABLE>
The payment of dividends, if any, in the future is within the discretion of
the Board of Directors and will depend on the Company's earnings, its capital
requirements, financial condition, contractual and legal restrictions and other
relevant factors. The Company does not expect to declare or pay any dividends in
the foreseeable future. In addition, the ability of the Company to pay cash
dividends in the future will be subject to its ability to meet certain other of
its obligations.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data of the Company for each of the years
1996, 1995, 1994, 1993, and 1992 has been derived from the audited financial
statements and notes thereto of the Company and its predecessors. The
information set forth below is qualified by reference to, and should be read in
conjunction with the consolidated financial statements and related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in thousands except share data)
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995(1) 1994(2)(3) 1993(2)(3) 1992(4)
---- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Operating Data:
Net sales $8,096 $3,094 $231 -- --
------- ------ --------
Costs and expenses:
Cost of sales 7,200 4,509 1,064 -- --
Research and development 420 75 90 -- --
Selling, general, and administrative 4,324 2,100 700 $ 1 --
Interest expense, net 387 368 7 -- --
Other expense (income), net (102) 51 (5) -- --
------- ------- -------- ------ ------
Income (loss) before
provision for income taxes (4,133) (4,009) (1,625) (1) --
Provision for income taxes -- -- -- -- --
Net income (loss) (4,133) (4,009) (1,625) (1) --
Primary earnings (loss) per
share (0.13) (0.15) (0.07) -- --
Weighted average shares
outstanding 31,695,693 26,584,630 22,873,322 21,309,323 955,450
Balance Sheet Data:
Working capital (deficit) 150 (277) (519) 403 5
Total assets 17,642 14,783 4,270 645 5
Long-term debt 4,545 5,000 456 -- --
Total liabilities 7,617 8,415 1,687 4 --
Accumulated deficit (9,771) (5,638) (1,628) (3) (2)
Stockholders' equity 10,025 6,368 2,583 641 5
</TABLE>
18
<PAGE>
FIBERCORE, INC.
NOTES TO SELECTED FINANCIAL DATA
1. Includes the results of ALT from September 18, 1995 through December 31,
1995.
2. Does not include the results of ALT.
3. Reflects the Venturecap merger as of the beginning of the period.
4. The year 1992 reflects the financial position of Venturecap, Inc. which was
a development stage company, prior to the merger with FiberCore,
Incorporated in 1995. Venturecap had no significant activities in those
years. FiberCore, Incorporated was formed in November 1993.
19
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars and Deutsche Marks in Thousands)
BACKGROUND
This Annual Report on Form 10-K contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Such statements are only predictions and the actual
events or results may differ materially from the results discusssed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below as well as those discussed in other
filings made by the Company with the Securities and Exchange Commission.
FiberCore, Incorporated, the predecessor to the Company, was organized under
the laws of the State of Nevada on November 5, 1993. Venturecap, Inc. was a
development stage enterprise, with no significant operations, no significant
assets or liabilities and was inactive from 1990 until the time of the
Venturecap Merger with FiberCore, Incorporated on July 18, 1995. Venturecap
issued 24,617,133 common shares for all of the outstanding shares of FiberCore,
Incorporated. The Venturecap Merger has been accounted for as a pooling of
interests. Subsequent to the Venturecap Merger, Venturecap changed its name to
FiberCore, Inc. (hereinafter "FiberCore" or the "Company").
The Company operates primarily through its FiberCore Jena subsidiary. The
Company maintains a headquarters in Sturbridge, Massachusetts which is staffed
by executive, engineering, accounting and administrative personnel. The
following discussion and analysis of the results of operations is based on the
Company's audited financial statements for the years ended December 31, 1996,
1995 and 1994.
RESULTS OF OPERATIONS
Year Ended December 31, 1996
Total revenues for the year ended December 31, 1996 were $8,096 compared with
revenues of $3,094 for the year ended December 31, 1995, an increase of 162%.
This increase in revenues was attributable to the Company's increase of
production capacity resulting from an upgrade of the Jena Facility, and the
Company's sales and marketing efforts resulting in the addition of new
customers.
Gross profit for the year ended December 31, 1996 was $896 compared to a loss
of $1,415 for the year ended December 31, 1995. This difference was attributable
to the higher volume of production and the upgrade of the Jena Facility since
its acquisition in July 1994. The improvement and upgrading of machinery and
equipment and production process technology changes resulted in better
production yields and lower per unit production costs.
Selling, general and administrative expenses were $4,324 for the year ended
December 31, 1996 compared to $2,100 for the year ended December 31, 1995, an
increase of 106%. This increase was due primarily to non-cash compensation
expense of $846 incurred in connection with the grant to employees and others of
options to acquire 382,184 shares of common stock of the Company, the
acquisition of ALT in September, 1995, which accounted for $704 of the increase
and approximately $421 of legal,
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
accounting, and other costs incurred in connection with the Company's
registering its common stock with the Securities and Exchange Commission.
Additionally, the commencement of increased production at the Jena Facility, the
Company's increased sales and marketing efforts and the addition of personnel in
Germany, added to this increase in costs.
Interest expense for the year ended December 31, 1996 was $393 compared to
$516, a decrease of 24% from the year earlier comparable period. This decrease
was due to the repayment in 1995 of a working capital line of credit that was
outstanding for most of 1995, offset by the interest on the AMP Note.
Interest income was $6 for the year ended December 31, 1996 compared to $148
in 1995. The decrease of $142 was principally due to the interest earned on the
short-term investment of the $5,000 AMP loan in 1995. The AMP loan proceeds were
used in 1995 to repay a line of credit and investments in the Jena Facility.
Other income, net of other expense, was $102 for the year ended December 31,
1996 compared to net expense of $51 in 1995. The increase in other income in
1996 was principally due to the receipt of research grants of $109 in Germany.
The net loss for the year ended December 31, 1996 was $4,133, an increase of
$124 (3%) from the loss of $4,009 in the corresponding period in 1995. The
primary cause of the increase was the improvement in sales and gross profit at
the Jena Facility offset by the changes in administrative and interest income
and expense as described above.
Year Ended December 31, 1995
Total revenues for the year ended December 31, 1995 were $3,094 compared to
$231 for the prior year, an increase of $2,863 (1,239%). This increase in
revenues was due to the acquisition of the Jena Facility by the Company in July
1994, with sales commencing primarily in the last quarter of the year and
expansion and upgrade of the Jena Facility since its acquisition. The results
for 1995 reflect a full year of operations and the related increase in sales
volume to new customers.
Selling, general and administrative costs increased by $1,400 in 1995, a 200%
increase over 1994. This increase is principally attributable to the full year
of operation at the Jena Facility compared to only six months of operation in
1994. In addition, the acquisition of ALT in September 1995 added $223 to
administrative costs in 1995.
Interest expense was $516 in 1995 compared to $22 in 1994, a 2,245% increase.
This increase was caused by a working capital loan that was outstanding during
1995 and interest on the AMP Note that was closed in April 1995.
Interest income was $148 in 1995 compared to $15 in 1994, an increase of
$133 (887%). This
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
increase resulted principally from the short term investment of the proceeds of
the AMP Note.
The net loss for the year ended December 31, 1995 of $4,009 was $2,384 or
147% greater than the loss of $1,625 for the year ended December 31, 1994. The
increase in loss is principally related to the increase in costs as described
above and the full year of operations of the Jena Facility resulting in an
increase in the gross loss on sales of $582 or 70%. The cost of goods sold as a
percent of sales decreased from 461% in 1994 to 146% in 1995. This is typical of
the nature of a capital intensive production operation wherein capacity and
through-put increases result in a significant improvement in per unit production
costs, as fixed costs are spread over a higher production volume.
Year Ended December 31, 1994
Total revenues for the year ended December 31, 1994 were $231 compared to
$-0- for the prior period in 1993. This was due to the acquisition of the Jena
Facility by the Company in July 1994, with shipments commencing primarily in the
last quarter of the year. The predecessor to the Company was incorporated in
November 1993 and had no production or revenues during the two months of 1993.
The operating loss for the year ended December 31, 1994 of $1,625 was due to
startup and production inefficiencies at the Jena Facility, selling, general and
administrative expenses of $700, and research and development expenses of $90.
For the period ended December 31, 1993, the Company had no comparable expenses.
For the year ended December 31, 1994, the Company had net interest expense of
$7, primarily attributable to its capitalized lease obligations of the Jena
Facility.
LIQUIDITY AND CAPITAL RESOURCES
Year Ended December 31, 1996
During the year ended December 31, 1996, the Company used $1,972 for
operating activities, principally resulting from the loss for the period of
$4,133 reduced by depreciation and amortization of $1,226 and non-cash
compensation expense of $846. Inventory increased $514 due to the higher volume
of production during the year. Accounts payable was reduced by $159, while
accrued expenses increased by $871. The increase in accrued expenses is
principally attributable to an increase in accrued salaries, legal and audit
fees. Certain officers deferred payment of their salaries during the year to
improve the Company's cash available for other purposes. Also, during the period
the Company utilized cash in investing activities of $1,150, principally for
equipment ($1,161) and investments in joint ventures ($950), reduced by grants
from the German government ($960) used to acquire equipment. Cash generated
through financing totaled $2,479, principally from the sale of stock ($1,500)
and new borrowings ($3,700), reduced by collateral for a bank loan to finance
investments in the Jena Facility ($2,498), and repayment of a note ($200).
The proceeds from the sale of stock noted above were received from Techman
under the Techman
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Share Purchase Agreement entered into in January 1996. Under that Agreement,
Techman subscribed to purchase 734,260 shares of the Company for $1,000. The
payment of $1,000 resulted in an increase in equity and was used as working
capital, improving the Company's ability to meet its current obligations, and as
a capital contribution for the FOI joint venture ($450). The sale of stock to
MESC ($500) was used as a capital contribution to the MEFC joint venture.
The Company expects to continue to incur operating losses until such time as
the Jena Facility's production equipment is expanded and fully upgraded, and
manufacturing inefficiencies are substantially eliminated. The Company has and,
with additional capital, will continue to transfer its more efficient and
productive technology to its Jena Facility with management's expectation of
improved operating results. The expansion of the Jena Facility, currently
underway, will result in improved production yields thus lowering production
costs per unit of preform and fiber. Additionally, the expansion will increase
throughput resulting in increased production volume. The Company has already
received commitments from current customers to purchase this increase in
production volume. Management anticipates that these increased sales combined
with lower per unit production costs will lead to profitability. The Company
will require an estimated $7,800 in capital investment for the Jena Facility. Of
this amount approximately $2,000 will be for building expansion and $5,800 for
equipment upgrades and new equipment.
The Company, therefore, has sought additional financing from one or more of
the following sources: (i) issuance of convertible instruments or stock in
private or public offerings; (ii) financing for the Jena Facility through a
combination of German bank loans, German federal and state government grants,
loan guarantees, and equity investments generated in all or part from (i) above;
(iii) exercise of stock Options and Warrants; and (iv) loans from officers,
directors, and principal stockholders of the Company. Funds for such loans to
the Company from officers, directors, and principal stockholders would be
derived, in part, from sales or pledges (to obtain loans) of Common Stock by
such individuals.
The Company believes that its success in raising additional capital is
dependent on investors' beliefs in the Company's technology, its position in the
fiber optics industry, and its strategic business plan. Achieving profitability
is dependent, in part, on raising additional funds to invest in capital
expenditures. In this regard, the Company has received a grant from the German
government of 4,000 Deutsche Marks (DM) (approximately $2,700) and a loan from
the Berliner Bank of 7,700 DM (approximately $5,100). These funds totaling
$7,800, are committed to the upgrade and expansion of the Jena Facility
described above. On November 27, 1996, AMP loaned the Company $3,000, part of
which has been used as collateral for the Berliner Bank Loan. As part of the new
AMP loan, AMP also converted $3,000 of principal plus interest on the existing
$5,000 loan into 3,058,833 shares of Common Stock.
The Company is not relying on the conversion of Warrants and Options to fund
the upgrade and expansion of the Jena Facility; however, if the Warrants and
Options are exercised, the total proceeds that the Company would receive upon
the exercise is approximately $6,242. To the extent that the Warrants and
Options are exercised, the Company intends to use the proceeds from the exercise
of such
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Warrants and Options for working capital purposes, including debt service
(approximately $80 per quarter beginning January 1997 through December 2001).
There are long payment deferral periods on a substantial amount of the Company's
outstanding loans. Under the AMP Note, the remaining $2,000 in principal and
accrued interest are due and payable at maturity in April 2005. Similarly, under
the new $3,000 AMP loan, payments of interest are deferred for the first five
years. Thereafter, accrued and unpaid interest is payable quarterly. The
principal and any remaining accrued interest is payable at maturity on November
27, 2006. As for the German loan, principal is also due and payable at the tenth
anniversary of closing; however, interest at 6.25% is due and payable quarterly.
The Company does not foresee any inability to meet its current debt
requirements.
The Company currently has a backlog of orders aggregating approximately
$18,600 which is scheduled to be shipped in 1997 and 1998. The backlog at
December 31, 1995 was approximately $4,800. Additionally, the Company has
entered into, or is negotiating, long-term supply agreements which, in the
opinion of management, could generate sales of up to approximately $251,000 in
the aggregate, although there can be no assurance. These include supply
agreements with MEFC, AMP, FOI and others. Pursuant to the supply agreement with
AMP, which provides for an initial term of five years and for an additional five
year term at AMP's option, AMP has undertaken to purchase at least 50% of its
global fiber requirements from the Company. The Company estimates that this
could amount to over $60,000 in sales over the five year period, significantly
improving the Company's cash flow and profits, although there can be no
assurance that actual sales will reach this amount.
The Company's ALT subsidiary is in a dispute with Norscan, a Canadian
company, with respect to Norscan selling FOCMS products, in competition with ALT
products and in violation of a non-competition agreement between ALT and
Norscan. Although no litigation has commenced in this dispute, ALT would be the
claimant in any lawsuit brought in connection with this matter. Failure by ALT
and Norscan to resolve this dispute could have a material adverse affect on the
future sales of ALT Products. ALT sales for the year ended December 31, 1996
were $189. The possible impact on sales of ALT resulting from failure to resolve
the Norscan dispute is not determinable.
Year Ended December 31, 1995
At December 31, 1995, the Company had cash of $833 and non-cash current
assets of $2,305. During 1995, the Company used $3,232 for operating activities.
This cash was used principally to fund the loss of $4,009, adjusted for
depreciation and amortization of $747. Accounts payable and accrued expenses
increased $1,652 and receivables and inventory increased $1,675, due to the
increases in sales, production and material costs and other operating costs.
Cash used in investing activities was $1,647 principally for the purchase of
equipment ($1,817). In addition, the Company acquired ALT in a non-cash
transaction for Common Stock valued at $7,000.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
During the year the Company received $5,454 from financing activities,
principally through the sale of common stock ($500) and the issuance of the AMP
Note for $5,000. These funds were used to finance operations and acquire
equipment as noted above.
Year Ended December 31, 1994
At December 31, 1994, the Company had cash of $258 and non-cash current
assets of $453. During the year, the Company used $831 in operating activities
principally from the loss for the year of $1,625, adjusted for depreciation and
amortization of $289 and reduced by an increase in accounts payable.
Cash used in investing activities was $597, principally due to the purchase
of equipment ($593). The Company also acquired equipment from SICO of $2,996 in
exchange for shares valued at $2,420 and a capital lease agreement of $576.
Cash from financing activities was $1,284 resulting primarily from the sale
of Common Stock ($1,549), issuance of a note ($200) and repurchase of stock
($500). The proceeds from the sale of stock were used to fund operating costs
and purchase equipment as noted above.
ALT
ALT was acquired by the Company as of September 18, 1995. ALT has
historically operated at a loss, has cumulative losses from its date of
inception, and requires additional capital to operate. The Company intends to
raise additional funds for ALT, however, there is no assurance that such funds
will be available. ALT has received an order from Pakistan Telecom in the amount
of $152, for a test installation of the fiber optic cable monitoring system. If
the test installation is successful, the Company anticipates that Pakistan
Telecom will place an order for additional installations estimated to be valued
at approximately $1,660, although there can be no assurance that such sales will
be realized. This increase in revenues, if realized, would provide sufficient
cash flow to sustain operations and improve the profitability of ALT's
operations.
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Reports .........................................................................27-28
Consolidated Balance Sheets at December 31, 1996 and 1995 ................................................29
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 ....................................................................30
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1996, 1995 and 1994 ..............................................................31
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 ....................................................................34
Notes to Consolidated Financial Statements for the Years Ended
December 31, 1996, 1995 and 1994 ....................................................................35
</TABLE>
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Boards of Directors and Stockholders
FiberCore, Inc.
Sturbridge, Massachusetts
We have audited the accompanying consolidated balance sheet of FiberCore, Inc.
and subsidiaries as of December 31, 1996, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of FiberCore, Inc. and subsidiaries as
of December 31, 1996, and the results of their operations and cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Hartford, Connecticut
March 20, 1997
27
<PAGE>
LETTERHEAD OF MOTTLE MCGRATH BRANEY & FLYNN, P.C.
INDEPENDENT AUDITORS' REPORT
The Boards of Directors and Stockholders
FiberCore, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of FiberCore, Inc.
and Subsidiaries as of December 31, 1995 and the related consolidated statements
of operations, changes in stockholders' equity and cash flows for the years
ended December 31, 1995 and 1994. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FiberCore, Inc. and
Subsidiaries as of December 31, 1995 and the results of their operations and
their cash flows for the years ended December 31, 1995 and 1994 in conformity
with generally accepted accounting principles.
/s/ MOTTLE McGRATH BRANEY & FLYNN, P.C.
MOTTLE McGRATH BRANEY & FLYNN, P.C.
Worcester, Massachusetts
July 29, 1996
28
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
(Dollars in thousands except share data) 1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash ........................................................................... $ 190 $ 833
Accounts receivable, less allowance for doubtful accounts of $36 in 1996 and
$39 in 1995 .................................................................. 675 583
Other receivables .............................................................. 418 286
Inventories .................................................................... 1,921 1,407
Prepaid and other current assets ............................................... 18 29
-------- --------
Total current assets ....................................................... 3,222 3,138
-------- --------
Property and equipment .............................................................. 5,244 5,044
Less accumulated depreciation ....................................................... 1,473 925
-------- --------
Property - net ............................................................. 3,771 4,119
-------- --------
Other assets:
Restricted cash ................................................................ 2,498 --
Patents, less accumulated amortization of $861 in 1996 and $203 in 1995 ........ 6,648 7,400
Investments in joint ventures .................................................. 1,375 54
Other .......................................................................... 128 72
-------- --------
Total other assets ......................................................... 10,649 7,526
-------- --------
Total assets ............................................................... $ 17,642 $ 14,783
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable .................................................................. $ 200 $ 609
Accounts payable ............................................................... 1,652 1,811
Accrued expenses ............................................................... 1,220 995
-------- --------
Total current liabilities .................................................. 3,072 3,415
Long-term debt ...................................................................... 4,545 5,000
-------- --------
Total liabilities .......................................................... 7,617 8,415
-------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, $.001 par value, authorized 10,000,000 shares; no shares issued
and outstanding ................................................................ -- --
Common stock, $.001 par value, authorized 100,000,000 shares; shares issued and
outstanding: 35,233,250 in 1996 and 30,506,963 in 1995 ......................... 35 30
Paid in capital ................................................................ 19,545 11,761
Accumulated deficit ............................................................ (9,771) (5,638)
Accumulated translation adjustment ............................................. 216 215
-------- --------
Total stockholders' equity ................................................. 10,025 6,368
-------- --------
Total liabilities and stockholders' equity ................................. $ 17,642 $ 14,783
======== ========
See accompanying notes to consolidated financial statements.
29
</TABLE>
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
(Dollars in thousands except share data)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales .................................... $ 8,096 $ 3,094 $ 231
Cost of sales ................................ 7,200 4,509 1,064
------------ ------------ ------------
Gross profit (loss) ..................... 896 (1,415) (833)
Operating expenses:
Selling, general and administrative expenses 4,324 2,100 700
Research and development ................... 420 75 90
------------ ------------ ------------
Loss from operations .................... (3,848) (3,590) (1,623)
Interest income .............................. 6 148 15
Interest expense ............................. (393) (516) (22)
Other income (expense) ....................... 102 (51) 5
------------ ------------ ------------
Net loss ................................ $ (4,133) $ (4,009) $ (1,625)
============ ============ ============
Loss per share of common stock ............... $ (.13) $ (.15) $ (.07)
============ ============ ============
Weighted average shares outstanding .......... 31,695,693 26,584,630 22,873,322
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
$.001 PAR PAID-IN SUBSCRIPTION ACCUMULATED TRANSLATION
SHARES VALUE CAPITAL RECEIVABLE DEFICIT ADJUSTMENT
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 21,309,323 $ 21 $ 703 $ (80) $ (4) $ --
Issuance of stock in exchange
for equipment 2,221,141 2 2,418 -- -- --
Issuance of stock for cash 1,421,714 2 1,547 -- -- --
Proceeds received -- -- -- 80 -- --
Issuance of stock for services 7,390 -- 8 -- -- --
Proceeds from capital contribution -- -- 1 -- -- --
Purchase of treasury stock,
(458,916 shares) -- -- -- -- -- --
Currency translation adjustment -- -- -- -- -- 10
Net loss -- -- -- -- (1,625) --
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1994 24,959,568 $ 25 $ 4,677 $ -- $ (1,629) $ 10
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
TREASURY
STOCK TOTAL
---------- ----------
Balance, December 31, 1993 $ -- $ 640
Issuance of stock in exchange
for equipment -- 2,420
Issuance of stock for cash -- 1,549
Proceeds received -- 80
Issuance of stock for services -- 8
Proceeds from capital contribution -- 1
Purchase of treasury stock,
(458,916 shares) (500) (500)
Currency translation adjustment -- 10
Net loss -- (1,625)
---------- ----------
Balance, December 31, 1994 $ (500) $ 2,583
---------- ----------
See accompanying notes to consolidated financial statements.
31
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
$.001 PAR PAID-IN SUBSCRIPTION ACCUMULATED TRANSLATION TREASURY
SHARES VALUE CAPITAL RECEIVABLE DEFICIT ADJUSTMENT STOCK TOTAL
----------- ----------- --------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 24,959,568 $ 25 $ 4,677 $ -- $ (1,629) $ 10 $ (500) $ 2,583
Issuance of stock for services 40,434 -- 44 -- -- -- -- 44
Reissuance of treasury
stock as loan incentive -- -- (455) -- -- -- 500 45
Issuance of stock for
acquisition of ALT 8,811,137 9 6,991 -- -- -- -- 7,000
Issuance of stock for
cash 367,131 -- 500 -- -- -- -- 500
Retirement of shares
held by ALT (3,671,307) (4) 4 -- -- -- -- --
Currency translation
adjustment -- -- -- -- -- 205 -- 205
Net loss -- -- -- -- (4,009) -- -- (4,009)
----------- -------- --------- ------------ --------- --------- ------------- ---------
Balance, December 31, 1995 30,506,963 $ 30 $ 11,761 $ -- $ (5,638) $ 215 $ -- $ 6,368
----------- -------- --------- ------------ --------- --------- ------------- ---------
See accompanying notes to consolidated financial statements.
</TABLE>
32
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands except share data)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
$.001 PAR PAID-IN SUBSCRIPTION ACCUMULATED TRANSLATION TREASURY
SHARES VALUE CAPITAL RECEIVABLE DEFICIT ADJUSTMENT STOCK
----------- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 30,506,963 $ 30 $ 11,761 $ -- $ (5,638) $ 215 $ --
Issuance of stock in exchange
for debt and accrued interest 3,312,835 3 4,052 -- -- -- --
Issuance of stock for cash
to Techman International 734,260 1 999 -- -- -- --
Issuance of stock for cash 367,131 1 499 -- -- -- --
Issuance of stock for investment
in joint venture of FOI 312,061 -- 425 -- -- -- --
Compensation cost recognized
on options issued to employees -- -- 846 -- -- -- --
Discount on AMP note from
issuance of warrants -- -- 963 -- -- -- --
Currency translation adjustment -- -- -- -- -- 1 --
Net loss -- -- -- -- (4,133) --
----------- ---------- ---------- -------- ---------- ---------- ----------
Balance, December 31, 1996 35,233,250 $ 35 $ 19,545 $ -- $ (9,771) $ 216 $ --
=========== ========== ========== ======== ========== ========== ==========
</TABLE>
TOTAL
----------
Balance, December 31, 1995 $ 6,368
Issuance of stock in exchange
for debt and accrued interest 4,055
Issuance of stock for cash
to Techman International 1,000
Issuance of stock for cash 500
Issuance of stock for investment
in joint venture of FOI 425
Compensation cost recognized
on options issued to employees 846
Discount on AMP note from
issuance of warrants 963
Currency translation adjustment 1
Net loss (4,133)
----------
Balance, December 31, 1996 $ 10,025
==========
See accompanying notes to consolidated financial statements.
33
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
(Dollars in thousands except share data) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss .................................................................. $(4,133) $(4,009) $(1,625)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization .......................................... 1,226 747 289
Bad debt expense ....................................................... 1 28 --
Compensation cost for stock options .................................... 846 -- --
Other .................................................................. 104 45 --
Changes in assets and liabilities:
Accounts receivable .................................................... (93) (555) (189)
Other receivables ...................................................... (132) 11 (122)
Inventories ............................................................ (514) (1,131) (134)
Prepaid and other current assets ....................................... 11 (20) (3)
Accounts payable ....................................................... (159) 853 866
Accrued expenses ....................................................... 871 799 87
------- ------- -------
Net cash used in operating activities .............................. (1,972) (3,232) (831)
------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment ..................................... (1,161) (1,817) (593)
Reimbursement from government grant .................................... 960 -- --
Investments in joint ventures .......................................... (950) (54) --
Other .................................................................. 1 224 (4)
------- ------- -------
Net cash used in investing activities .............................. (1,150) (1,647) (597)
------- ------- -------
Cash flows from financing activities:
Proceeds from sale of common stock ..................................... 1,500 500 1,549
Proceeds from long-term debt ........................................... 3,500 5,000 --
Restricted long-term cash deposits ..................................... (2,498) -- --
Proceeds from notes payable ............................................ 200 -- 200
Repayment of notes payable ............................................. (200) (7) --
Purchase of treasury stock ............................................. -- -- (500)
Other .................................................................. (23) (39) 35
------- ------- -------
Net cash provided by financing activities ......................... 2,479 5,454 1,284
------- ------- -------
(Decrease) increase in cash ............................................. (643) 575 (144)
Cash, beginning of year ................................................ 833 258 402
------- ------- -------
Cash, end of year ...................................................... $ 190 $ 833 $ 258
======= ======= =======
Supplemental disclosure:
Cash paid during the year for interest $ 18 $ 183 $ 1
Reduction of property and equipment book value due to cancellation of
obligation under capitalized lease -- 499 --
Equipment acquired in exchange for common stock and capital lease -- -- 2,996
</TABLE>
See accompanying notes to consolidated financial statements.
34
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Incorporation and nature of operations
FiberCore, Inc. (the "Company") is involved in the research, development,
production and sales of optical fiber and optical fiber preforms for the
telecommunications industry. FiberCore Glasfaser Jena GmbH ("FCJ"), the
Company's principal operating subsidiary located in Germany, manufactures
optical fiber and optical fiber preforms. Automated Light Technologies, Inc.
("ALT"), a wholly-owned subsidiary of the Company, is a manufacturer and
distributor of fiber optic cable monitoring and fault locating systems for the
telecommunications industry.
FiberCore Incorporated, the predecessor to FiberCore, Inc. was organized under
the laws of the State of Nevada on November 5, 1993. On July 18, 1995, FiberCore
Incorporated merged with Venturecap, Inc., ("Venturecap"), an inactive company
organized in the State of Nevada in 1987. Approximately 24,600,000 shares of
Venturecap common stock were exchanged for all of the outstanding shares of
FiberCore Incorporated. Following the merger Venturecap changed its name to
FiberCore, Inc. The per share merger consideration states that each share of
FiberCore Incorporated stock shall be converted into 3.6713070 shares of
Venturecap stock. The merger was accounted for as a pooling of interests and,
accordingly, the Company's consolidated financial statements have been restated
for all prior periods as if the merger took place at the beginning of such
periods.
(b) Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(c) Principles of consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
35
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Restricted Cash
In connection with the expansion of the FCJ facility, the Company obtained a
loan from the Berliner Bank in Germany. Cash in the amount of $2,498, has been
deposited with this institution as collateral for this loan.
(e) Inventories
Inventories are valued at the lower of cost or market using the first-in,
first-out method.
(f) Property and equipment
Property and equipment is stated at cost, net of grants received applicable to
acquisitions. The cost of maintenance and repairs is charged to expense as
incurred. Expenditures for significant renewals or improvements to properties
and equipment are added to the basis of the asset.
In 1996, the Company began receiving grants from the German government to be
used in the expansion of the FCJ facility. All grant proceeds received have been
netted against the cost of the assets acquired.
Property and equipment is depreciated using the straight-line method over the
estimated useful lives of the assets.
(g) Patents
Patents are amortized on a straight-line basis over seventeen years. The Company
evaluates the recoverability of patents from expected future cash flows.
(h) Investments in joint ventures
The Company has a 30% ownership interest in Fiber Optic Industries (Pvt.) Ltd.
("FOI"), which is accounted for using the equity method of accounting.
The Company's 15% ownership interest in Middle East Optical Fiber Cable Co.
("MEFC") is carried at cost.
36
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands except share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Fair value of financial instruments
The Company has financial instruments, which consist of cash, short-term
receivables, accounts payable and a note payable, for which their carrying
amounts approximate fair value due to the short maturity of those instruments.
The carrying amount of the investments in joint ventures approximates fair value
as no significant operations have occurred in either joint venture in 1996 and
management believes that the carrying amounts were not impaired at December 31,
1996 and therefore reflect the corresponding fair values.
The principal amount of the long-term debt approximates fair value because the
interest rates on these instruments change with market interest rates.
(j) Translation of foreign currencies
The translation of foreign subsidiaries financial statements into U.S. dollars
is performed for balance sheet accounts using current exchange rates in effect
at the balance sheet date and for revenue and expense accounts using an average
exchange rate for the period. Unrealized gains or losses resulting from
translation are included in stockholders' equity.
(k) Income taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". Deferred taxes are
recognized based on the differences between the book and tax basis of assets and
liabilities.
(l) Loss per share of common stock
Primary loss per share of common stock is computed based on the weighted average
shares outstanding during the year. The stock purchase warrants and stock
options have not been included in the computation of primary loss per share
since the effect would be anti-dilutive.
37
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Stock Based Compensation
FASB Statement No. 123 "Accounting for Stock-Based Compensation" defines a fair
value based method of accounting for an employee stock option or similar equity
instrument. However, the Company will continue to measure compensation cost for
employee stock compensation transactions using the intrinsic value based method
of accounting prescribed by APB Opinion No. 25 "Accounting for Stock Issued to
Employees".
(n) Reclassifications
Certain amounts in the prior year financial statements have been reclassified to
conform to the 1996 presentation.
(2) ACQUISITIONS AND STRATEGIC INVESTMENTS
On September 18, 1995, the Company acquired all the outstanding stock of ALT.
The purchase method of accounting for business combinations was used. The
operating results of ALT have been included in the Company's consolidated
results of operations from the date of acquisition. The acquisition, valued at
approximately $7,000, was made with the issuance of 8,811,137 shares of
restricted common stock of the Company valued at approximately $0.80 per share.
The fair value of assets acquired was approximately $7,700, of which
approximately $7,500 is attributable to patents developed or acquired by ALT
over the years. ALT now operates as a wholly-owned subsidiary of the Company.
The following proforma unaudited consolidated operating results of the Company
for the years ended December 31, 1995 and 1994, assuming the acquisition had
been made as of January 1, 1995 and 1994, are summarized below:
1995 1994
---- ----
Net sales ................................... $ 3,255 $ 707
Net loss ..................................... (4,625) (2,359)
Loss per share............................ $ ( .15) $ ( .08)
38
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(2) ACQUISITIONS AND STRATEGIC INVESTMENTS (continued)
In April 1995, the Board of Directors ratified actions by FiberCore Incorporated
to enter into a joint venture with John Royle & Sons Co. and Middle East
Specialized Cables Company ("MESC") for a period of 15 years to be known as
Middle East Fiber Cables Co. ("MEFC"). As part of the agreement the Company
issued to MESC 734,262 shares of common stock for $1,000, (approximately $1.36
per share). The agreement also provides that MESC will receive 312,061 shares of
common stock and warrants to purchase 550,696 shares upon the completion and
execution of a product supply contract between the Company and MEFC. MESC must
exercise the warrants to purchase shares of the Company's common stock at
approximately $1.63 per share, within a two year period to receive an additional
238,635 shares. The Company invested $500 of the $1,000 purchase price in MEFC
as a capital contribution to the joint venture, as required by the agreement,
and in the process acquired a 15% interest in MEFC. There were no significant
operations which occurred in 1996 for MEFC. MEFC is expected to commence
operations in 1997.
On January 11, 1996, as part of a share purchase agreement with Techman
International Corporation (Techman), a related party, a joint venture was
established between the Company and Techman. The joint venture, FOI, is located
in Pakistan. The Company has a 30% ownership interest in FOI. The Company
acquired its interest in FOI by making a $450 capital contribution to the joint
venture and issuing 312,061 shares of Company common stock to Techman valued at
approximately $1.36 per share, ($425). In addition to the ownership interest,
the Company concluded a long term agreement to supply fiber and preforms to FOI.
FOI was formed in 1996 and had no significant operations in 1996. FOI is
expected to commence operations in 1997.
(3) RECEIVABLES
Activity in the allowance for doubtful accounts consisted of the following for
the years ended December 31:
1996 1995 1994
---- ---- ----
Balance at beginning of period............... $39 $-- $--
Additions charged to expense................. 1 28 --
Additions - Other............................ -- 11 --
Deductions................................... 4 -- --
--- --- ---
Balance at end of period $36 $39 $--
=== === ===
39
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(3) RECEIVABLES (continued)
Other receivables consist of the following at December 31:
1996 1995
---- ----
Value added tax ...................... $181 $189
SICO ................................. -- 69
MEFC ................................. 219 25
Other ................................ 18 3
---- ----
Total ..................... $418 $286
==== ====
The value added tax receivable is comprised principally of advance payments to
the German tax authorities that are to be refunded to FCJ.
(4) INVENTORIES
Inventories consist of the following at December 31:
1996 1995
---- ----
Raw materials ............................ $ 841 $ 736
Work-in-process .......................... 403 17
Finished goods ........................... 677 654
------ ------
Total ............................ $1,921 $1,407
====== ======
40
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS)
(Dollars in thousands except share data)
(5) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES 1996 1995
------------ ---- ----
<S> <C> <C> <C>
Office equipment ................. 2 - 5 years $ 156 $ 109
Machinery and equipment .......... 2 - 12 years 5,068 4,809
Furniture and fixtures ........... 5 - 7 years 18 18
Leasehold improvements ........... 3 - 10 years 7 5
Construction in progress.......... 955 103
------- -------
6,204 5,044
Less grant proceeds received.. (960) --
------- -------
Total............................. $ 5,244 $ 5,044
======= =======
</TABLE>
Depreciation on property and equipment charged to expense was $548 in 1996, $523
in 1995 and $254 in 1994.
Included above are grants received from the German government for use by the
Company as part of the expansion of the FCJ facility. The Company received
grants of $960 in 1996 which have been applied against costs incurred by the
Company as part of the expansion of the FCJ facility.
(6) ACCRUED EXPENSES
Accrued expenses consist of the following at December 31:
1996 1995
---- ----
Accrued interest ............................................... $ 72 $351
Accrued wages, benefits & taxes ................................ 568 323
Accrued legal and audit ........................................ 170 86
Other .......................................................... 410 235
------ ----
Total................................................... $1,220 $995
====== ====
41
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(7) NOTES PAYABLE
Notes payable consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Convertible note payable to a director of ALT, interest at 8.5%, with principal
and interest due April 1, 1997, all principal and accrued interest, if any,
convertible into common stock of the Company at approximately $1.36 per share. $200 $ --
Note payable to Connecticut Innovations, Inc., ("CII"). -- 210
Note payable to Connecticut Development Authority, ("CDA"). -- 199
Note payable to Harkerside Trust, interest at 10.5%, payable semi-
annually, due December 6, 1995. -- 200
---- ----
$200 $609
==== ====
</TABLE>
The note payable to CII with interest at 8.5% payable monthly, was issued with
detachable stock warrants to purchase shares of common stock of ALT at $1.50 per
share. On July 10, 1996, CII agreed to exchange the balance of the note plus
accrued interest and the warrants for 111,462 shares of the Company.
The note payable to CDA with interest at 12% payable monthly, was issued with
detachable stock warrants to purchase 100,000 shares of common stock of ALT at
$1.50 per share. In August 1996, the Company and CDA agreed to exchange the
balance of the note plus accrued interest and the warrants for 142,540 shares of
the Company.
42
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(8) LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------ -----
<S> <C> <C>
Convertible note payable to AMP Incorporated ("AMP"), interest at 3-month London
Interbank Offered Rate plus one percent (6.5625% at December 31, 1996),
due April 17, 2005. $2,000 $5,000
Note payable to AMP, interest at prime plus one percent
(9.25% at December 31, 1996), due November 27, 2006. 3,000 --
Discount attributable to warrants issued in conjunction
with the $3,000 note above. (955) --
Notes payable to the spouses of officers of the Company, with interest at prime
plus one percent (9.25% at December
31, 1996), due July 31, 1999. 500 --
------ ------
$4,545 $5,000
====== ======
</TABLE>
The AMP notes are collateralized by the Company's patents, patent applications,
licenses, rights and royalties resulting from such patents and the equipment of
FCJ.
In April 1995, FiberCore Incorporated issued to AMP, a floating rate,
collateralized, ten year debenture in the amount of $5,000, due April 17, 2005,
with interest, at an annualized rate adjusted quarterly, equal to the 3-month
London Interbank Offered Rate plus 1%, (6.5625% at December 31, 1996). No
interest is due until the earlier of: AMP conversion of debt to stock, a public
financing by the Company and AMP elects to call the loan, or maturity. AMP has
the option to convert the outstanding loan plus accrued interest into common
stock of the Company at approximately $1.16 per share in years 1-5 or the per
share price provided for in the last third party private equity financing in
years 6-10.
On November 27, 1996, AMP converted $3,000 of principal and $541 of accrued
interest relating to the original $5,000 ten year debenture, into shares of
common stock of the Company at the rate of approximately $1.16 per share
(3,058,833 shares) and entered into a multi-year supply
43
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(8) LONG-TERM DEBT (continued)
agreement. The remaining principal balance remained subject to the terms of the
original debenture agreement. The conversion agreement contains certain
valuation guarantees of the market value of the Company's common stock. Unless
the closing price of the Company's common shares equals or exceeds $1.7364 for
30 consecutive trading days during the first two (2) years following the closing
at a time when AMP was not restricted from selling such shares, then effective
on the second anniversary of the closing, an additional number of shares of
Company common stock shall be issued to AMP and an adjustment shall be made in
the conversion rate for the outstanding balance of the debenture such that the
total number of shares held and convertible by AMP would have a market value
(based on the average closing price of Company's shares during the last thirty
(30) trading days preceding the second anniversary of the closing) equal to
$7,500; provided, however, that not more than 6,478,810 Company shares will be
issued or issuable to AMP as a result of the conversion of the $5,000 debenture
and this guarantee.
In the alternative, the Company may satisfy this guarantee on the second
anniversary of the closing by offering or arranging for its designee to offer to
purchase from AMP the converted shares and the outstanding balance of the
debenture, including accrued interest, for $7,500 reduced prorata for any
intervening sales of shares by AMP. Such offer to purchase shall be for cash
only in immediately available funds.
As an additional part of this agreement, on November 27, 1996, AMP issued to the
Company $3,000 under a ten-year note, secured by equipment owned by the Company,
with interest at prime plus one percent, (9.25% at December 31, 1996). Terms of
the debenture state that interest shall be accrued, but not paid, for the first
five years of the loan and a portion of the proceeds are required to be used as
collateral for the German bank loan of approximately $5,100 for the planned
expansion of its FCJ facility. The principal will become due before the maturity
date if the major financing is repaid or the collateral is released by the
German financial institution.
In conjunction with the loan agreement, AMP was issued five year warrants to
acquire 1,382,648 shares of the Company's stock at an exercise price of
approximately $1.45 per share. The Company has guaranteed the market value of
their stock. Unless the closing price of the Company's common shares equals or
exceeds $2.1697 for a period of thirty (30) consecutive trading days during the
first two (2) years following the closing at a time when AMP was not restricted
from selling such shares, then the exercise price of the warrants shall be
adjusted effective as of the second anniversary of the closing by multiplying
$1.4465 per share by a fraction the denominator of which is $2.1697 and the
numerator of which is the average closing price of the shares during the last
thirty (30) trading days preceding the second anniversary of the closing;
provided, however, that the adjusted exercise price shall not be less than
$0.7232 per share (50% of $1.4465). In the alternative, the Company or its
designee may offer to purchase the warrants on the second anniversary of the
closing for an amount equal to $1,000; provided, however, that AMP shall have
the right not to sell, in which case the guarantee will no longer be available.
44
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(8) LONG-TERM DEBT (continued)
In connection with the new AMP loan and the expansion of the FCJ facility, the
Company has been awarded a grant from the German government of approximately
$2,700 and has received a loan from Berliner Bank of approximately $5,100. The
loan from Berliner Bank bears interest at 6.25% per year. Interest is payable
quarterly and the principal is due in a lump sum on September 30, 2006. The loan
is collateralized by a deposit with the bank of $2,498. At December 31, 1996 and
1995 there were no amounts outstanding on this loan.
Scheduled principal maturities of long-term debt are as follows:
1999 ............................................... $ 500
2005................................................ 2,000
2006................................................ 3,000
-------
Total................ $ 5,500
=======
(9) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries have entered into various leases for its office
and production space. The Company's office lease expired on January 31, 1997. On
February 1, 1997, the Company agreed to sub-lease the same office space from the
new lessee, on a month to month basis.
FCJ conducts its operations from premises under an operating lease with SICO
Quarzschmelze Jena GmbH ("SICO"). The lease expires in June, 2000, and contains
various renewal options. The rental payments for the facility is fixed per month
through June 30, 2000. On July 1, 1995, the lease rental was changed from $21 to
$30 per month.
Future minimum lease payments under noncancellable operating leases (with
minimum or remaining lease terms in excess of one year) are as follows:
FISCAL YEAR ENDING DECEMBER 31, AMOUNT
1997 .................................................. $ 374
1998 .................................................. 356
1999 .................................................. 356
2000 .................................................. 178
---------
Total ................ $ 1,264
========
45
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(9) COMMITMENTS AND CONTINGENCIES (continued)
Included in the statements of operations for the years ended December 31, 1996,
1995 and 1994 is rent expense of $456, $413 and $169, respectively.
Substantially, all lease payments are to a related party, SICO.
FCJ is a defendant in a case brought against it by a German firm, COIA GmbH.
COIA is suing FCJ, SICO and SICO's president, Mr. Walter Nadrag, (who was
previously the managing director of FCJ) (the "Defendants") for approximately
$200 (reduced from the earlier claim of $1.5 million), alleging that the
Defendants failed to comply with a sales contract. The Company believes no such
sales contract existed because COIA failed to provide the required end user
certificate which the Company believes was required under United States law and
COIA failed to pay FCJ for previous sales to COIA. The Company is aggressively
defending this action. In addition, the Company is subject to various claims
which arise in the ordinary course of business. The Company believes that these
claims and legal actions, individually or in the aggregate, will not have a
material adverse affect on the financial position or results of operations of
the Company.
ALT is contingently liable for debt of a former subsidiary, Allied Controls,
Inc. ("Allied"), approximating $900, details of which are described below.
ALT and two of its key officers have issued the following guarantees and/or
security interests with respect to certain loans of its spun-off former
subsidiary Allied. In a $250 financing of Allied from the State of Connecticut
acting through the Department of Economic Development ("DED"), dated as of
October 9, 1992, DED received a guarantee and security interest in certain
assets from ALT. In a $250 financing of Allied from the State of Connecticut,
acting through CDA, dated as of June 9, 1992, CDA received a guarantee from two
key officers of ALT.
Under a plan of reorganization, on May 14, 1991, the present Allied acquired the
assets and assumed certain liabilities of a corporation that had filed for
voluntary protection under Chapter 11 of the U.S. Bankruptcy Code. One of the
assumed liabilities was a $650 SBA loan dated May 29, 1989, (originally in the
amount of $1,000) from American National Bank, now Lafayette American National
Bank ("Lafayette"). As a condition of the loan assumption on March 21, 1991,
Lafayette obtained the guarantees of ALT and two key officers of ALT which
guarantees were in addition to the initial loan guarantees Lafayette already had
from other persons. Before commencing proceedings to enforce the guarantees
first against ALT and second against the two key officers, Lafayette must first
take all reasonable steps to realize upon the assets of Allied and the security
provided by the initial guarantors. In the event of a deficiency, Lafayette may
enforce its guarantee against ALT, provided that at all times it simultaneously
and diligently pursues actions to enforce its guarantees from the initial
individual loan guarantors.
46
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(9) COMMITMENTS AND CONTINGENCIES (continued)
Allied is now current with its payments under this loan. In addition, Allied
management has been in discussions with several potential buyers of Allied
which, if successful, would eliminate the aforementioned guarantees that have
been provided by ALT.
(10) STOCKHOLDERS' EQUITY
The following stock options were granted during the years ended December 31,
1996, 1995 and 1994:
<TABLE>
<CAPTION>
Stock options $.003 $0.68 $1.09 $1.16 $1.36 $1.43 $1.45 $1.50 $1.51 $2.00
- ------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Granted in 1994 220,278 -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Balance,
Dec. 31, 1994 220,278 -- -- -- -- -- -- -- -- --
Granted in 1995 36,713 -- 33,042 -- -- -- -- -- -- --
Granted in 1995
in connection
with the ALT
acquisition -- -- -- -- -- 67,188 -- 41,993 178,679 --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Balance,
Dec. 31, 1995 256,991 -- 33,042 -- -- 67,188 -- 41,993 178,679 --
Granted in 1996 18,357 64,248 -- 87,492 55,193 -- 148,709 -- -- 26,542
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Balance,
Dec. 31, 1996 275,348 64,248 33,042 87,492 55,193 67,188 148,709 41,993 178,679 26,542
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Options
exercisable 201,922 64,248 33,042 87,492 55,193 67,188 148,709 41,993 178,679 26,542
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
Options vest at rates stated in each employees contract, principally at the
grant date or the anniversary date of the employee's date of hire. The options
have no expiration dates and no options were exercised in 1996, 1995, and 1994.
47
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(10) STOCKHOLDERS' EQUITY (continued)
A summary of the status of the Company's stock options and weighted average
prices are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------- ---------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance
beginning of year 577,893 $ .81 220,278 $.003 -- $ --
Granted 400,541 $1.22 357,615 $1.30 220,278 $ .003
------- ------- -------
Balance
end of year 978,434 $ .98 577,893 $ .81 220,278 $ .003
======= ======= =======
Exercisable at
end of year 905,008 $1.06 456,740 $1.02 51,398 $ .003
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
Range of Options Exercise Remaining Options Exercise
Price Exercise Outstanding Price Years (1) Exercisable Price
- -------------- ----------- ----- --------- ----------- -----
<C> <C> <C> <C> <C> <C>
$.003 275,348 $.003 -- 201,922 $.003
$0.68 - $1.36 239,975 $1.07 -- 239,975 $1.07
$1.43 - $2.00 463,111 $1.51 -- 463,111 $1.51
------- ----- -- ------- -----
$.003 - $2.00 978,434 $0.98 -- 905,008 $1.06
======= =======
</TABLE>
(1) Options granted and exercisable have no expiration date.
48
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(10) STOCKHOLDERS' EQUITY (continued)
The Company applies APB Opinion 25 in accounting for its stock compensation
plans. Compensation cost charged to operations was $846 in 1996 related to
options granted at an exercise price less than the market price of the shares at
the dates of the grants. Had compensation cost been determined on the basis of
fair value pursuant to FASB Statement No. 123, net loss and loss per share would
have been as follows:
1996 1995
---- ----
Net loss
- --------
As reported $(4,133) $(4,009)
======== ========
Pro forma $(4,295) $(4,535)
======== ========
Primary loss per share
- ----------------------
As reported $ (.13) $ (.15)
========== =========
Pro forma $ (.14) $ (.17)
========== =========
The weighted average fair value of options granted during 1996 and 1995 was
$2.52 and $1.48 per share, respectively.
The fair value of each option granted is estimated on the grant date using the
Black-Scholes model. The following assumptions were made in estimating fair
value:
Stock
Assumptions Plan
----------- ----
Dividend yield --
Risk-free interest rate 5.5%
Expected life 2 years
Expected volatility 40 %
49
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(10) STOCKHOLDERS' EQUITY (continued)
The following warrants to purchase common stock have been issued during the
years ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
Warrants $0.95 $1.31 $1.36 $1.43 $1.45 $1.63 $1.81
- -------- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Issued in 1994 -- 479,565 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Balance, Dec. 31, 1994 -- 479,565 -- -- -- -- --
Issued in 1995 -- 118,858 -- -- -- 550,696 --
Issued in 1995 in
connection with the ALT
acquisition 83,985 -- -- 5,511 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Balance
December 31, 1995 83,985 598,423 -- 5,511 -- 550,696 --
Issued in 1996 -- -- 146,850 -- 1,382,648 550,696 230,440
--------- --------- --------- --------- --------- --------- ---------
Balance Dec. 31, 1996 83,985 598,423 146,850 5,511 1,382,648 1,101,392 230,440
========= ========= ========= ========= ========= ========= =========
</TABLE>
The weighted average fair value of warrants granted during 1996 and 1995 was
$1.05 and $1.63 based on total warrants of 2,310,634 and 759,050 granted in
1996 and 1995, respectively. The warrants are exercisable from the date of the
grant.
(11) INCOME TAXES
The significant components of the net deferred tax asset as of December 31, 1996
and 1995 were as follows:
1996 1995
---- ----
Net operating loss carry forwards $ 2,738 $ 1,717
Accrued expenses 75 --
Less valuation allowance (2,813) (1,717)
------- -------
Net deferred tax asset $ -- $ --
======= =======
The liability method of accounting for deferred income taxes requires a
valuation allowance against deferred tax assets if, based on the weight of
available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.
50
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(11) INCOME TAXES (continued)
The Company has net operating loss carry forwards available of approximately
$3,822, at December 31, 1996 for federal and state tax purposes. The majority of
the net operating loss carry forward expires in the years 2009 through 2011.
FCJ has net operating loss carry forwards at December 31, 1996 of approximately
$2,686 for corporation tax and trade income tax purposes available to offset
future taxable income. Under German tax law the losses can be carried forward
indefinitely.
Because future profitability is uncertain, such benefits have been fully
reserved.
In addition, ALT has pre-acquisition net operating loss carry forwards available
of approximately $4,278, at December 31, 1996 for federal and state tax
purposes. The loss carry forwards expire between the years 2001 through 2011.
(12) MAJOR CUSTOMERS AND SUPPLIERS
The major customers listed below accounted for approximately the following
amounts and related percentages of the trade accounts receivable balance of the
Company at December 31:
CUSTOMER 1996 1995
- -------------- ----------------------- --------------------
AMOUNT % AMOUNT %
-------- ---- --------- ----
A $ 167 23 $ 233 40
B 211 30 - -
C 109 15 - -
D - - 134 23
E - - 132 23
51
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(12) MAJOR CUSTOMERS AND SUPPLIERS (continued)
The approximate net product sales by the Company to its major customers and the
related percentages are as follows:
CUSTOMER 1996 1995 1994
- --------------------------------------------------------------------------------
AMOUNT % AMOUNT % AMOUNT %
-------- ------- -------- ------ ---------- ------
A $ 4,524 56 $1,855 60 $ 65 28
B 1,217 15 -- -- -- --
D -- -- 319 10 -- --
F -- -- -- -- 166 72
The major supplier listed below accounted for approximately the following amount
and related percentage of the trade accounts payable balance of the Company at
December 31:
Supplier 1996 1995
-------- ----------------------------------------------
AMOUNT % AMOUNT %
--------- -------- --------- -------
A $ 355 22 - -
The approximate net product purchases by the Company from its major supplier and
the related percentage is as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
AMOUNT % AMOUNT % AMOUNT %
-------- ------- -------- ------ ---------- ------
A $ 2,404 33 - - - -
(13) RELATED PARTY TRANSACTIONS
On August 19, 1995 and amended in January 1996, a capital lease agreement
between SICO and FCJ was revised. It was agreed that SICO would keep 2,221,141
shares, originally held as collateral, of the Company as payment for an
obligation under a capital lease. The outstanding lease obligation, which
amounted to $499 on August 19, 1995, was canceled. As a result, the net book
value of the assets was reduced by $499.
The managing director of FCJ was the controlling shareholder of SICO. In
November 1995, this officer resigned from his position with FCJ.
52
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(13) RELATED PARTY TRANSACTIONS (continued)
Transactions with SICO during the years ended December 31, 1996, 1995 and 1994
consist of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Property and equipment under capital lease ......... $ -- $ -- $2,996
Purchase price reduction of property and
equipment under capital lease ........................... -- 499 --
Rent of premises .................................................. 356 315 127
Purchase of services and utilities......................... 611 874 407
Purchase of materials .......................................... -- 351 69
Interest ............................................................. -- 26 --
Other expenses .................................................... -- 22 --
Sales of fibers ...................................................... 176 131 166
</TABLE>
In 1994, SICO was FCJ's main supplier of materials and its main customer
accounting for approximately 72% of its sales. In 1996 and 1995, SICO is no
longer a principal customer or the main supplier of materials.
In January 1996, the Company reached an agreement with Techman, whereby Techman
purchased 734,260 shares for $1 million ($1.36 per share). Techman is a related
party as the president and sole shareholder of Techman is a director of the
Company. Upon acceptance of the offer and delivery of the 734,260 shares, the
Company delivered to Techman warrants, granting Techman the right to purchase
550,696 shares of the Company at $1.63 per share exercisable in whole or in part
within a 2 year period. The Company also issued an additional 312,061 shares to
Techman upon all partners of FOI completing all documents required to form FOI,
and FOI and the Company executing an exclusive supply agreement for sales of
preforms to FOI.
The Company maintains a consulting agreement with Techman under which Techman
provides administration, marketing, technical and personnel advisory services to
the Company. The agreement is on a month to month basis at a monthly fee of
$3,000 and is terminable at any time by the Company. For the years ended
December 31, 1996 and 1995, Techman was paid $36,000 and $21,000, respectively,
for such services.
For the years ended December 31, 1996 and 1995, Mr. Phillips, a director, was
paid a consulting fee of $64,950, and $25,875, respectively.
53
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(14) FOREIGN OPERATIONS
The Company has operations in two principal geographic areas: the United States
(Company and ALT) and Germany (FCJ). Following is a summary of information by
area for the years ended December 31, 1996, 1995 and 1994:
1996 1995 1994
------- ------- -------
Net sales to customers:
United States ............................... $ 196 $ 305 $ --
Germany ..................................... 7,900 2,789 231
------- ------- -------
Net sales as reported in the accompanying
consolidated statements of operations .... $ 8,096 $ 3,094 $ 231
======= ======= =======
Income (loss) from operations:
United States .............................. $(3,893) $(1,757) $ (644)
Germany .................................... 45 (1,833) (979)
------- ------- -------
(3,848) (3,590) (1,623)
Interest income ............................... 6 148 15
Interest expense .............................. (393) (516) (22)
Other income (expense) ........................ 102 (51) 5
------- ------- -------
Net loss as reported in the accompanying
consolidated statements of operations .. $(4,133) $(4,009) $(1,625)
======= ======= =======
Identifiable assets:
United States .............................. $ 8,441 $ 8,488
Germany .................................... 9,201 6,295
------- -------
Total assets as reported in the accompanying
consolidated balance sheets .............. $17,642 $14,783
======== =======
Inter-company sales are eliminated in consolidation and are excluded from net
sales reported in the accompanying consolidated statements of operations.
Identifiable assets are those that are identifiable with operations in each
geographic area.
54
<PAGE>
FIBERCORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except share data)
(15) SUBSEQUENT EVENTS
On January 14, 1997 the Company was notified by the Securities and Exchange
Commission ("SEC") that the Company's registration statement on Form S-1 and
Form 8-A were declared effective. Accordingly, the Company is subject to the
filing requirements of the Securities Exchange Act of 1934. The registration
statement registered then currently outstanding securities and, therefore, the
Company did not receive any proceeds as a result thereof.
55
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Board of Directors of the Company approved the replacement of Mottle
McGrath Braney & Flynn, P. C. (the "Former Accountants") as the Company's
independent outside accountants and the selection of Deloitte & Touche LLP as
the Company's new independent outside accountants.
The report of the Former Accountants on the financial statements of the
Company for the fiscal year ended December 31, 1995 contained no adverse opinion
or disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. The report on the financial statements of
the Company for the fiscal year ended December 31, 1994 contained no adverse
opinion or disclaimer of opinion and was not qualified or modified as to audit
scope or accounting principles. The report was qualified as to the Company's
ability to continue as a going concern.
During the Company's fiscal years ended December 31, 1995 and 1994 and
through the date of this report, there were no disagreements with the Former
Accountants on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to their satisfaction would have caused them to make reference
thereto in their report on the financial statements for such years. During the
fiscal years ended December 31, 1995 and 1994 and through the date of this
report, the Former Accountants did not advise the Company with respect to the
matters described in paragraphs (a)(1)(v)(A) through (D) of Item 304 of
Regulation S-K.
The Company engaged Deloitte & Touche LLP as its new independent
accountants effective January 16, 1997. During the two fiscal years preceding
its appointment and through the date hereof, the Company had not consulted with
Deloitte & Touche LLP on items regarding:
(i) The application of accounting principles to a specific completed
or contemplated transaction, or the type of audit opinion that might be rendered
on the Company's financial statements; there was no written or oral advice
provided that was an important factor in reaching a decision as to any
accounting, auditing or financial reporting issue; or
(ii) Any matter that was the subject of a disagreement or a reportable
event required to be identified pursuant to paragraph (a)(1)(v) of Item 304 of
Regulation S-K.
The Company has provided the Former Accountants with a copy of the
foregoing disclosures and has requested in writing that the Former Accountants
furnish it with a letter addressed to the Securities and Exchange Commission
(the "SEC") stating whether or not it agrees with such disclosures. A copy of
such letter is filed as an exhibit to this report in accordance with Item 601 of
Regulation S-K.
56
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS AND DIRECTORS
The following tables set forth certain information with respect to each
person who was an executive officer or director of the Company as of December
31, 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Dr. Mohd A. Aslami 50 Chairman Of The Board Of Directors, Chief
Executive Officer, President and Director
Charles DeLuca 59 Executive Vice President, Secretary and Director
of the Company and General Manager of the Company's
ALT subsidiary
Michael J. Beecher 52 Chief Financial Officer and Treasurer
Hans F.W. Moeller 67 Managing Director of the Company's FiberCore
Jena subsidiary
Zaid Siddig 59 Director
Steven Phillips 51 Director
Dr. M. Mahmud Awan 45 Director
</TABLE>
Dr. Aslami is a co-founder, Chairman of the Board of Directors and Chief
Executive Officer of the Company. Dr. Aslami has served as Chairman and Chief
Executive Officer of FiberCore Jena, the Company's wholly-owned subsidiary in
Germany, since 1994. Dr. Aslami also co-founded and became President, Chief
Executive Officer and a director of ALT in 1986. Dr. Aslami received a Ph.D. in
chemical engineering from the University of Cincinnati (1974).
Mr. DeLuca is a co-founder, Executive Vice President, Secretary and a
director of the Company. Mr. DeLuca also co-founded and became an Executive Vice
President and director of ALT in 1986. Mr. DeLuca received his MBA in marketing
and business management from St. Johns University in 1974.
Mr. Beecher became Chief Financial Officer of the Company in April 1996. Mr.
Beecher was the Vice President/Treasurer and Chief Financial Officer at the
University of Bridgeport from 1989 through 1995. Mr. Beecher is a Certified
Public Accountant and is a member of the American Institute of Certified Public
Accountants.
Mr. Moeller became Managing Director of FiberCore Jena in the fourth
quarter of 1995 on a part time basis. He served as a director of FiberCore
Incorporated from 1994 through March 1996. As part of a reorganization of the
Company, he resigned his position as a director and agreed to serve as a
director of the Company's newly formed subsidiary InfoGlass. From 1993 to 1994,
he
57
<PAGE>
served as Vice Chairman of Schott Corporation ("Schott"), a United States
subsidiary of Schott A.G., a corporation specializing in the production of,
among other things, optical glass. From 1989 to 1993, he served as President of
Schott. Mr. Moeller was a member of the Board of Directors of Schott from 1989
to 1994.
Mr. Siddig became a director of the Company in 1994. He also serves as a
consultant to the Board of Directors of FiberCore Jena. Since 1991, Mr. Siddig
has been active as a private investor and has occasionally served as a
consultant to ALT. Mr. Siddig is the uncle of Dr. Aslami's wife.
Mr. Phillips became a director of the Company in May 1995 and became a
director of ALT in 1989. Since co-founding the Winstar Government Securities
Company L. P., a registered government securities dealer which specializes in
odd-lot securities transactions, Mr. Phillips has served as Chief Financial
Officer, Secretary, and a Director. Since August 1987, Mr. Phillips has served
as a director, Secretary and Chief Financial Officer of James Money Management,
Inc., a private investment company. Since June 1987, Mr. Phillips has served as
director and President of One Financial Group Incorporated, a financial
consulting company of which he is the majority stockholder.
Dr. Awan is the founder and President of Techman International Corporation,
a Massachusetts company engaged in providing technical, sales and management
consulting services to various industrial companies in the United States and
abroad. Dr. Awan has been responsible for the development of several high tech
companies in Massachusetts over the past 10 years and serves on the Board of
Directors of a number of professional organizations as well as these companies.
He is an active investor in the Pakistani market and has maintained
manufacturing and distribution operations in Karachi, Islamabad, and Lahore
since 1982. Dr. Awan has been instrumental in promoting satellite networks for
Pakistan. His company was licensed in 1994 by the Government of Pakistan to
operate a national and international satellite data communication network
throughout Pakistan. Dr. Awan received a Ph.D. in economics from Clark
University (1974).
58
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Following is a summary of the compensation earned and/or paid to the Company's
Chief Executive Officer and its most highly compensated executive officers for
the last three years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Position Fiscal Salary Bonus Other Restricted Securities
Year $ $ Annual Stock Underlying
Compen- Award(s) Options/
sation $ SARs(#)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dr. Mohd Aslami 1996 146,500 -- -- -- 60,913
Chairman, Chief Executive 1995 146,500 -- -- -- --
Officer & President 1994 178,729 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Charles DeLuca (1) 1996 98,398 -- -- -- 46,050
Executive Vice President 1995 28,699 -- -- -- --
& Secretary 1994 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Beecher (2) 1996 53,708 -- -- -- 64,248
Chief Financial Officer 1995 -- -- -- -- --
& Treasurer 1994 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Hans Moeller (3) 1996 98,596 -- -- -- 55,193
Managing Director, 1995 7,227 -- -- -- 33,042
FiberCore Glasfaser Jena 1994 -- -- -- -- --
GmbH
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) From September 18, 1995 with the acquistion of ALT.
(2) Started employment on April 15, 1996
(3) Started employment on October 1, 1995
59
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table lists the options granted to the executive officers during
the year ended December 31, 1996.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------------------
Name Number of % of Total Exercise Exp. Value at Potential Potential
----
Securities Options/ or base Date Grant Date realized realized
----
Underlying SARs price Market values at values at
Options/ Granted to ($/Share) Price assumed assumed
---------
SARs Employees 0% ($) annual rates annual
------
Granted in Fiscal of stock rates of
(#) Year price stock price
--- ----
apprec. For apprec.
option term For option
5%($) term
10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dr. Mohd Aslami (a, 60,913 25% $1.45 -- $289,337 $230,670 $261,774
b)
- ------------------------------------------------------------------------------------------------------------------------------------
Charles DeLuca (a ,b) 46,050 19% $1.45 -- $218,738 $174,386 $197,900
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Beecher (a, c) 64,248 26% $0.68 -- $152,589 $124,479 $140,882
- ------------------------------------------------------------------------------------------------------------------------------------
Hans Moeller (a, b) 55,193 23% $1.36 -- $262,167 $213,976 $242,159
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Table
a. The term of options used in the potential realized value calculation is two
years
b. The market value per share at the date of grant was $4.75
c. The market value per share at the date of grant was $2.375
60
<PAGE>
COMPENSATION OF DIRECTORS
The Company does not maintain any standard compensation arrangements or
plans for directors.
The Company, however, maintains a consulting agreement with Techman under
which Techman provides administration, marketing, technical and personnel
advisory services to the Company. Dr. M. Mahmud Awan, a director of the Company,
is the President and sole shareholder of Techman. The agreement is on a month to
month basis at a monthly fee of $3,000 and is terminable at any time by the
Company. For the year ended December 31, 1996, Techman was paid $36,000 for such
services.
Mr. Phillips, a director of the Company, continues to be a consultant to
ALT and the Company without a formal agreement, but the Company and Mr. Phillips
intend to enter into such an agreement. The Company anticipates that the
agreement will provide that Mr. Phillips will serve as a senior financial
advisor to the Company for a term of one year, renewable at the Company's option
and Mr. Phillips' consent. Mr. Phillips will be paid a retainer of $60,000 per
year payable in monthly installments of $5,000, based on an hourly rate of $185
per hour. The retainer will be adjusted quarterly based on actual hours of
service. For the year ended December 31, 1996, Mr. Phillips' fee was $64,950.
61
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
PRINCIPAL SECURITYHOLDERS
The following table sets forth certain information regarding the ownership
of the Common Stock as of February 28, 1997, with respect to (i) each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each executive officer named in the Executive Compensation
Table, (iii) each director of the Company and (iv) all the directors and
executive officers of the Company as a group. Unless otherwise indicated, each
of the shareholders has sole voting and investment power with respect to the
shares beneficially owned.
<TABLE>
<CAPTION>
NAME
AND SHARES %
ADDRESS(1) OWNED OWNED
<S> <C> <C>
Mohd Aslami........................................... 7,593,329 (2), (11) 17.6
Charles DeLuca........................................ 4,576,276 (3), (11) 10.6
Gregory A. Perry...................................... 3,572,881 (4) 8.3
Steven Phillips....................................... 845,399 (5) 2.0
Zaid Siddig........................................... 591,735 (6) 1.4
M. Mahmud Awan........................................ 2,597,017 (7), (11) 6.0
Hans F.W. Moeller..................................... 88,235 (8) 0.2
AMP Incorporated ..................................... 6,169,154 (9), (11) 14.3
SICO Quarzschemelze Jena GmbH......................... 2,040,891 4.7
Michael J. Beecher.................................... 54,248 (10) 0.1
All directors and executive officers as a group
(7 persons)............................................ 16,346,239 37.9%
</TABLE>
- -------------------------------
(1) The addresses of the persons and entities named in this table are as
follows: Messrs. Aslami, DeLuca, Perry, Siddig, Beecher, Moeller, Ramsey,
Awan, and the Ariana Trust c/o FiberCore, Inc., P. O. Box 206, 174 Charlton
Road, Sturbridge, MA 01566; AMP Incorporated, 470 Friendship Road,
Harrisburg, PA 17105; and Sico Quarzchemelze Jena GmbH, Goscheweitzer Str.
20 07745, Jena, Germany.
(2) Includes 157,473 shares and Warrants to purchase 115,220 shares held by Dr.
Aslami's wife, 425,085 shares held by Dr. Aslami's children, 1,998,589 and
608,914 shares held respectively by the Ariana Trust and the Kabul
Foundation, trusts of which Dr. Aslami's wife is trustee and of which Dr.
Aslami's children are beneficiaries, and 284,860 shares held by the Raja
Foundation, a trust of which Dr. Aslami's wife and Mr DeLuca's wife are
trustees and of which various organizations and family members are
beneficiaries. Dr. Aslami disclaims beneficial ownership of all such
shares. Also includes 60,913 currently exercisable options.
62
<PAGE>
(3) Includes 1,395,097 shares and Warrants to purchase 115,220 shares held by
Elizabeth DeLuca, Mr. DeLuca's wife, 347,715 shares held by Mr. DeLuca's
children, 608,914 shares held by the Dawn Foundation, a trust of which Mrs.
DeLuca is trustee and of which Mr. DeLuca's children are beneficiaries, and
174,053 shares held by the Raja Foundation, a trust of which Dr. Aslami's
wife and Mr. DeLuca's wife are trustees and of which various organizations
and family members are beneficiaries. Mr. DeLuca disclaims beneficial
ownership of all shares. Also includes 46,050 currently exercisable
options.
(4) Includes 1,358,384 shares held by Beth Perry, Mr. Perry's wife, and 146,852
shares held by Mr. Perry's children. Mr. Perry disclaims beneficial
ownership of all such shares.
(5) Include 41,746 currently exercisable options issued to One Financial Group
Incorporated.
(6) Mr. Siddig is the uncle of Dr. Aslami's wife.
(7) Includes shares issuable to Techman or its designee upon exercise of
Warrants (550,696), and shares (1,000,000) to be issued ratably as
commissions on Company sales up to $200 million.
(8) Includes 88,235 currently exercisable options.
(9) Includes shares into which the AMP Note is convertible at $1.16 per share
and Warrants to purchase 1,382,648 shares.
(10) Includes 54,248 currently exercisable options.
(11) Under the AMP loan, the Company, Mohd A. Aslami, Charles DeLuca, M. Mahmud
Awan and AMP entered into a Voting Agreement pursuant to which they agreed
to vote together to elect a slate of directors to the Board of Directors of
the Company. Such slate of directors initially consists of Mohd A. Aslami,
Charles DeLuca, Hans Moeller, one nominee of AMP and three outside
directors, one of whom is Dr. Awan.
63
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DEALINGS WITH SICO
Since June 1994, FiberCore Jena has leased its office and manufacturing
facility in Germany from SICO Quarzschmelze Jena GmbH ("SICO"). At February 28,
1997 SICO owned 2,040,891 shares of Common Stock (approximately 4.7% of the
Company). The lease payment is fixed for the initial term of the lease (which
expires on June 30, 2000) at DM 51,376 per month (approximately $33,327). SICO
is also a reseller customer of the Company. In 1995 and 1996, SICO accounted for
approximately 10% and less than 1%, respectively, of Company total sales.
DEALINGS WITH TECHMAN
Since 1995, the Company has maintained a working relationship with Techman,
a technology management company headquartered in Massachusetts since 1982. Dr.
M. Mahmud Awan, the President and sole shareholder of Techman, is a director of
the Company. Techman specializes in sales of fiber optic products and
telecommunication systems.
On November 1, 1995, the Company entered into an International Distributor
Agreement with Techman to market the Company's products worldwide. Techman
agreed to receive customary sales commissions in the form of Warrants
exercisable into 1,000,000 shares of Common Stock to be issued to Techman for
sales of the Company's products up to $200,000,000. Such shares will be issued
upon receipt of the proceeds of any such sales.
Pursuant to the Techman Share Purchase Agreement dated January 11, 1996,
Techman purchased 734,260 shares of Common Stock for $1,000,000 (approximately
$1.36 per share) and was granted Warrants exercisable into 550,696 shares of
Common Stock at $1.63 per share. Additionally, the Company issued an additional
312,061 shares of Common Stock to Techman on (i) the formation of FOI (a joint
venture), in which the Company holds a 30% ownership interest, and (ii) the
completion of a supply agreement between FOI and the Company. Under the
agreement, $450,000 of the $1,000,000 share purchase price was invested by
Techman for the Company in FOI as an additional capital contribution.
FOI, a company incorporated in Islamabad under the laws of Pakistan, was
formed to manufacture optical fiber products in Pakistan, and is in the process
of raising capital to fund the construction of a manufacturing facility. Since
its inception in June 1995, FOI has been funded primarily by Techman. FOI has
contracted with First Capital Securities Corporation Limited to arrange for
listing of FOI on the Karachi Stock Exchange.
The Company maintains a consulting agreement with Techman under which
Techman provides administration, marketing, technical and personnel advisory
services to the Company. The agreement is on a month to month basis at a monthly
fee of $3,000 and is terminable at any time by the Company. For the years ended
December 31, 1996 and 1995, Techman was paid $36,000 and $21,000, respectively,
for such services.
64
<PAGE>
DEALINGS WITH AMP
In April 1995, the Company issued the AMP Note, which is a ten year
$5,000,000 convertible note, to AMP, Incorporated, a company listed on the New
York Stock Exchange and a manufacturer of electrical and optical connection
devices, systems and other equipment including fiber optic cable. Principal of
the AMP Note plus accrued interest at a rate of LIBOR plus one percent may be
converted into Common Stock through April 17, 2005. Until April 17, 2000, the
conversion price is $1.16 per share; thereafter the conversion price is equal to
the price per share paid by a third party investor in the private sale of Common
Stock immediately prior to such conversion. The AMP Note is subject to
prepayment on demand in the event the Company is the issuer of securities to be
sold by the Company under an effective registration statement.
In July 1996, AMP entered into a five year supply contract (renewable at
AMP's option for an additional five year period) with the Company whereby the
Company will supply AMP with at least 50% of AMP's future glass optical fiber
needs. On November 27, 1996 the Company obtained an additional $3,000,000 loan
at an interest rate of prime plus 1%, adjustable on the first business day of
each calendar quarter, from AMP to fund the expansion of the Jena Facility, in
exchange for a ten year note and $2,000,000 of common stock purchase warrants
exercisable for up to 1,382,648 shares of Common Stock at $1.45 and expiring on
November 27, 2001. AMP also converted $3,000,000 of principal plus $540,985 of
accrued interest on the AMP Note into 3,058,833 shares of Common Stock. In
connection with the new loan from AMP, the Company agreed to issue AMP
additional shares of Common Stock in the event the Company's share price does
not exceed $2.17 for 30 consecutive trading days by November 27, 1998. The
issuance of additional shares under the new AMP loan would have a dilutive
effect on the Company's other shareholders and could adversely affect the market
price of the Common Stock.
LOANS
On July 31, 1996, the Company borrowed $500,000 under two loan agreements
from the spouses of Dr. Aslami and Mr. DeLuca. The loans are in the amount of
$250,000 each and bear interest at the prime rate plus one percent (currently
9.25%), and are due on July 31, 1999. In conjunction with the loans each lender
received warrants to purchase 115,220 shares of Common Stock at the rate of
$1.81 per share. The warrants expire on July 31, 2001.
CONSULTING
Mr. Phillips, a director of the Company, continues to be a consultant to
ALT and the Company without a formal agreement, but the Company and Mr. Phillips
intend to enter into such an agreement. The Company anticipates that the
agreement will provide that Mr. Phillips will serve as a senior financial
advisor to the Company for a term of one year, renewable at the Company's option
and Mr. Phillips' consent. Mr. Phillips will be paid a retainer of $60,000 per
year payable in monthly installments of $5,000, based on an hourly rate of $185
per hour. The retainer will be adjusted quarterly based on actual hours of
service. For the years ended December 31, 1996 and 1995, Mr. Phillips' fee was
$64,950, and $25,875, respectively.
65
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. FINANCIAL STATEMENTS
See Item 8 of this Report
2. FINANCIAL STATEMENT SCHEDULES
The required disclosures are included in the footnotes to
the Financial Statements
3. EXHIBITS
(+ denotes filed herewith)
EXHIBIT
NUMBER
+2.1 Agreement And Plan Of Reorganization dated as of July 18, 1995 between
Venturecap, Inc. and FiberCore Incorporated.
+2.2 Agreement of Merger dated as of July 18, 1995 between Venturecap, Inc.
and FiberCore Incorporated.
+2.3 Agreement and Plan of Reorganization dated as of September 18, 1995
between the FiberCore, Inc. Alt Merger Co., and Automated Light
Technologies, Inc. ("ALT").
+2.4 Agreement dated February 13, 1987 between Norscan Instruments Ltd. and
ALT.
+3.1 Certificate of Incorporation of FiberCore, Inc.
+3.2 By-Laws of FiberCore, Inc.
+10.1 Loan Agreement dated August 2, 1990 between ALT and Connecticut
Innovations, Inc. ("CII").
+10.2 Promissory Note issued by ALT to CII.
+10.3 Security Agreement dated as of August 1990 between ALT and CII.
+10.4 Subordination executed August 2, 1990 between CII, Mohd Aslami, and
Charles DeLuca.
+10.5 Collateral Assignment and Security Agreement dated August 2, 1990
between ALT and CII.
+10.6 Loan Agreement dated December 5, 1990 between ALT and the Connecticut
Development Authority ("CDA").
+10.7 Promissory Note dated December 5, 1990 issued by ALT to CDA.
+10.8 Guaranty dated December 5, 1990 issued to CDA by Mohd Aslami and
Charles DeLuca.
+10.9 Collateral Assignment and Security Agreement dated December 5, 1990
between ALT and CDA.
+10.10 Security Agreement dated as of December 5, 1990 between ALT and CDA.
+10.11 Subordination dated November 5, 1990 between CDA, Mohd Aslami and
Charles DeLuca.
+10.12 Form of Warrant issued by ALT to CDA
+10.13 Form of Warrant issued by Agreement between ALT to Connecticut
Innovations Incorporated.
+10.14 Form of Warrant issued by ALT.
+10.15 Form of FiberCore Incorporated Warrant.
+10.16 Assignment dated November 8, 1993 by Gregory Perry to FiberCore
Incorporated of U.S. Patent No. 4,596,589.
+10.17 Lease executed January 31, 1994 between Cobra Realty Trust, FiberCore
Incorporated, Mohd Aslami and Charles DeLuca.
+10.18 Agreement dated June 7, 1994 between SICO Quarzschmelze Jena, GmbH
("SICO")and FiberCore Inc., to lease building and equipment and to
manufacture optical fiber and optical fiber preform.
+10.19 Agreement dated August 19, 1995 between SICO and FiberCore Glasfaser
Jena GmbH, with supplemental agreement by Walter Nadrag.
66
<PAGE>
+10.20 Cooperation Agreement dated December 19, 1995 between SICO and
FiberCore, Inc.
+10.21 Lease dated August 19, 1995 between SICO and FiberCore Glasfaser Jena
GmbH.
+10.22 Agreement dated January 25, 1996 between FiberCore, Inc., FiberCore
Glasfaser, Jena and SICO.
+10.23 Share Purchase Agreement dated January 11, 1996 between FiberCore,
Inc. and Techman International, Corp. ("Techman").
+10.24 Escrow Agreement dated as of April 13, 1995 between FiberCore
Incorporated, Middle East Specialized Cables Co. ("MESC") and Shawmut
Bank, N.A.
+10.25 Escrow Amending Agreement dated September 15, 1995 between FiberCore,
Inc., Middle East Specialized Cables Co. ("MESC") and Shawmut Bank,
N.A.
+10.26 Share Purchase Agreement dated as of April 13, 1995 between FiberCore
Incorporated and MESC.
+10.27 Share Purchase Amending Agreement dated September 15, 1995 between the
Registrant and MESC.
+10.28 Convertible Debenture Purchase Agreement effective as of April 17,
1995 between AMP Incorporated and FiberCore Incorporated, with form of
Convertible Debenture Attached, as Exhibit A.
+10.29 Cooperation Agreement dated June 17, 1994 between John Royle & Sons
and FiberCore Incorporated, with Amendment No. 1 executed on the same
date.
+10.30 Warrant issued by FiberCore, Inc. to Techman to purchase up to 550,696
shares of Common Stock.
+10.31 Agreement dated July 1, 1994 between FiberCore Incorporated and
FiberCore Glasfaser Jena GmbH.
+10.32 Joint Venture Agreement dated January 31, 1996 between Middle East
Optic Fiber Company ("MEOFC"), Royle Mid East Ltd. and FiberCore Mid
East Ltd.
+10.33 Convertible Note Purchase Agreement and Convertible Promissory Note
between FiberCore, Inc. and Hedayat Amin-Arsala in the amount of
$200,000, each dated March 15, 1996.
+10.34 Joint Venture Agreement dated May 21, 1995 between the Company,
Techman and the other parties named therein.
+10.35 International Distributor Agreement between Techman and the Company,
dated November 1, 1995.
+10.36 Term Loan Agreement by and between FiberCore, Inc. as borrower and AMP
Incorporated a lender dated November 27, 1996.
+10.37 Term Promissory Note in the original principal amount of $3 million
dated November 27, 1996.
+10.38 Amendment No. 1 to Convertible Debenture Purchase Agreement between
FiberCore, Inc., as borrower and AMP Incorporated as Lender dated
November 27, 1996.
+10.39 Subsidiary Guarantee between FiberCore Glasfaser Jena GmbH and AMP
Incorporated dated November 27, 1996.
+10.40 Security Interest Agreement between FiberCore Glasfaser Jena GmbH and
AMP Incorporated dated November 27, 1996.
+10.41 Patent Security Agreement between FiberCore, Inc. and AMP Incorporated
dated November 27, 1996.
+10.42 Warrant issued to AMP Incorporated to purchase shares of Common Stock
of FiberCore, Inc. dated November 27, 1996.
+10.43 Amended and Restated Convertible Debenture dated April 17, 1995.
+10.44 Voting Agreement between FiberCore, Inc., AMP Incorporated, Mohd
Aslami, Charles DeLuca and Dr. M. Mahmud Awan dated November 27, 1996.
+10.46 Supply contract between AMP Incorporated and FiberCore, Inc. dated
July 29, 1996.
+10.47 Loan Agreement between FiberCore, Inc. and Berliner Bank AG for the
amount of DM 7,700,000 dated September 6, 1996.
+10.48 Grants Agreements between FiberCore Glasfaser Jena GmbH and the
Ministry of Economics and Infrastructure in the amount of DM 2,300,000
dated June 12, 1996 and December 30, 1995.
+10.49 Intercompany Loan Agreement between FiberCore, Inc. and FiberCore
Glasfaser Jena GmbH in connection with the loan from Berliner Bank AG
dated July 10, 1996.
+10.50 Form of Warrant issued by FiberCore, Inc. to Techman to exercise up to
1,000,000 shares of Common Stock pursuant to the International
Distributor Agreement dated November 1, 1995.
67
<PAGE>
+10.51 Note Purchase and Warrant Agreement between FiberCore, Inc. and
Bereshkai S. Aslami in the amount of $250,000 and granting Warrants to
purchase up to 115,220 shares of Common Stock.
+10.52 Note Purchase and Warrant Agreement between FiberCore, Inc. and
Elizabeth DeLuca in the amount of $250,000 and granting Warrants to
purchase up to 115,220 shares of Common Stock.
+10.53 Forbearance Agreement between ALT and CDA Authority and granting of
Warrants dated August 27, 1996.
+10.54 Forbearance Agreement between ALT and CII and granting of Warrants
dated July 31, 1996.
+10.55 Long Term Preform Supply Agreement between FiberCore, Inc. and Fiber
Optic Industries (Pvt.) Limited dated July 25, 1996.
+10.56 Long-term supply agreement between FiberCore, Inc. and Middle East
Optical Fiber Cable Co. (MEFC) dated November 1, 1996.
+14.0 Copy of patents purchased from SICO.
+16.0 Letter re: change in certifying accountant.
+22 List of subsidiaries of FiberCore, Inc.
+27 Financial Data Schedule.
(b) Reports on Form 8-K
On January 17, 1997, the Company filed a report on Form 8-K,
reporting the change in the principal accountants.
68
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIBERCORE, INC.
(Registrant)
By: /s/ Mohd A. Aslami March 26, 1997
--------------------------------------
Dr. Mohd A. Aslami
Chairman, Chief Executive Officer
And President
By: /s/ Michael J. Beecher March 26, 1997
-----------------------------------------
Michael J. Beecher
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Mohd A. Aslami Chairman of the Board, March 26, 1997
------------------ President
Dr. Mohd A. Aslami Chief Executive Officer,
Director
(Principal Executive Officer)
/s/ Charles DeLuca Executive Vice President March 26, 1997
- ------------------ Secretary and Director
Charles DeLuca
/s/ Steven Phillips Director March 26, 1997
- -------------------
Steven Phillips
/s/ Zaid Siddig Director March 26, 1997
- ---------------
Zaid Siddig
/s/ M. Mahmud Awan Director March 26, 1997
- ------------------
Dr. M. Mahmud Awan
</TABLE>
69
AGREEMENT AND PLAN OF REORGANIZATION
Between
Venturecap, Inc.
And
FiberCore Incorporated
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RECITALS .........................................................................................................1
ARTICLE 1. DEFINITIONS............................................................................................1
1.1 Certain Definitions.............................................................................1
1.2 Other Definitions...............................................................................2
ARTICLE 2. THE MERGER.............................................................................................2
2.1 Effective Time of the Merger....................................................................2
2.2 Effects of the Merger...........................................................................2
2.3 Effect on Capital Stock.........................................................................3
2.4 Exchange of Certificates........................................................................4
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF FIBERCORE............................................................5
3.1 Organization and Standing.......................................................................5
3.2 Capital Structure...............................................................................5
3.3 Authority.......................................................................................6
3.4 Brokers or Finders..............................................................................6
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF VENTURECAP...........................................................6
4.1 Organization....................................................................................6
4.2 Capital Structure...............................................................................6
4.3 Authority.......................................................................................7
4.4 No Violation or Conflict........................................................................7
4.5 Consent of Governmental Authorities.............................................................8
4.6 Information and Disclosure Statement............................................................8
4.7 Information Supplied............................................................................8
4.8 Shares of Common Stock..........................................................................8
4.9 Litigation......................................................................................9
4.10 Environmental Liability.........................................................................9
4.11 Subsidiaries....................................................................................9
4.12 Property........................................................................................9
4.13 Prior Activities................................................................................9
4.14 Tax Matters.....................................................................................9
4.15 Financial Statements...........................................................................10
4.16 Employee Matters...............................................................................11
4.17 Employee Benefit Plans.........................................................................11
4.18 Bank Accounts..................................................................................11
4.19 Brokers or Finders.............................................................................11
4.20 Public Filings.................................................................................11
i
<PAGE>
4.21 Compliance With Laws...........................................................................11
ARTICLE 5. COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................12
5.1 Dividends; Changes in Stock....................................................................12
5.2 Issuance of Securities.........................................................................12
5.3 Governing Documents............................................................................12
5.4 Accounting Practices...........................................................................12
5.5 Other Agreements...............................................................................12
5.6 Liabilities....................................................................................13
5.7 Dividends; Changes in Stock....................................................................13
5.8 Agreements.....................................................................................13
5.9 Issuance of Securities.........................................................................13
5.10 No Dispositions................................................................................13
5.11 Governing Documents............................................................................13
5.12 No Acquisitions................................................................................13
5.13 Accounting Practices...........................................................................14
5.14 Other Agreements...............................................................................14
5.15 Recapitalization...............................................................................14
ARTICLE 6. OMITTED ..............................................................................................14
ARTICLE 7. ADDITIONAL AGREEMENTS.................................................................................14
7.1 Legal Conditions to the Merger.................................................................14
7.2 Shareholders' Approval.........................................................................14
7.3 Delivery of Stock Certificates.................................................................14
7.4 Tax Treatment..................................................................................15
7.5 Board of Directors.............................................................................15
ARTICLE 8. CONDITIONS PRECEDENT..................................................................................15
8.1 Conditions to Each Party's Obligations to Effect the
Merger.........................................................................................15
8.2 Conditions to Obligations of Venturecap........................................................16
8.3 Conditions to Obligations of FiberCore.........................................................17
ARTICLE 9. OMITTED ..............................................................................................18
ARTICLE 10. CLOSING..............................................................................................18
10.1 Closing Date...................................................................................18
10.2 Filing Date....................................................................................18
ARTICLE 11. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
.......................................................................................................19
ii
<PAGE>
ARTICLE 12. PAYMENT OF EXPENSES..................................................................................19
12.1 Payment of Expenses...........................................................................19
ARTICLE 13. TERMINATION, AMENDMENT AND WAIVER....................................................................20
13.1 Termination....................................................................................21
13.2 Effect of Termination..........................................................................21
13.3 Amendment......................................................................................21
13.4 Extension; Waiver..............................................................................21
ARTICLE 14. LIMITATION ON LIABILITY..............................................................................22
14.1 Liabilities of FiberCore.......................................................................22
ARTICLE 15. GENERAL..............................................................................................22
15.1 Notices........................................................................................22
15.2 Headings.......................................................................................23
15.3 Counterparts...................................................................................23
15.4 Binding Nature.................................................................................23
15.5 Other Agreements...............................................................................23
15.6 Good Faith.....................................................................................23
15.7 Applicable Law.................................................................................23
15.8 No Third Party Beneficiaries...................................................................23
15.9 Severability...................................................................................23
iii
</TABLE>
<PAGE>
SCHEDULES
Schedule 3.2 Outstanding Equity Securities of FiberCore
Schedule 4.11 Subsidiaries of Venturecap
Schedule 4.13 Liabilities of Venturecap
Schedule 4.14 Taxes
Schedule 4.15(a) Annual Financial Statements
Schedule 4.15(b) April Financial Statements
Schedule 4.16 Venturecap Employees
Schedule 4.18 Bank Accounts
Schedule 4.20 Venturecap Documents Filed with Regulators
iv
<PAGE>
EXHIBITS
Exhibit A Merger Agreement
Exhibit B Certificate of Incorporation of Surviving Corporation
Exhibit C Bylaws of Surviving Corporation
Exhibit D Directors of Surviving Corporation
Exhibit E Officers of Surviving Corporation
Exhibit F Opinion of Venturecap's Counsel
Exhibit G Form of Principals' Letter
Exhibit H Certificate of Duane Midgley
v
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and entered into as of the 18th day of July,
1995, by and among Venturecap, Inc., a Nevada corporation ("Venturecap"), and
FiberCore Incorporated a Nevada corporation ("FiberCore").
RECITALS
A. The respective Boards of Directors of Venturecap and FiberCore have
approved the merger of FiberCore with and into Venturecap (the "Merger"), upon
the terms and subject to the conditions set forth herein and in the Merger
Agreement annexed as Exhibit A (the "Merger Agreement"), as a result of which
FiberCore will be merged into Venturecap and the shareholders of FiberCore
(other than shareholders who perfect appraisal rights) will be entitled to
receive the consideration provided in this Agreement.
B. The parties hereto desire to set forth certain representations,
warranties and covenants made by Venturecap to FiberCore, and by FiberCore to
Venturecap, and the conditions precedent to the consummation of the Merger.
C. The Boards of Directors of Venturecap and FiberCore, respectively,
have approved and adopted this Agreement and the Merger as a plan of
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, Venturecap and FiberCore
hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Certain Definitions. The terms defined in this Section 1.1 shall, for all
purposes of this Agreement, have the meanings herein specified, unless the
context expressly or by necessary implication otherwise requires:
<PAGE>
(a) "Dissenting Shares" shall mean shares of FiberCore Capital Stock
which shall be owned by shareholders who shall duly perfect and pursue their
appraisal rights with respect to such shares in accordance with the Nevada
Corporation Law.
(b) "Dissenting Shareholders" shall mean those shareholders of
FiberCore who are holders of and are entitled to Dissenting Shares.
(c) "SEC" shall mean the Securities and Exchange Commission.
(d) "FiberCore Capital Stock" means the common stock of FiberCore, par
value $0.01 per share.
(e) "FiberCore Shareholders" shall mean all holders of FiberCore
Capital Stock immediately prior to the Effective Time of the Merger.
(f) "Subsidiary" means a corporation whose voting securities are owned
directly or indirectly by a "parent" corporation in such amounts as are
sufficient to elect at least a majority of the Board of Directors of the
Subsidiary.
(g) "Venturecap Common" means the common stock of Venturecap, par value
$.001 per share.
1.2 Other Definitions. In addition to the terms defined in Section 1.1, certain
other terms are defined elsewhere in this Agreement; whenever such terms are
used in this Agreement they shall have their respective defined meanings, unless
the context expressly or by necessary implication otherwise requires.
ARTICLE 2.
THE MERGER
2.1 Effective Time of the Merger. Subject to the provisions of this Agreement,
the Articles of Merger, together with all other required certificates, shall be
filed in accordance with the Nevada Revised Statutes as soon as practicable on
or after the Closing Date (as defined in Section 10.1 of this Agreement). The
Merger shall become effective upon the filing of such certificates with the
Nevada Secretary of State (the "Effective Time of the Merger").
2
<PAGE>
2.2 Effects of the Merger. At the Effective Time of the Merger:
(a) the separate existence of FiberCore shall cease and FiberCore shall
be merged with and into Venturecap as the surviving corporation (the "Surviving
Corporation").
(b) the Certificate of Incorporation and By-laws of the Surviving
Corporation shall be in the form attached to this Agreement as Exhibit B and
Exhibit C, respectively; and
(c) the persons listed on Exhibit D shall be the directors of the
Surviving Corporation, and shall continue to act as such, until their respective
successors are duly elected and qualified, and the persons listed on Exhibit E
shall hold the offices in the Surviving Corporation listed next to their names
until their respective successors are duly elected and qualified.
2.3 Effect on Capital Stock. As of the Effective Time of the Merger, by virtue
of the Merger and without any action on the part of the holder of any shares of
the issued and outstanding shares of FiberCore Capital Stock:
(a) Cancellation of FiberCore Stock Owned by Venturecap or FiberCore.
All shares of FiberCore Capital Stock, if any, that are owned by FiberCore or
directly or indirectly by Venturecap, or any Subsidiary of Venturecap, shall be
canceled, and no stock of Venturecap or other consideration shall be delivered
in exchange therefor.
(b) Conversion of FiberCore Capital Stock and Options. Other than
shares to be canceled pursuant to Section 2.3(a), Dissenting Shares and
fractional shares as provided in Section 2.3(e), each share of FiberCore Capital
Stock issued and outstanding immediately prior to the Effective Time of the
Merger shall be converted, without any action on the part of the holders
thereof, into 3.6713070 shares (hereinafter, the "Exchange Ratio" or the "Per
Share Merger Consideration") of issued and outstanding Venturecap Common. An
aggregate of 24,250,000 shares of Venturecap Common will be issued in the Merger
if all 6,605,277 shares of FiberCore Capital Stock outstanding prior to the
Effective Time of the Merger are converted into shares of Venturecap Common.
With respect to unexpired options ("Options") or warrants ("Warrants") or
convertible securities ("Convertible Securities"), whether or not
3
<PAGE>
exercisable or convertible, as the case may be, at the Effective Time of the
Merger, outstanding on the Effective Time of the Merger which have been issued
by FiberCore, each such Option or Warrant or Convertible Security shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive, for each share of FiberCore Capital
Stock subject thereto, the Per Share Merger Consideration upon payment of the
exercise price specified in such Option or Warrant or conversion price specified
in such Convertible Security subject to the expiration date and other terms of
such Options or Warrants or Convertible Securities.
(c) Adjustments of Exchange Ratio. If, between the date of this
Agreement and the Effective Time of the Merger, the outstanding shares of
Venturecap Common or FiberCore Capital Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, not contemplated by this Agreement, the Exchange Ratio shall be
correspondingly adjusted.
(d) Dissenters' Rights of FiberCore Shareholders. Any Dissenting Shares
shall not be converted into Venturecap Common but shall be converted into the
right to receive such consideration as may be determined to be due with respect
to such Dissenting Shares pursuant to the Nevada Revised Statutes. In the event
of the legal obligation, after the Effective Time of the Merger, to deliver
shares of Venturecap Common to any Dissenting Shareholder who shall have failed
to make an effective demand for appraisal or shall have lost his status as a
Dissenting Shareholder, Venturecap shall issue and deliver, upon surrender by
such Dissenting Shareholder of his certificate or certificates representing
shares of FiberCore Capital Stock, the shares of Venturecap Common to which such
Dissenting Shareholder is then entitled under this Section 2.3, and the Nevada
Revised Statutes.
(e) Fractional Shares. No fractional shares of Venturecap Common shall
be issued, but in lieu thereof each holder of shares of FiberCore Capital Stock
who would otherwise be entitled to receive a fraction of a share of Venturecap
Common shall receive a whole share of Venturecap Common.
2.4 Exchange of Certificates.
4
<PAGE>
(a) Exchange Procedures. On and after the Effective Time of the Merger
each holder of a certificates representing outstanding shares of FiberCore
Capital Stock (the "Certificates"), shall be entitled to receive upon the
surrender of such Certificates to an office of the Surviving Corporation
designated for the purpose the number of shares of Venturecap Common to which
the holder of FiberCore Capital Stock is entitled pursuant to Section 2.3 of
this Agreement and is represented by the Certificates so surrendered. The
Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of FiberCore Capital Stock which is not registered in the
transfer records of FiberCore, the appropriate number of shares of Venturecap
Common may be delivered to a transferee if the Certificate representing the
right to receive such Venturecap Common is presented to Venturecap and
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.4, each Certificate shall be
deemed at any time after the Effective Time of the Merger to represent the right
to receive upon such surrender the number of shares of Venturecap Common as
provided by Section 2.3 and the provisions of the Nevada Corporation Law.
(b) No Further Ownership Rights in FiberCore Capital Stock. All
Venturecap Common delivered upon the surrender for exchange of shares of
FiberCore Capital Stock in accordance with the terms hereof shall be deemed to
have been delivered in full satisfaction of all rights pertaining to such shares
of FiberCore Capital Stock. There shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
FiberCore Capital Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article 2.
5
<PAGE>
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF FIBERCORE
FiberCore represents and warrants to Venturecap as of the date hereof
and as of the Closing as follows:
3.1 Organization and Standing. FiberCore is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation, and has the full power and authority (corporate and otherwise) to
carry on its business in the places and as it is now being conducted and to own
and lease the properties and assets which it now owns or leases.
3.2 Capital Structure. The authorized capital stock of FiberCore consists of
20,000,000 shares of FiberCore Capital Stock, of which 6,605,277 are issued and
outstanding. All of the outstanding shares of FiberCore Capital Stock were
issued in compliance with applicable federal and state securities laws, and no
further registration, qualification or other compliance under such securities
laws is required. All of the outstanding shares of FiberCore Capital Stock are
validly issued, fully paid and nonassessable and not subject to preemptive
rights created by statute, FiberCore's Articles of Incorporation or Bylaws or
any agreement to which FiberCore is a party or is bound. Except for the
foregoing, and as set forth on Schedule 3.2 there are no equity securities of
any class of FiberCore or any security exchangeable or convertible into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth on Schedule 3.2, there are no options,
warrants, calls, rights, commitments or agreements of any character to which
FiberCore is a party or by which it is bound obligating FiberCore to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of FiberCore or obligating FiberCore to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
3.3 Authority. FiberCore has all requisite corporate power and authority to
enter into this Agreement and, subject to approval of this Agreement by the
shareholders of FiberCore, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
6
<PAGE>
Directors of FiberCore, subject to such approval by the shareholders of
FiberCore. This Agreement has been duly executed and delivered by FiberCore and,
subject to such approval by the shareholders of FiberCore, constitutes a valid
and binding obligation of FiberCore, enforceable against FiberCore in accordance
with its terms, except to the extent that their enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
3.4 Brokers or Finders. Except with respect to the Armand Group, FiberCore has
not incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF VENTURECAP
Venturecap represents and warrants to FiberCore as of the date hereof
and as of the Closing as follows:
4.1 Organization. Venturecap is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation. Venturecap
has the corporate authority to (A) own or lease and operate its properties and
(B) conduct its business as presently conducted.
4.2 Capital Structure. The authorized capital stock of Venturecap presently
consists of 20,000,000 shares of Venturecap Common, of which 955,451 shares are
issued and outstanding. As set forth in Section 5.15 prior to the Effective Time
of the Merger the authorized capital stock of Venturecap will be increased to
100,000,000 shares of Venturecap Common and 10,000,000 shares of preferred
stock, par value $.001 per share; and Venturecap will effect a reverse stock
split so that 750,000 shares of Venturecap Common will be outstanding. All of
the outstanding shares of Venturecap Common Stock were issued in compliance with
applicable federal and state securities laws, no further registration,
qualification or other compliance under such securities laws is required. No
shareholder or group of shareholders of Venturecap could be characterized as an
underwriter under the Securities Act
<PAGE>
of 1933, as amended, and all shareholders of Venturecap received their stock in
private offerings. All of the outstanding shares of Venturecap Common are
validly issued, fully paid and nonassessable and not subject to preemptive
rights created by statute, Venturecap's Articles of Incorporation or Bylaws or
any agreement to which Venturecap is a party or is bound. Except for the
foregoing and except as set forth in Section 5.15, there are no equity
securities of any class of Venturecap or any security exchangeable or
convertible into or exercisable for such equity securities, issued, reserved for
issuance or outstanding. There are no options, warrants, calls, rights,
commitments or agreements of any character to which Venturecap or any Subsidiary
of Venturecap is a party or by which any of them is bound obligating Venturecap,
or such Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of Venturecap, or such Subsidiary or
obligating Venturecap or such Subsidiary to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are no voting
trusts or other agreements or understandings with respect to the shares of
capital stock of Venturecap or any Subsidiary of Venturecap.
4.3 Authority. Venturecap has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Venturecap. This Agreement has been duly executed and delivered by
Venturecap and constitutes a valid and binding obligation of Venturecap,
enforceable against Venturecap in accordance with its terms, except to the
extent that its enforcement is limited by bankruptcy, insolvency, reorganization
or other laws relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity.
4.4 No Violation or Conflict. The execution, delivery and performance by
Venturecap of this Agreement and the Merger Agreement and the consummation by
Venturecap of the transactions contemplated hereby and thereby: (A) do not and
will not violate or conflict with any provision of law or regulation, or any
writ, order, judgment or decree of any court or governmental or regulatory
authority, or any provision of Venturecap's Articles of Incorporation or Bylaws;
and (B) do not and will not, with or without the passage of time or the giving
of notice, result in the
<PAGE>
breach of, or constitute a default, cause the acceleration of performance, or
require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Venturecap pursuant to any material
instrument or agreement to which Venturecap is a party or by which Venturecap or
its properties may be bound or affected.
4.5 Consent of Governmental Authorities. Other than in connection with the
Nevada Revised Statutes, no consent, approval or authorization of, or
registration, qualification or filing with any federal, state, local or foreign
governmental or regulatory authority is required to be made by Venturecap or any
of its Subsidiaries in connection with the execution, delivery or performance by
Venturecap of this Agreement and the Merger Agreement or the consummation by
Venturecap of the transactions contemplated hereby or thereby.
4.6 Information and Disclosure Statement. As of the respective dates they were
filed, the Information and Disclosure Statements filed by Venturecap, including
all documents attached thereto, complied in all material respects with the rules
and regulations of the SEC and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No material changes have occurred in
the financial condition of Venturecap since the Information and Disclosure
Statement was filed.
4.7 Information Supplied. As of the date of this Agreement and at all times
subsequent thereto until the Closing Date none of the information provided or to
be provided by Venturecap to FiberCore in writing in connection with the
transactions contemplated by this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.8 Shares of Common Stock. The shares of Venturecap Common will, when issued
and delivered to the shareholders of FiberCore in accordance with this
Agreement, be duly authorized, validly issued,
<PAGE>
fully paid and nonassessable, and subject to no encumbrances of any kind.
4.9 Litigation. Venturecap is not and never has been a party to any litigation
and no litigation has been ever been threatened against Venturecap.
4.10 Environmental Liability. Venturecap (i) does not come within the scope of
42 U.S.C. 9607(a)(1) through (a)(4); (ii) could not be liable for or incur
response costs or similar costs under 42 U.S.C. 9607 (including costs and
damages listed under 42 U.S.C. 9607(A)- (D)), or any other similar statute, or
regulation when and if such costs are incurred by the United States Government,
or another person or entity; or (iii) could not incur any liability, or costs
associated with reclaiming, decontaminating or restoring any property including
land, real property or personal property relating to any environmental statute
based on past activity, ownership, status, affiliations or otherwise.
4.11 Subsidiaries. Venturecap does not now have nor has it ever had Subsidiaries
or equity investments of any kind.
4.12 Property. Neither Venturecap nor any of its Subsidiaries has ever owned or
leased any real property. There are no liens or encumbrances of any kind on the
assets or properties of Venturecap or any of its Subsidiaries.
4.13 Prior Activities. Except as set forth in Schedule 4.13, neither Venturecap
nor any of its Subsidiaries has any liabilities whether contingent, liquidated,
unliquidated, matured, unmatured, or otherwise, nor is Venturecap a party to any
agreements, or contracts, whether written or oral. Except as set forth on
Schedule 4.13 neither Venturecap nor any of its Subsidiaries has engaged in any
business or activities of any type or kind whatsoever and neither is subject to
or bound by any obligation or undertaking which are not contemplated by this
Agreement or incurred in connection with its incorporation.
4.14 Tax Matters. All tax returns and other similar documents (collectively,
"Returns") required to be filed with respect to Venturecap or any of its
Subsidiaries have been timely filed with the appropriate governmental
authorities in all jurisdictions in which such returns and documents are
required to be filed, all of
<PAGE>
the foregoing as filed are true, correct and complete in all material respects
and reflect accurately all liabilities for taxes of Venturecap and its
Subsidiaries for the periods to which such returns and documents relate, and all
amounts shown as owing thereon have been paid. All Returns are attached hereto
as part of Schedule 4.14. All material, profits, franchise, sales, use, value
added, occupancy, property, excise, payroll, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by Venturecap
and its Subsidiaries or relating to or chargeable against any of their assets,
revenues or income through December 31, 1994 were fully collected and paid by
such date or provided for by adequate reserves in Venturecap's December 31, 1994
financial statements. No claims or deficiencies have been asserted against
Venturecap or any Subsidiary with respect to any taxes or other governmental
charges or levies which have not been paid or otherwise satisfied or for which
accruals or reserves have not been made in Venturecap' December 31, 1994
financial statements, there exists no reasonable basis for the making of any
such claims. Except as disclosed on Schedule 4.14, neither Venturecap nor any of
its Subsidiaries have waived any restrictions on assessment or collection of
taxes or consented to the extension of any statute of limitations relating to
taxation.
4.15 Financial Statements. (a) The audited balance sheets of Venturecap and its
Subsidiaries as at December 31, 1987, December 31, 1988, December 31, 1989,
December 31, 1990, December 31, 1991, December 31, 1992, December 31, 1993 and
December 31, 1994 and the related audited statements of income, stockholders'
equity and cash flows for the respective years then ended, including the notes
thereto, and the reports thereon of Duane Midgley, independent certified public
accountants (the "Company Financial Statements"), are attached hereto as
Schedule 4.15(a). The Company Financial Statements present fairly the
consolidated financial position and the results of operations of Venturecap and
its Subsidiaries as of the dates and for the periods indicated on the Company
Financial Statements, in each case in conformity with generally accepted
accounting principles ("GAAP"), consistently applied during such periods.
Venturecap and its Subsidiaries do not have any material liabilities or
obligations of any nature (whether accrued, absolute, contingent, unasserted or
otherwise) except (1) as disclosed, reflected or reserved against in the balance
sheet dated December 31, 1994 included in the Company Financial Statements and
<PAGE>
the notes thereto and (2) for items explicitly disclosed in the Interim
Financial Statements (as defined below).
(b) Attached hereto as Schedule 4.15(b) is the balance sheet
(the "April Balance Sheet") of Venturecap as of April 30, 1995 (the "Balance
Sheet Date") and the related statements of income, stockholders' equity and cash
flows for the four-month period then ended (the "Interim Financial Statements").
The Interim Financial Statements present fairly, in all material respects, the
financial position and results of operations of Venturecap and its Subsidiaries
as of the dates and for the periods indicated on the Interim Financial
Statements, in accordance with GAAP, consistently applied with prior periods,
except that the Interim Financial Statements do not contain footnotes and will
be subject to normal year-end adjustments. At the Effective Time of the Merger,
Venturecap will have no liabilities of any kind.
4.16 Employee Matters. Venturecap and its Subsidiaries have no employees, and
except as set forth in Schedule 4.16 have never paid or owed compensation to any
officers, directors or employees, consultants or contractors person for services
performed. There are no employment contracts in effect with respect to
Venturecap.
4.17 Employee Benefit Plans. (A) There are not now nor have there ever been any
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance or termination pay, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, other employee benefit plan,
program, agreement or arrangement (other than arrangements involving the payment
of wages), sponsored, maintained or contributed to or required to be contributed
to by Venturecap or any of its Subsidiaries or by any trade or business, whether
or not incorporated (an "ERISA Affiliate") that together with Venturecap or any
of its Subsidiaries would be deemed a "single employer" within the meaning of
section 4001(a)(14) of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder ("ERISA"), for the
benefit of any current or former employee, director or officer of Venturecap or
any of its Subsidiaries or any ERISA Affiliate, whether formal or informal and
whether legally binding or not (the "Plans") with respect to which Venturecap or
any of its Subsidiaries or any ERISA Affiliate has or may in the future have
<PAGE>
any liability or obligation to contribute or make payments of any kind.
(B) No liability under Title IV of ERISA has been incurred by
Venturecap or any of its Subsidiaries or any ERISA Affiliate since the effective
date of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to Venturecap or any of its Subsidiaries or an ERISA
Affiliate of incurring a liability under such Title,
4.18 Bank Accounts. Schedule 4.18 includes a list of all bank accounts and safe
deposit boxes in the name of or controlled by Venturecap within the last 24
months or any of their Subsidiaries and the persons having access thereto.
4.19 Brokers or Finders. Venturecap has not and shall not incur, directly or
indirectly, any liability for any brokerage or finders' fees or agents
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
4.20 Public Filings. Attached hereto as Schedule 4.20 are copies of all
documents filed by Venturecap with state or federal securities regulators,
agencies or departments and all Information Disclosure Statements filed by
Venturecap.
4.21 Compliance With Laws. Neither Venturecap nor its officers or directors have
committed any acts, made any statements, failed to timely file any documents,
failed to timely comply with any NASD rules, failed to timely publicly disclose
any information, or failed to do any other acts, which acts or failures to act
could give rise to any liability, or cause of action whatsoever (whether by a
public entity or a private person) under state or federal securities or fraud
statutes or regulations, or under any other statutes or regulations.
ARTICLE 5.
COVENANTS RELATING TO CONDUCT OF BUSINESS
During the period from the date of this, FiberCore agrees (except as
expressly contemplated by this Agreement or to the extent that Venturecap shall
otherwise consent in writing) that:
<PAGE>
5.1 Dividends; Changes in Stock. FiberCore shall not: (i) declare, pay or
promise to pay any dividends on or make other distributions in respect of any of
its capital stock, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of capital stock of FiberCore or (iii)
repurchase or otherwise acquire any shares of its capital stock.
5.2 Issuance of Securities. FiberCore shall not issue, deliver or sell or
authorize, promise or propose the issuance, delivery or sale of, or purchase or
promise or propose the purchase of, any shares of its capital stock or any class
or securities exercisable or convertible into or exchangeable for, or rights,
warrants or options to acquire, any such shares or other convertible securities,
other than at fair value.
5.3 Governing Documents. FiberCore shall not amend its Articles of Incorporation
or Bylaws, except as contemplated in this Agreement or the Merger Agreement.
5.4 Accounting Practices. FiberCore shall not alter the manner of keeping its
books, accounts or records, or change in any manner the accounting practices
therein reflected.
5.5 Other Agreements. FiberCore shall not agree, in writing or otherwise, to do
any of the foregoing.
During the period from the date of this Agreement and continuing until
the Effective Time of the Merger, Venturecap agrees (except as expressly
contemplated by this Agreement or to the extent that FiberCore shall otherwise
consent in writing) that:
5.6 Liabilities. Venturecap will not incur liabilities of any kind whatsoever,
including, but not limited to, matured, unmatured, liquidated, unliquidated,
contingent liabilities, other than liabilities not to exceed $1,000 arising from
consummation of this Agreement. Venturecap will not conduct any business, other
than business necessary to consummate the transactions contemplated by this
Agreement.
5.7 Dividends; Changes in Stock. Venturecap shall not: (i) declare, pay or
promise to pay any dividends on or make other
<PAGE>
distributions in respect of any of its capital stock, (ii) split, reverse split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of Venturecap or (iii) repurchase or otherwise
acquire any shares of its capital stock, except as specified in Section 5.15.
5.8 Agreements. Venturecap shall not enter into any agreements or contracts,
whether oral or written.
5.9 Issuance of Securities. Venturecap shall not issue, deliver or sell or
authorize, promise or propose the issuance, delivery or sale of, or purchase or
promise or propose the purchase of, any shares of its capital stock or any class
or securities exercisable or convertible into or exchangeable for, or rights,
warrants or options to acquire, any such shares or other convertible securities.
5.10 No Dispositions. Venturecap shall not sell, lease, transfer or otherwise
dispose of any of its assets, including but not limited to, the granting of
liens or security interests.
5.11 Governing Documents. Venturecap shall not amend its Articles of
Incorporation or Bylaws, except as contemplated in this Agreement or the Merger
Agreement.
5.12 No Acquisitions. Venturecap shall not acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business of any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets except with the prior written consent of
FiberCore.
5.13 Accounting Practices. Venturecap shall not alter the manner of keeping its
books, accounts or records, or change in any manner the accounting practices
therein reflected.
5.14 Other Agreements. Venturecap shall not agree, in writing or otherwise, to
do any of the foregoing.
<PAGE>
5.15 Recapitalization. Venturecap shall effect a 1.27393466 to 1 reverse stock
split so that immediately prior to the Effective Time of the Merger 750,000
shares will be outstanding and increase its authorized capital to 100,000,000
shares of Venturecap Common, and authorize the issuance of 10,000,000 shares of
preferred stock, par value $.01 per share, the terms of which shall be
determined by the Board of Directors of Venturecap after the Effective Time of
the Merger.
ARTICLE 6.
OMITTED
ARTICLE 7.
ADDITIONAL AGREEMENTS
7.1 Legal Conditions to the Merger. Each party will take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
such party with respect to the Merger and will promptly cooperate with and
furnish information to the other party in connection with any such requirements
imposed upon such other party in connection with the Merger. Each party will
take all reasonable actions to obtain (and to cooperate with the other party)
any consent, authorization, order or approval of, or any exemption by, any
governmental entity, or other third party, required to be obtained or made by
such party or its Subsidiaries in connection with the Merger or the taking of
any action contemplated thereby or by this Agreement.
7.2 Shareholders' Approval. Venturecap and FiberCore each agree to submit this
Agreement and any related matters to their respective shareholders for approval,
as provided by law and their respective Articles of Incorporation and Bylaws,
immediately following the execution of this Agreement. The Board of Directors of
each of Venturecap and FiberCore will unanimously recommend to their respective
shareholders that such shareholders approve the transactions contemplated by
this Agreement.
7.3 Delivery of Stock Certificates. Venturecap will issue and deliver as and
when required by the provisions of this Agreement, certificates representing the
shares of Venturecap Common into which the shares of FiberCore Capital Stock
outstanding immediately
<PAGE>
prior to the Effective Time of the Merger shall have been converted as provided
herein and deliver substitute option and warrants into which the options and
warrants outstanding immediately prior to the Effective Time of the Merger shall
have been converted as provided herein.
7.4 Tax Treatment. FiberCore and Venturecap shall use best efforts to qualify
the Merger, and shall use best efforts not to take any action to cause the
Merger not to qualify, as a reorganization under Section 368(a) of the Code.
From and after the Effective Time of the Merger, (i) Venturecap shall continue
FiberCore's historic business or use a significant portion of FiberCore's
historic business assets in a business within the meaning of Treasury Regulation
Section 1.368-1(d), and (ii) Venturecap shall treat the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code and shall file
such information with its income tax returns as may be required by Treasury
Regulation Section 1.368-3 or other applicable law.
7.5 Board of Directors. Venturecap will cause the persons listed in Exhibit D to
be the only members of its Board of Directors immediately following the Closing.
ARTICLE 8.
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligations to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the required affirmative vote or consent of (i) the holders of the
outstanding shares of FiberCore Capital Stock and (ii) the holders of the
outstanding shares of Venturecap Common.
(b) Government Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expira tion of waiting periods
imposed by, any governmental entity necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to, such
requirements
<PAGE>
under applicable state securities laws, shall have been filed, occurred or been
obtained, other than filings with and approvals by foreign governments relating
to the Merger if failure to make such filings or obtain such approvals would not
be materially adverse to Venturecap or its Subsidiaries taken as a whole, or
FiberCore.
(c) Third-Party Approvals. Any and all consents or approvals required
from third parties shall have been obtained.
(d) Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any federal or state court and remain in
effect, and no litigation seeking the issuance of such an order or injunction,
or seeking the imposition against FiberCore or Venturecap of substantial damages
if the Merger is consummated, shall be pending which, in the good faith judgment
of FiberCore's or Venturecap's Board of Directors has a reasonable probability
of resulting in such order, injunction or damages. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(e) Statutes. No statute, rule or regulation shall have been enacted by
the government of the United States or any state or agency thereof which would
make the consummation of the Merger illegal.
8.2 Conditions to Obligations of Venturecap. The obligations of Venturecap to
effect the Merger are subject to the satisfaction on or prior to the Closing
Date of the following conditions, unless waived by Venturecap:
(a) Representations and Warranties. The representations and warranties
of FiberCore set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date,
and Venturecap shall have received a certificate or certificates to such effect
signed by the Chief Executive Officer of FiberCore.
(b) Performance of Obligations of FiberCore. FiberCore shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date,
<PAGE>
and Venturecap shall have received a certificate signed by the Chief Executive
Officer of FiberCore to such effect.
(c) Corporate Action. Venturecap shall have received from FiberCore
certified copies of resolutions of FiberCore's shareholders and Board of
Directors approving and adopting this Agreement and the transactions
contemplated hereby, and Venturecap shall have received a certificate signed on
behalf of FiberCore by the corporate secretary of FiberCore to such effect.
8.3 Conditions to Obligations of FiberCore. The obligations of FiberCore to
effect the Merger are subject to the satisfaction on or prior to the Closing
Date of the following conditions unless waived by FiberCore:
(a) Representations and Warranties. The representations and warranties
and covenants of Venturecap set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date, and FiberCore shall have received a certificate signed by the
Chief Executive Officer of Venturecap to such effect.
(b) Performance of Obligations of Venturecap. Venturecap shall have
performed all obligations required to be performed by it under this Agreement
prior to the Closing Date, and FiberCore shall have received a certificate
signed by the Chief Executive Officer of Venturecap to such effect.
(c) Opinion of Venturecap's Counsel. FiberCore shall have received an
opinion dated the Closing Date of Leonard Nielsen, counsel to Venturecap,
substantially in the form set forth in Exhibit F attached hereto.
(d) No Adverse Tax Opinion. FiberCore shall not have obtained an
opinion of counsel, who shall be reasonably satisfactory to Venturecap, that the
exchange of shares contemplated by the Merger will not be tax-free to the
exchanging holders of FiberCore Capital Stock.
(e) Corporate Action. FiberCore shall have received from Venturecap
certified copies of resolutions of such entities' shareholders and of such
entities Boards of Directors approving and adopting this Agreement and the
transactions contemplated hereby,
<PAGE>
and FiberCore shall have received a certificate signed on behalf of each such
entity by the corporate secretary of each such entity to such effect. FiberCore
shall have also received a Report of Inspector of Elections setting forth the
vote of Venturecap shareholders relating to the shareholder meeting at which the
Merger is approved (the "Shareholder Meeting") and an affidavit by the person
mailing the notices of the shareholder meeting of the Shareholder Meeting,
setting forth the list of shareholders to whom notices of the Shareholder's
Meeting were mailed, the date of the mailing and attaching the complete contents
of the mailing.
(f) Venturecap 1995 Financial Statements. Venturecap shall have
furnished to FiberCore the balance sheets of Venturecap as of June 30, 1995 and
related statements of earnings, shareholders' equity and statements of cash
flows for the year then ended, certified by Duane Midgley, independent certified
public accountants which shall not reflect a material adverse change from
Venturecap's projected June 30, 1995 financial statements.
(g) Board of Directors. Venturecap shall have taken all action
necessary to cause the persons listed on Exhibit D hereto to constitute its
Board of Directors immediately after the closing.
(h) Principals' Letter. James R. Glavas shall have delivered the
Principals' Letter attached hereto as Exhibit G.
(i) Accountants Letter. Duane Midgley shall have delivered the
certificate attached as Exhibit H to FiberCore.
(j) Recapitalization. Venturecap shall have effected the
recapitalization set forth in Section 5.15 hereof.
(k) Appraisal Rights. Holders of no more than 5% of the outstanding
shares of Venturecap shall have commenced pursuit of their rights for demand for
payment or appraisal under the Nevada Revised Statutes.
(l) By-Laws. Venturecap shall have adopted the current By- Laws of
FiberCore.
ARTICLE 9.
OMITTED
<PAGE>
ARTICLE 10.
CLOSING
10.1 Closing Date. The Closing under this Agreement (the "Closing") shall be
held not more than two (2) business days following the later of (a) the approval
of the Merger by the shareholders of FiberCore; (b) approval of the Merger by
the shareholders of Venturecap and (c) satisfaction of all other conditions
precedent to the Merger specified in this Agreement, unless duly waived by the
party entitled to satisfaction thereof. The parties hereto anticipate that the
Closing will occur on or before July 10, 1995. In any event, if the Closing has
not occurred on or before July 28, 1995, this Agreement may be terminated as
provided in Article 13. Such date on which the Closing is to be held is herein
referred to as the "Closing Date." The Closing shall be held at the offices of
Coleman & Rhine, 1120 Avenue of the Americas, New York, New York, at 10:00 a.m.
on such date, or at such other time and place as the parties may agree upon in
writing.
10.2 Filing Date. Subject to the provisions of this Agreement, on the Closing
Date a fully-executed and acknowledged copy of this Agreement, if required,
along with required related certificates of FiberCore and Venturecap meeting the
requirements of the Nevada Revised Statutes, shall be filed with the Nevada
Secretary of State, all in accordance with the provisions of this Agreement.
ARTICLE 11.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
11.1 Survival of Representations. The representations, warranties and covenants
contained in this Agreement shall survive the Merger for five years following
the merger. All representations, warranties and covenants in or pursuant to this
Agreement shall be deemed to be conditions to the Merger, and in the event this
Agree ment shall be terminated in accordance with the terms thereof, the
provisions of Section 7.1 and Articles 11 and 12 of this Agreement shall survive
any termination of this Agreement.
<PAGE>
ARTICLE 12.
PAYMENT OF EXPENSES
12.1 Payment of Expenses. If for any reason the Merger as contemplated herein is
not consummated Venturecap and FiberCore shall each pay their own out-of-pocket
expenses incurred incident to the preparation and carrying out of the
transactions herein contemplated; provided that, unless the Merger is not
consummated because of a failure of Venturecap to satisfy any of the conditions
of Section 8.2, Venturecap will reimburse FiberCore the actual documented costs
incurred, up to a maximum of Five Thousand Dollars $5,000, in consideration of
the expenses incurred by FiberCore and the termination of this Agreement and the
Merger; provided further, that if the Merger is not consummated because of a
failure of FiberCore to satisfy any of the conditions of Section 8.3, FiberCore
will reimburse Venturecap actual documented costs incurred, up to a maximum of
Five Thousand Dollars ($5,000), in consideration of the expenses incurred by
Venturecap and the termination of this Agreement and the Merger.
ARTICLE 13.
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after approval of matters
presented in connection with the Merger by the shareholders of FiberCore and
Venturecap:
(a) by mutual written consent of FiberCore and Venturecap;
(b) by Venturecap, on the one hand or FiberCore, on the other hand, as
the non-defaulting party, if there has been a material breach of any material
representation, warranty, covenant or agreement contained in this Agreement on
the part of the other party set forth in this Agreement and, if such breach is
curable, such breach has not been cured within a ten (10) day period after
written notice of such breach;
(c) by either Venturecap or FiberCore if the Merger shall not have been
consummated on or before July 28, 1995;
<PAGE>
provided, however, that if the Merger shall not be consummated on or before July
28, 1995 because of a party's failure to satisfy any of the conditions set forth
in Sections 8.2 or 8.3, neither Venturecap nor FiberCore may rely upon its own
actions or lack thereof to terminate the Agreement;
(d) by either Venturecap or FiberCore if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the Merger or (ii) there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any governmental entity which would make
consummation of the Merger illegal;
(e) by either Venturecap or FiberCore if there shall be any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the Merger by any governmental entity, which would (A)
prohibit Venturecap's ownership or operation of all or a material portion of the
business or assets of FiberCore and its Subsidiaries taken as a whole, or compel
Venturecap to dispose of or hold separate all or a material portion of the
business or assets of FiberCore and its Subsidiaries taken as a whole or
Venturecap and its Subsidiaries taken as a whole, as a result of the Merger or
(B) render Venturecap or FiberCore unable to consummate the Merger, except for
any waiting period provisions; or
(f) by either party; provided however that the party terminating solely
pursuant to this provision shall be liable to the other party for such party's
expenses, but in no event shall such amount exceed $5,000.
Where action is taken to terminate this Agreement pursuant to this
Section 13.1, it shall be sufficient for such action to be authorized by the
Board of Directors of the party taking such action.
13.2 Effect of Termination. In the event of termination of this Agreement by
either FiberCore or Venturecap as provided in Section 13.1, this Agreement and
the Merger Agreement shall forthwith become void and there shall be no liability
or obligation on the part of Venturecap or FiberCore or their respective
officers or directors except as set forth in Article 12 and except to the
<PAGE>
extent that such termination results from the breach by a party hereto of any of
its covenants or agreements set forth in this Agreement.
13.3 Amendment. This Agreement may be amended by the parties hereto, by action
taken by their respective Board of Directors, at any time before or after
approval of matters presented in connection with the Merger by the shareholders
of FiberCore and Venturecap but, after any such shareholder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
13.4 Extension; Waiver. At any time prior to the Effective Time of the Merger,
any party hereto, by such corporate action as shall be appropriate, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE 14.
LIMITATION ON LIABILITY
14.1 Liabilities of FiberCore. The aggregate liability of all entities for
breaches by FiberCore and its officers and directors under this Agreement and
the Merger Agreement and the transactions contemplated hereby and thereby shall
be no greater than $5,000.
<PAGE>
ARTICLE 15.
GENERAL
15.1 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and delivered personally
or sent by certified mail, postage prepaid, as follows:
If to Venturecap prior to the Effective Time of the Merger:
Venturecap, Inc.
1037 East 3300 South
Suite 203
Salt Lake City, Utah 84105
with a copy to
Leonard E. Neilson, Esq.
1121 East 3900 South
Suite 200, Building C
Salt Lake City, Utah 84124
If to FiberCore or the Surviving Corporation following the Effective
Time of the Merger:
Dr. Mohd Aslami, President
FiberCore Incorporated
P.O. Box 206
174 Charlton Road
Sturbridge, Massachusetts 01566
with a copy to
Coleman & Rhine LLP
1120 Avenue of the Americas
New York, New York 10036
Attention: Bruce S. Coleman, Esq.
15.2 Headings. The headings of the several sections of this Agreement are
inserted for convenience of reference only and are
<PAGE>
not intended to affect the meaning or interpretation of this Agreement.
15.3 Counterparts. This Agreement may be executed in counterparts, and when so
executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
15.4 Binding Nature. This Agreement shall be binding upon and inure to the
benefit of the parties hereto. Neither Venturecap, nor FiberCore may assign or
transfer any rights under this Agreement.
15.5 Other Agreements. All written agreements heretofore made between the
parties hereto in contemplation of this Agreement are superseded by this
Agreement and are hereby terminated in their entirety.
15.6 Good Faith. Each of the parties hereto agrees that it shall act in good
faith in an attempt to cause all the conditions precedent to their respective
obligations to be satisfied.
15.7 Applicable Law. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of New York and
each party agrees to submit to the jurisdiction of the courts of the state of
New York.
15.8 No Third Party Beneficiaries. The terms and provisions of this Agreement
are intended for the benefit of each party hereto and their respective
successors and permitted assigns, and it is not the intention of the parties to
confer third party beneficiary rights upon any other person or entity.
15.9 Severabilty. A determination that any portion of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of any
of the remaining portions hereof or of this Agreement as a whole. In the event
that any part of any of the covenants, sections or provisions herein may be
determined by a court of law to be overly broad or against applicable precedent
or public policy, thereby making such covenants, sections or provisions invalid
or unenforceable, the parties hereto agree, and it is their desire that, such
<PAGE>
court shall substitute a reasonable and judicially enforceable limitation in
place of the invalid and unenforceable part of such covenants, sections or
provisions, and that, as so modified, the covenants, sections or provisions
shall be as fully enforceable as if set forth herein by the parties themselves
in the modified form. If, however, any court of law shall refuse to substitute
any reasonable and judicially enforceable provisions in their place, the parties
shall attempt to reach agreement with respect to a valid and enforceable
substitute for the deleted provisions which shall be as close in its intent and
effect as possible to the deleted portions.
<PAGE>
IN WITNESS WHEREOF, Venturecap and FiberCore have caused this Agreement
to be duly executed as of the date first written above.
VENTURECAP, INC.
By: /s/ James R. Glaven
----------------------
Name: James R. Glaven
--------------------
Title:
--------------------
FIBERCORE INCORPORATED
By: /s/ Mohd Aslami
----------------------
Name: Mohd Aslami
--------------------
Title: President
--------------------
MERGER AGREEMENT
This Merger Agreement is executed as of this 18th day of July, 1995.
WITNESSETH:
WHEREAS, the Board of Directors of each of the undersigned corporations
has adopted the Plan of Merger of FiberCore Incorporated, a Nevada corporation,
into Venturecap, Inc., a Nevada corporation, attached as Annex 1 (the "Plan");
and
NOW, THEREFORE, the undersigned corporations hereby agree that the Plan
and the merger contemplated thereby, shall be consummated as provided by the
Plan, unless terminated pursuant to the Plan prior to the filing of Articles of
Merger, and further agree that following consummation of the merger, this
instrument and Annex 1 hereto shall constitute the complete executed Plan of
Merger referred to in Nevada Revised Statutes 78.451 et seq.
<PAGE>
IN WITNESS WHEREOF, Venturecap and FiberCore have caused this Agreement
to be duly executed as of the date first written above.
VENTURECAP, INC.
By: /s/ James R. Glavas
--------------------------
Name: James R. Glavas
-------------------------
Title:
------------------------
FIBERCORE INCORPORATED
By: /s/ Mohd Aslami
--------------------------
Name: Mohd Aslami
------------------------
Title: President
<PAGE>
ANNEX 1
PLAN OF MERGER
Pursuant to the provisions of Nevada Revised Statutes ("NRS") 78.451,
et seq., the following sets forth a plan of merger of FiberCore Incorporated, a
Nevada corporation (the "Constituent Corporation"), into Venturecap, Inc., a
Nevada corporation (the "Surviving Corporation," or "Venturecap"):
a. If this plan of merger is adopted by the stockholders of the parties
in accordance with the laws of the State of Nevada and not terminated or
abandoned as hereinafter provided, the merger of the Constituent Corporation
into the Surviving Corporation shall become effective upon the filing of
Articles of Merger in the office of the Secretary of State of Nevada pursuant to
the provisions of NRS 78.458, or at such later time as may be set forth in the
Articles of Merger (the "Effective Time of the Merger").
b. At the Effective Time of the Merger, the separate existence of the
Constituent Corporation shall cease, and the Surviving Corporation shall possess
all rights, privileges and powers, and be subject to all restrictions,
disabilities and duties of the Constituent Corporation.
c. At the Effective Time of the Merger, the title to all real estate
and other property, real and personal, owned by the Constituent Corporation and
all debts due to the Constituent Corporation shall be vested in the Surviving
Corporation without reversion or impairment.
d. At the Effective Time of the Merger, the Surviving Corporation shall
have all of the debts, liabilities and duties of the Constituent Corporation,
but all rights of creditors and all liens upon any property of the Constituent
Corporation shall be preserved unimpaired.
e. Any proceeding pending against the Constituent Corporation may be
continued as if the merger had not occurred or the Surviving Corporation may be
substituted in the proceeding for the Constituent Corporation.
<PAGE>
f. The Articles of Incorporation of the Surviving Corporation shall
remain in full force and effect as the Articles of Incorporation of the
Surviving Corporation, and will be amended at the Effective Time of the Merger,
as follows:
Article I of the Articles of Incorporation is deleted in its entirety
and replaced by the following:
The Name of the Corporation is FiberCore, Inc.
g. The Bylaws of the Surviving Corporation shall remain in full force
and effect as the Bylaws of the Surviving Corporation following the Effective
Time of the Merger, without amendment, until altered, amended or repealed as
provided therein.
h. The officers and directors of FiberCore Incorporated on the
Effective Time of the Merger, to wit:
Name Position
Mohd A. Aslami Director and Chief Executive Officer
Gregory A. Perry Director and Vice President of Sales
and Marketing
Charles DeLuca Director and Secretary
Hans Moeller Director
Zaid Siddig Director
John Ramsey Director
Steven Phillips Director
shall be the officers and directors of the Surviving Corporation following the
Effective Time of the Merger until respective successors are appointed or
elected and qualified.
i. Each outstanding share of common stock of the Constituent
Corporation shall be converted into 3.6713070 shares of the Surviving
Corporation.
j. The manner of converting the outstanding shares of the capital stock
of the Constituent Corporation into the shares or other securities of the shall
be as follows:
<PAGE>
(1) Each share of common stock of Venturecap, Inc., which
shall be issued and outstanding at the Effective Time of the Merger shall remain
issued and outstanding.
(2) Other than shares of common stock of the Constituent
Corporation owned by the Constituent Corporation or shares of common stock of
the Constituent Corporation owned directly or indirectly by Venturecap, which
shall be cancelled, the shares of common stock of the Constituent Corporation
which shall be outstanding at the Effective Time of the Merger and all rights in
respect thereof, shall forthwith be changed and converted into 3.6713070 shares
of common stock of the Surviving Corporation.
(3) After the Effective Time of the Merger, each holder of an
outstanding certificate representing shares of common stock of the Constituent
Corporation shall surrender the same to the Surviving Corporation and each such
holder shall be entitled upon such surrender to receive the number of shares of
common stock of the basis provided herein. Until so surrendered, the outstanding
shares of the stock of the Constituent Corporation to be converted into the
stock of as provided herein, may be treated by the Surviving Corporation for all
corporate purposes as evidencing the ownership of shares of the Surviving
Corporation as though said surrender and exchange had taken place. After the
Effective Time of the Merger, each registered owner of any uncertified shares of
common stock of the Constituent Corporation shall have said shares canceled and
said registered owner shall be entitled to such number of common shares of the
Surviving Corporation as are provided for herein.
k. Anything herein or elsewhere to the contrary notwithstanding, the
merger may be abandoned by the Board of Directors of either corporation, in the
sole discretion of any such Board and without further action by stockholders, at
any time prior to the Effective Time of the Merger, subject to the provisions of
the Agreement and Plan of Reorganization between Venturecap and FiberCore.
l. Any officer of the Surviving Corporation is authorized to execute
and deliver such other and further instruments and documents as may be necessary
to effectuate this plan of merger in accordance with its terms.
<PAGE>
m. The shares to be issued in the merger will not be registered under
the Securities Act of 1933, as amended, or under any state securities laws.
n. The Surviving Corporation shall in no event be required to
consummate the merger unless the Surviving Corporation in its sole discretion
shall have determined that issuance of shares in the merger is exempt from the
registration requirements of the Securities Act of 1933, as amended, and that
such shares may be lawfully issued without registration under the provisions of
any state securities law.
<PAGE>
ARTICLES OF MERGER
OF
FiberCore Incorporated,
a Nevada Corporation
Into
Venturecap, Inc.,
a Nevada Corporation
THE UNDERSIGNED, as the President and the Secretary of Venturecap,
Inc., a Nevada corporation (the "Surviving Corporation"), as and for the purpose
of complying with the provisions of Nevada Revised Statutes ("NRS") Sections
78.451 et seq., and in order to effectuate the merger of FiberCore Incorporated,
a Nevada Corporation into Venturecap, Inc., a Nevada Corporation, hereby
certifies as follows:
1. The name of the Constituent Corporation is FiberCore Incorporated
and its place of incorporation was the State of Nevada. The name of the
Surviving Corporation is Venturecap, Inc. and its place of incorporation was
also the State of Nevada.
2. A plan of merger has been adopted by the Board of Directors of each
corporation that is a party to this merger.
3. The plan of merger was submitted by the Board of Directors of the
Surviving Corporation to its stockholders pursuant to the Nevada Revised
Statutes. Of the 955,451 outstanding shares of Venturecap common stock, par
value, $.001 per share at the time of the vote, all were entitled to vote on the
plan of merger, 765,550 were represented at the shareholders meeting, 765,550
shares were voted in favor of the plan of merger and 0 shares were voted against
the plan and the number of votes cast in favor of the plan was sufficient for
approval of the plan of merger.
4. The plan of merger was submitted by the Board of Directors of the
Constituent Corporation to its stockholders pursuant to the
<PAGE>
Nevada Revised Statutes. Of the 6,605,277 outstanding shares of FiberCore common
stock, par value, $.01 per share, holders representing 5,333,334 shares agreed
to the plan of merger by written consent, and the consent of such stockholders
was sufficient for approval.
4. The Articles of Incorporation of the Surviving Corporation are
hereby amended as follows:
Article I of the Articles of Incorporation is deleted in its
entirety and replaced by the following:
The Name of the Corporation is FiberCore, Inc.
5. A complete executed plan of merger is on file at the office of the
registered agent of the Surviving Corporation which is hereby changed to be:
Corporation Trust Company
One East 1st Street, Suite 1600
Reno, Nevada 89501
Formerly the registered agent was:
Broadmoor Associates, Inc.
3916 Orville Circle
Las Vegas, Nevada 89108
6. A copy of the plan of merger will be furnished by the Surviving
Corporation on request and without any cost to any stockholder of any
corporation which is a party to this merger.
7. The effective date of this merger is the date upon which these
Articles of Merger are filed in the Office of the Secretary of State of the
State of Nevada.
<PAGE>
IN WITNESS WHEREOF, we have set forth our hands as of the day of
1995.
VENTURECAP, INC.
By
----------------------------
Name:
Title: President
By
----------------------------
Name:
Title: Secretary
FIBERCORE INCORPORATED
By
----------------------------
Name:
Title: President
By
----------------------------
Name:
Title: Secretary
<PAGE>
EXHIBIT D
DIRECTORS OF SURVIVING CORPORATION
Mohd A. Aslami
Gregory A. Perry
Charles DeLuca
Hans Moeller
Zaid Siddig
John Ramsey
Steven Phillips
<PAGE>
Exhibit E
OFFICERS OF SURVIVING CORPORATION
Mohd A. Aslami Chief Executive Officer
Gregory A. Perry Vice President of Sales and Marketing
Charles DeLuca Secretary
<PAGE>
EXHIBIT F
July __, 1995
FiberCore Incorporated
P.O. Box 206
174 Charlton Road
Sturbridge, Massachusetts 01566
Gentlemen:
We have acted as counsel to Venturecap, Inc., a Nevada corporation
("Venturecap"), in connection with their execution and delivery of the (i)
Agreement and Plan of Reorganization (the "Agreement and Plan") among Venturecap
and FiberCore Incorporated, a Nevada corporation ("FiberCore") and (ii) the
Merger Agreement among FiberCore and Venturecap (the "Merger Agreement"), each
dated as of July __, 1995 (the Agreement and Plan and the Merger Agreement are
sometimes hereinafter referred to collectively as the "Merger Agreements"). This
opinion is given pursuant to Section 8.3(c) of the Agreement and Plan.
Capitalized terms used but not defined herein have the meanings ascribed to such
terms respectively in the Agreement and Plan.
In connection with this opinion, we have examined: the Merger
Agreements and certain originals or copies of corporate records of Venturecap.
For purposes of this opinion, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and that the information in the certificates,
representations, and
<PAGE>
statements referred to above remains true and complete as of the date hereof.
Based upon and subject to the foregoing, and subject to the
qualifications and exceptions hereinafter set forth, we are of the opinion as of
this date that:
a. Venturecap is duly organized and validly existing corporations in
good standing under the laws of the State Nevada has the corporate power and
authority to own its properties and conduct its businesses as presently
conducted. Venturecap has full corporate power and authority to enter into the
Merger Agreements and to consummate the transactions contemplated thereby.
b. The execution, delivery, and performance of the Merger Agreements by
Venturecap have been duly authorized by all requisite corporate and shareholder
action on the part of Venturecap. The Merger Agreements have been duly executed
and delivered by Venturecap and constitute legal, valid, and binding obligations
on the part of Venturecap.
c. The execution and delivery of the Merger Agreements and the
consummation of the Merger do not violate or conflict with the Certificate of
Incorporation or Bylaws of Venturecap.
d. Upon and following the Effective Time of the Merger, the shares of
Venturecap to be issued in the Merger will be duly authorized, validly issued,
fully paid and non-assessable outstanding shares of Venturecap Common.
e. The Articles of Merger, when filed with the Nevada Secretary of
State will be effective to consummate the merger between Venturecap and
FiberCore.
In addition, I declare that as of the date hereof, neither myself nor
my firm is owed any funds (including disbursements) by Venturecap, including but
not limited to funds owed for work related to this merger.
Very truly yours,
<PAGE>
EXHIBIT G
Principal's Letter
------------------
July , 1995
FiberCore Incorporated
P.O. Box 206
174 Charlton Road
Sturbridge, Massachusetts 01566
Ladies and Gentlemen:
In consideration of the merger of FiberCore Incorporated ("FiberCore"),
into Venturecap, Inc. ("Venturecap"), of which I am a shareholder, in my
individual capacity, and not in my capacity as a director or officer of
Venturecap, I agree represent, warrant and covenant as follows:
(i) I will indemnify, pay the defense costs of and hold FiberCore and
if the merger is consummated, the corporation surviving the merger (the
"Surviving Corporation") and its affiliates (the "Indemnitees") harmless from
and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys, fees and expenses (collectively
"Damages"), imposed upon or incurred by FiberCore or the Surviving Corporation
by reason of or resulting from:
(a) any inaccuracy or breach of any representation, warranty or
covenant or failure of any condition or lack of compliance with
any term of the Agreement by Venturecap contained in or made
pursuant to the Agreement and Plan of Reorganization (the
"Agreement") and the Merger Agreement (the "Merger Agreement"),
or
(b) any inaccuracy or misrepresentation in any certificate or any
Venturecap Schedule delivered by Venturecap pursuant to the
Agreement, or
<PAGE>
(c) any breach by me of this letter.
(ii) I will pay each Indemnitee the amount which would be required to
put such Indemnitee in the position that it would have been in had any breach
(including any inaccuracy of any representation or warranty, failure of any term
or condition, or lack of compliance with any term of the agreement) not
occurred.
(iii) I will not seek contribution or indemnification or any other
recourse for my obligations hereunder from Venturecap or the Surviving
Corporation, or any of their officers or directors, or any other entity, if such
contribution or indemnification would or could cause any payments to be made by
Venturecap or the Surviving Corporation, either directly or indirectly.
(iv) Any notice may be sent to me at the address listed above.
(v) I represent that I own 80,000 shares of Venturecap common stock and
that I acquired my shares in Venturecap in a transaction exempt from
registration under the Securities Act of 1933, as amended.
(vi) This letter will be governed by the laws of the State of New York
and any dispute relating thereto shall be adjudicated in the courts of the state
of New York or in the federal courts located in such jurisdiction, and I hereby
submit to the jurisdiction of such courts.
(vii) I acknowledge that any Indemnitee may seek recourse against me,
independent of any other recourse he may have, provided that no Indemnitee shall
be entitled to more than a single recovery.
(viii) In executing this letter agreement, I am not relying on any
other shareholder executing a similar agreement.
<PAGE>
(ix) This indemnification shall remain in full force and effect
notwithstanding any waivers by any entity.
(x) In executing this letter, I am not relying on any statement by
FiberCore with respect to its financial condition or otherwise contained in the
Agreement.
Very truly yours,
By
--------------------------
James R. Glavas
<PAGE>
EXHIBIT H
CERTIFICATE OF DUANE MIDGLEY
I hereby certify that as of the date hereof, there are no amounts owing
from Venturecap, Inc. to me or my firm, and all such amounts have been paid in
full.
---------------------------
Duane Midgley
<PAGE>
Schedule 3.2
Warrants, Options and Other
Outstanding Convertible Equity Securities
-----------------------------------------
$5,000,000 convertible debt plus interest accumulatuing at a rate of
LIBOR plus one percent may be converted into common stock of FiberCore through
April 17, 2005. For the first five years the conversion price is $4.25 per
share; thereafter the conversion price is equal to the price per share paid by a
third party investor in the private sale of common stock by FiberCore
immediately prior to such conversion.
95,000 employee stock options are outstanding and 305,000 additional
options are available for issuance.
425,000 options may be issued to a new chief operating officer.
Pursuant to a Letter of Intent dated May 15, 1995 between FiberCore and
Automated Light Technologies, Inc. ("ALT"), ALT will merge into FiberCore or a
subsidiary thereof and FiberCore will issue a 2.4 million shares of common stock
of FiberCore to ALT shareholders.
Additional warrants exercisable into 150,000 shares of FiberCore
Capital Stock are due to be issued to Middle Eastern Specialized Cable Company
("MESC"), upon signing of certain agreements.
65,000 shares of FiberCore Capital Stock are due to be issued to MESC
upon the exercise of the warrants listed in the above paragraph.
An additional 185,000 shares of FiberCore Capital Stock are to be
issued to MESC upon the signing of certain agreements.
100,000 shares of FiberCore Capital Stock are currently being held in
escrow for MESC pending certain approvals and the signing of certain documents.
<PAGE>
An additional 223,625 warrants are outstanding (subject to adjustment)
Additional warrants may be due the Armand Group in an amount dependent
on the number of the Company's securities placed by them, in a contemplated
private placement.
All warrants and options reflect pre-dilution numbers. Such dilution
may have occurred from issuance of other warrants, options or sales of stock. In
addition, the terms of this agreement may further dilute options and warrants.
AGREEMENT AND PLAN OF REORGANIZATION
Among
FiberCore, Inc.,
a Nevada corporation
ALT Merger Co.,
a Delaware corporation
And
Automated Light Technologies, Inc.,
a Delaware corporation
DATED AS OF SEPTEMBER 15, 1995
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RECITALS .........................................................................................................1
ARTICLE 1. DEFINITIONS............................................................................................1
1.1 Certain Definitions.............................................................................1
1.2 Other Definitions...............................................................................2
ARTICLE 2. THE MERGER.............................................................................................2
2.1 Effective Time of the Merger....................................................................2
2.2 Effects of the Merger...........................................................................2
2.3 Effect on Capital Stock.........................................................................3
2.4 Exchange of Certificates........................................................................5
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF FIBERCORE AND SUB....................................................6
3.1 Organization and Standing.......................................................................6
3.2 Capital Structure...............................................................................6
3.3 Authority.......................................................................................7
3.4 Brokers or Finders..............................................................................7
3.5 Financial Statements............................................................................7
3.6 Subsidiaries....................................................................................8
3.7 No Violation or Conflict........................................................................8
3.8 Consent of Governmental Authorities.............................................................9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF ALT..................................................................9
4.1 Organization and Standing.......................................................................9
4.2 Capital Structure...............................................................................9
4.3 Authority......................................................................................10
4.4 Brokers or Finders.............................................................................10
4.5 Financial Statements...........................................................................10
4.6 Subsidiaries...................................................................................11
4.7 No Violation or Conflict.......................................................................11
4.8 Consent of Governmental Authorities............................................................11
ARTICLE 5. COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................12
5.1 Covenants of FiberCore and Sub.................................................................12
5.2 Covenants of ALT...............................................................................13
ARTICLE 6. OMITTED ..............................................................................................13
<PAGE>
ARTICLE 7. ADDITIONAL AGREEMENTS.................................................................................13
7.1 Legal Conditions to the Merger.................................................................13
7.2 Delivery of Stock Certificates.................................................................14
7.3 Tax Treatment..................................................................................14
7.4 Board of Directors.............................................................................14
ARTICLE 8. CONDITIONS PRECEDENT..................................................................................14
8.1 Conditions to Each Party's Obligations to Effect the
Merger.........................................................................................14
8.2 Conditions to Obligations of ALT...............................................................16
8.3 Conditions to Obligations of FiberCore and Sub.................................................16
ARTICLE 9. OMITTED ..............................................................................................17
ARTICLE 10. CLOSING..............................................................................................17
10.1 Closing Date...................................................................................17
10.2 Filing Date....................................................................................17
ARTICLE 11. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS...............................................................................................17
ARTICLE 12. PAYMENT OF EXPENSES..................................................................................18
ARTICLE 13. TERMINATION, AMENDMENT AND WAIVER....................................................................18
13.1 Termination....................................................................................18
13.2 Effect of Termination..........................................................................19
13.3 Amendment......................................................................................19
13.4 Extension; Waiver..............................................................................20
ARTICLE 14. LIMITATION ON LIABILITY..............................................................................20
ARTICLE 15. GENERAL..............................................................................................20
15.1 Notices........................................................................................20
15.2 Headings.......................................................................................21
15.3 Counterparts...................................................................................21
15.4 Binding Nature.................................................................................21
15.5 Other Agreements...............................................................................21
15.6 Good Faith.....................................................................................21
15.7 Applicable Law.................................................................................21
15.8 No Third Party Beneficiaries...................................................................21
15.9 Severability...................................................................................21
</TABLE>
<PAGE>
SCHEDULES
Schedule 2.3 Exchange Ratio
Schedule 3.2 Outstanding Equity Securities of FiberCore
Schedule 3.7 FiberCore Violations or Conflicting
Agreements
Schedule 3.5(a) FiberCore 1993 and 1994 Financial Statements
Schedule 3.5(b) FiberCore June 1995 Financial Statements
Schedule 4.2 Outstanding Equity Securities of ALT
Schedule 4.7 ALT Violations or Conflicting Agreements
Schedule 4.5(a) ALT 1993 and 1994 Financial Statements
Schedule 4.5(b) ALT June 1995 Financial Statements
Schedule 5.1 FiberCore Covenants Relating to Conduct of
Business
Schedule 5.2 ALT Covenants Relating to Conduct of
Business
<PAGE>
EXHIBITS
Exhibit A Plan of Merger
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
of the 15th day of September, 1995, by and among FiberCore, Inc. ("FiberCore"),
a Nevada corporation, ALT Merger Co. ("Sub"), a Delaware corporation and a
wholly owned subsidiary of FiberCore, and Automated Light Technologies, Inc.
("ALT"), a Delaware Corporation.
RECITALS
A. The respective Boards of Directors of FiberCore, Sub and ALT have
approved the merger of Sub with and into ALT (the "Merger"), upon the terms and
subject to the conditions set forth herein and in the Plan of Merger annexed as
Exhibit A (the "Plan of Merger"), as a result of which Sub will be merged into
ALT and the shareholders of ALT (other than shareholders who perfect appraisal
rights) will be entitled to receive the consideration provided in this
Agreement.
B. The parties hereto desire to set forth certain representations,
warranties and covenants made by FiberCore and Sub to ALT, and by ALT to
FiberCore and Sub and the conditions precedent to the consummation of the
Merger.
C. The Boards of Directors of FiberCore, Sub and ALT respectively, have
approved and adopted this Agreement and the Merger as a plan of reorganization
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, FiberCore, Sub and ALT
hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Certain Definitions. The terms defined in this Section 1.1 shall, for all
purposes of this Agreement, have the meanings herein specified, unless the
context expressly or by necessary implication otherwise requires:
1
<PAGE>
(a) "ALT Capital Stock" means the common stock of ALT, par value $0.01
per share.
(b) "Dissenting Shares" shall mean shares of ALT Capital Stock which
shall be owned by shareholders who shall duly perfect and pursue their appraisal
rights with respect to such shares in accordance with the Delaware General
Corporation Law.
(c) "Dissenting Shareholders" shall mean those shareholders of ALT who
are holders of and are entitled to Dissenting Shares.
(d) "SEC" shall mean the Securities and Exchange Commission.
(e) "Sub Common" means the common stock of Sub, par value $0.01 per
share.
(f) "FiberCore Capital Stock" means the common stock of FiberCore, par
value $0.001 per share.
(g) "ALT Shareholders" shall mean all holders of ALT Capital Stock
immediately prior to the Effective Time of the Merger.
(h) "Subsidiary" means a corporation whose voting secu rities are owned
directly or indirectly by a "parent" corporation in such amounts as are
sufficient to elect at least a majority of the Board of Directors of the
Subsidiary.
1.2 Other Definitions. In addition to the terms defined in Section 1.1, certain
other terms are defined elsewhere in this Agreement; whenever such terms are
used in this Agreement they shall have their respective defined meanings, unless
the context expressly or by necessary implication otherwise requires.
2
<PAGE>
ARTICLE 2.
THE MERGER
2.1 Effective Time of the Merger. Subject to the provisions of this Agreement,
the Articles of Merger, together with all other required certificates, shall be
filed in accordance with the Delaware General Corporation Law as soon as
practicable on or after the Closing Date (as defined in Section 10.1 of this
Agreement). The Merger shall become effective upon the filing of such
certificates with the Delaware Secretary of State (the "Effective Time of the
Merger").
2.2 Effects of the Merger. At the Effective Time of the Merger:
(a) the separate existence of Sub shall cease and Sub shall be merged
with and into ALT as the surviving corporation (the "Surviving Corporation").
(b) the Certificate of Incorporation and By-laws of ALT shall be the
Certificate of Incorporation and By-laws of the Surviving Corporation; and
(c) the directors of ALT shall be the directors of the Surviving
Corporation, and shall continue to act as such, until their respective
successors are duly elected and qualified, and the officers of ALT shall hold
the same offices in the Surviving Corporation until their respective successors
are duly elected and qualified.
2.3 Effect on Capital Stock. As of the Effective Time of the Merger, by virtue
of the Merger and without any action on the part of the holder of any shares of
the issued and outstanding shares of ALT Capital Stock:
(a) Cancellation of ALT and FiberCore Stock Owned by ALT and FiberCore.
All shares of ALT Capital Stock and FiberCore Capital Stock, if any, that are
owned directly by ALT or FiberCore, shall be canceled, and no stock of FiberCore
or other consideration shall be delivered in exchange therefor, except as
provided herein.
3
<PAGE>
(b) Conversion of ALT Capital Stock and Options. Other than shares to
be canceled pursuant to Section 2.3(a), Dissenting Shares and fractional shares
as provided in Section 2.3(e), each share of ALT Capital Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall be
converted, without any action on the part of the holders thereof, into a number
of shares of issued and outstanding FiberCore Capital Stock equal to the ratio
of (x) 8,811,137 over (y) the total number of shares of ALT Capital Stock
outstanding on a fully diluted basis (other than shares underlying warrants
issued to the Connecticut Development Authority ("CDA") and Connecticut
Innovations, Inc. ("CII") and other than 85,250 shares underlying certain
warrants and 275,000 shares underlying certain incentive stock options, but
including approximately 4.53 million shares underlying warrants and debt to be
issued at the Effective Time of the Merger) (the "ALT Outstanding") at the
Effective Time of the Merger (hereinafter, the "Exchange Ratio" or the "Per
Share Merger Consideration"). The exact Exchange Ratio is set forth on Schedule
2.3. An aggregate of 8,811,137 shares of FiberCore Capital Stock will be issued
in the Merger if all shares of ALT Outstanding are converted into shares of
FiberCore Capital Stock. With respect to unexpired options ("Options") or
warrants ("Warrants") or convertible securities ("Convertible Securities"),
whether or not exercisable or convertible, as the case may be, at the Effective
Time of the Merger, outstanding on the Effective Time of the Merger which have
been issued by ALT, each such Option or Warrant or Convertible Security shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive, for the number of shares of ALT
Capital Stock to which the warrantholder, optionholder, or convertible security
holder is entitled (the "Underlying Share Count"), the number of shares of
FiberCore Capital Stock determined by multiplying the aforesaid number by the
Per Share Merger Consideration, upon payment of an amount equal to the exercise
price specified in such Option or Warrant or conversion price specified in such
Convertible Security multiplied by the Underlying Share Count, subject to the
expiration date and other terms of such Option or Warrant or Convertible
Securities. At the request of the holder of Options, Warrants, or Convertible
Securities, FiberCore shall upon surrender of such instruments exchange such
instruments for similar instruments in FiberCore Capital Stock, adjusting the
4
<PAGE>
exercise price and the Underlying Share Count for the Exchange Ratio, all as set
forth in this paragraph.
(c) Adjustments of Exchange Ratio. If, between the date of this
Agreement and the Effective Time of the Merger, the outstanding shares of ALT
Capital Stock or FiberCore Capital Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, not contemplated under this Agreement, the Exchange Ratio shall be
correspondingly adjusted.
(d) Dissenters' Rights of ALT Shareholders. Any Dissenting Shares shall
not be converted into FiberCore Capital Stock but shall be converted into the
right to receive such consideration as may be determined to be due with respect
to such Dissenting Shares pursuant to the Delaware General Corporation Law. In
the event of the legal obligation, after the Effective Time of the Merger, to
deliver shares of FiberCore Capital Stock to any Dissenting Shareholder who
shall have failed to make an effective demand for appraisal or shall have lost
his status as a Dissenting Shareholder, FiberCore shall issue and deliver, upon
surrender by such Dissenting Shareholder of his certificate or certificates
representing shares of ALT Capital Stock, the shares of FiberCore Capital Stock
to which such Dissenting Shareholder is then entitled under this Section 2.3,
and the Delaware General Corporation Law.
(e) Fractional Shares. No fractional shares of FiberCore Capital Stock
shall be issued, but in lieu thereof each holder of shares of ALT Capital Stock
who would otherwise be entitled to receive a fraction of a share of FiberCore
Capital Stock shall receive a whole share of FiberCore Capital Stock.
2.4 Exchange of Certificates.
(a) Exchange Procedures. On and after the Effective Time of the Merger,
each holder of a certificate representing out standing shares of ALT (the
"Certificates") shall be entitled to receive upon the surrender of such
Certificates to an office of the Surviving Corporation designated for the
purpose the number of shares of FiberCore Capital Stock to which the holder of
ALT Capital Stock is entitled pursuant to Section 2.3 of this
5
<PAGE>
Agreement and is represented by the Certificates so surrendered. The
Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of ALT Capital Stock which is not registered in the
transfer records of ALT, the appropriate number of shares of FiberCore Capital
Stock may be delivered to a transferee if the Certificate representing the right
to receive such ALT Capital Stock is presented to FiberCore and accompanied by
all documents required to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.4, each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent the right to receive upon
such surrender the number of shares of FiberCore Capital Stock as provided by
Section 2.3 and the provisions of the Delaware General Corporation Law.
(b) No Further Ownership Rights in ALT Capital Stock. All FiberCore
Capital Stock delivered upon the surrender in exchange of shares of ALT Capital
Stock in accordance with the terms hereof shall be deemed to have been delivered
in full satis faction of all rights pertaining to such shares of ALT. There
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of ALT Capital Stock which were outstanding
immediately prior to the Effective Time of the Merger. If, after the Effective
Time of the Merger, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article 2.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF FIBERCORE AND SUB
FiberCore and Sub represent and warrant to ALT as of the date hereof
and as of the Closing as follows:
3.1 Organization and Standing. Each of FiberCore and Sub is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation, and has the full power and authority
(corporate and otherwise) to carry on its business in the places and as it is
now being conducted and to own and lease the properties and assets which it
6
<PAGE>
now owns or leases. FiberCore is or shortly after the Effective Time of the
Merger will be qualified in Massachussets.
3.2 Capital Structure. The authorized capital stock of FiberCore consists of
100,000,000 shares of common stock, par value $.001 per share, of which
25,367,130 shares of FiberCore Capital Stock are issued and outstanding
(including 367,130 shares to be issued to Middle Eastern Specialized Cable
Company, which may or may not have been issued at the time of this Agreement),
and 10,000,000 shares of preferred stock, par value $.001 per share, of which no
shares are outstanding. The authorized capital stock of Sub consists of 1,000
shares of Sub Common of which 1,000 are outstanding and held by FiberCore. All
of the outstanding shares of FiberCore Capital Stock and Sub Common were issued
in compliance with applicable federal and state securities laws, and no further
registration, qualification or other compliance under such securities laws is
required. All of the outstanding shares of FiberCore Capital Stock and Sub
Common are validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, FiberCore's or Sub's Articles of
Incorporation or Bylaws or any agreement to which FiberCore or Sub is a party or
is bound. Except for the foregoing, and as set forth on Schedule 3.2, there are
no equity securities of any class of FiberCore or Sub or any security
exchangeable or convertible into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set forth on Schedule
3.2, there are no options, warrants, calls, rights, commitments or agreements of
any character to which either of FiberCore or Sub is a party or by which it is
bound obligating FiberCore or Sub to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of FiberCore or
Sub or obligating FiberCore or Sub to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement.
3.3 Authority. Each of FiberCore and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of FiberCore and Sub, and by FiberCore as the sole
shareholder of Sub. This Agreement has been duly executed and delivered by
FiberCore and Sub and constitutes a valid and
7
<PAGE>
binding obligation of FiberCore and Sub, enforceable against FiberCore and Sub
in accordance with its terms, except to the extent that their enforcement is
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity.
3.4 Brokers or Finders. Neither FiberCore nor Sub has incurred, or will incur,
directly or indirectly, any liability for any brokerage or finders' fees or
agents commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.5 Financial Statements. (a) The consolidated balance sheets of FiberCore
Incorporated ("Old FiberCore") and its Subsidiaries as at December 31, 1993
(audited) and December 31, 1994 (unaudited) and the related consolidated
statements of income, stockholders' equity and cash flows for the respective
years then ended, including the notes thereto, and the reports thereon of Mottle
McGrath & Company, independent certified public accountants (in the case of the
1993 financial statements) (the "Company Financial Statements"), are attached
hereto as Schedule 3.5(a). The Company Financial Statements present fairly the
consolidated financial position and the results of operations of FiberCore and
its Subsidiaries as of the dates and for the periods indicated on the Company
Financial Statements, in each case in conformity with generally accepted
accounting principles ("GAAP"), consistently applied during such periods.
FiberCore and its Subsidiaries do not have any material liabilities or
obligations of any nature, which would be reflected in a current unaudited
financial statement, if available, except (1) as disclosed, reflected or
reserved against in the balance sheet dated December 31, 1994 included in the
Company Financial Statements and the notes thereto; (2) for items explicitly
disclosed in the Interim Financial Statements (as defined below); (3) for
liabilities incurred after June 30, 1995 in the ordinary course of business,
consistent with past practice; (4) for items disclosed in the Information and
Disclosure Statement previously delivered to ALT; and (5) for items listed in
Schedule 3.5(a) or any other schedule attached hereto.
(b) Attached hereto as Schedule 3.5(b) is the consolidated balance
sheet (the "June Balance Sheet") of
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FiberCore and subsidiaries as of June 30, 1995 (the "Balance Sheet Date") and
the related consolidated statements of income, stockholders' equity and cash
flows for the three-month period then ended (the "Interim Financial
Statements"). The Interim Financial Statements present fairly, in all material
respects, the financial position and results of operations of FiberCore and its
Subsidiaries as of the date and for the period indicated on the Interim
Financial Statements, in accordance with GAAP, consistently applied with prior
periods, except that the Interim Financial Statements do not contain footnotes
and will be subject to normal year-end adjustments. Since June 30, 1995,
FiberCore has not disposed of any assets other than at fair value, consistent
with past practice.
(c) The parties hereto acknowledge that the financial
statements attached hereto are estimates prepared in good faith by management.
The parties agree that no liabilities shall attach hereto for any errors
therein.
3.6 Subsidiaries. Except for FiberCore Jena Gmbh, a wholly owned subsidiary of
FiberCore, Inc., and Sub, a wholly owned subsidiary of FiberCore, Inc., and
FiberCore Mid East Ltd., neither FiberCore nor Sub has any Subsidiaries or
equity investments of any kind.
3.7 No Violation or Conflict. Except as set forth in Schedule 3.7, the
execution, delivery and performance by FiberCore and Sub of this Agreement and
the Plan of Merger and the consummation by FiberCore and Sub of the transactions
contemplated hereby and thereby: (A) do not and will not violate or conflict
with any provision of law or regulation, or any writ, order, judgment or decree
of any court or governmental or regulatory authority, or any provision the
Articles of Incorporation or Bylaws of FiberCore and Sub; and (B) do not and
will not, with or without the passage of time or the giving of notice, result in
the breach of, or constitute a default, cause the acceleration of performance,
or require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of FiberCore or Sub or their
Subsidiaries pursuant to any material instrument or agreement to which FiberCore
or Sub or their Subsidiaries are a party or by which FiberCore or Sub or their
Subsidiaries or their respective properties may be bound or affected.
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3.8 Consent of Governmental Authorities. Other than in connection with the
Delaware General Statutes, no consent, approval or authorization of, or
registration, qualification or filing with any federal, state, local or foreign
governmental or regulatory authority is required to be made by FiberCore or Sub
or any of their Subsidiaries in connection with the execution, delivery or
performance by FiberCore or Sub of this Agreement and the Plan of Merger or the
consummation by FiberCore and Sub of the transactions contemplated hereby or
thereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ALT
ALT represents and warrants to FiberCore and Sub as of the date hereof
and as of the Closing as follows:
4.1 Organization and Standing. ALT is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation, and has the full power and authority (corporate and otherwise) to
carry on its business in the places and as it is now being conducted and to own
and lease the properties and assets which it now owns or leases except ALT is or
shortly after the Effective Time of the Merger will be qualified in
Massachussets.
4.2 Capital Structure. The authorized capital stock of ALT consists of
10,000,000 shares of ALT Capital Stock, of which approximately 3,850,000 shares
are issued and outstanding. All of the outstanding shares of ALT Capital Stock
were issued in compliance with applicable federal and state securities laws, and
no further registration, qualification or other compliance under such securities
laws is required. All of the outstanding shares of ALT Capital Stock are validly
issued, fully paid and nonassessable and not subject to preemptive rights
created by statute, ALT's Articles of Incorporation or By-laws or any agreement
to which ALT is a party or is bound. At or immediately before the Effective Time
of the Merger warrants and debt convertible into approximately 4.53 million
shares of ALT Capital Stock will convert such warrants and debt into ALT Capital
Stock (the "Warrant and Debt Conversion"). Except for the foregoing, for
warrants convertible into 85,250 shares, and for warrants for purchase of
100,0000 shares issued to the Connecticut Development
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Authority and warrants for the purchase of 66,667 shares issued to Connecticut
Innovations, Inc. (copies of which were previously delivered to FiberCore), and
for 275,000 incentive stock options, and except as set forth on Schedule 4.2,
there are no equity securities of any class of ALT or any security exchangeable
or convertible into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. Except for the foregoing or as set forth on
Schedule 4.2, there are no options, warrants, calls, rights, commitments or
agreements of any character to which ALT is a party or by which it is bound
obligating ALT to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of ALT or obligating ALT to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
4.3 Authority. ALT has all requisite corporate power and authority to enter into
this Agreement and, subject to approval of this Agreement by the shareholders of
ALT, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of ALT, and have been
approved by the shareholders of ALT. This Agreement has been duly executed and
delivered by ALT and, subject to such approval by shareholders of ALT,
constitutes a valid and binding obligation of ALT, enforceable against ALT in
accordance with its terms, except to the extent that their enforcement is
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity.
4.4 Brokers or Finders. ALT has not incurred, and will not incur, directly or
indirectly, any liability for any brokerage or finders' fees or agents
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
4.5 Financial Statements. (a) The unaudited balance sheets of ALT as at December
31, 1993 and December 31, 1994 and the related unaudited statements of income,
stockholders' equity and cash flows for the respective years then ended,
including the notes thereto (in the case of the 1994 financial statements), (the
"ALT Financial Statements"), are attached hereto as Schedule 4.5(a). The ALT
Financial Statements present fairly the financial
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position and the results of operations of ALT as of the dates and for the
periods indicated on the ALT Financial Statements, in each case in conformity
with generally accepted accounting principles ("GAAP"), consistently applied
during such periods. ALT and its Subsidiaries do not have any material
liabilities or obligations of any nature, which would be reflected in a current
unaudited financial statement, if available, except (1) as disclosed, reflected
or reserved against in the balance sheet dated December 31, 1994 included in the
ALT Financial Statements and the notes thereto; (2) for items explicitly
disclosed in the ALT Interim Financial Statements (as defined below); (3) for
liabilities incurred after June 30, 1995 in the ordinary course of business,
consistent with past practice; and (4) for items listed in schedule 4.5(a) or
any other schedule attached hereto.
(b) Attached hereto as Schedule 4.5(b) is the balance sheet (the "June
Balance Sheet") of ALT as of June 30, 1995 (the "Balance Sheet Date") and the
related statements of income, stockholders' equity and cash flows for the
six-month period then ended (the "ALT Interim Financial Statements"). The ALT
Interim Financial Statements present fairly, in all material respects, the
financial position and results of operations of ALT as of the date and for the
period indicated on the ALT Interim Financial Statements, in accordance with
GAAP, consistently applied with prior periods, except that the Interim Financial
Statements will be subject to normal year-end adjustments. Since June 30, 1995,
ALT has not disposed of any assets other than at fair value, consistent with
past practice and other than its stock in Allied Controls Inc. and its interest
in Allied Controls Holding LLC ("LLC").
(c) The parties hereto acknowledge that the financial statements
attached hereto are estimates prepared in good faith by management. The parties
agree that no liabilities shall attach hereto for any errors therein.
4.6 Subsidiaries. ALT has no Subsidiaries or equity investments of any kind.
4.7 No Violation or Conflict. Except as set forth on Schedule 4.7, the
execution, delivery and performance by ALT of this Agreement and the Plan of
Merger and the consummation by ALT of the transactions contemplated hereby and
thereby: (A) do not and
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will not violate or conflict with any provision of law or regulation, or any
writ, order, judgment or decree of any court or governmental or regulatory
authority, or any provision of ALT's Articles of Incorporation or Bylaws; and
(B) do not and will not, with or without the passage of time or the giving of
notice, result in the breach of, or constitute a default, cause the acceleration
of performance, or require any consent under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of ALT or its
Subsidiaries pursuant to any material instrument or agreement to which ALT or
its Subsidiaries are a party or by which ALT or its Subsidiaries or their
respective properties may be bound or affected.
4.8 Consent of Governmental Authorities. Other than in connection with the
Delaware General Corporate Law, no consent, approval or authorization of, or
registration, qualification or filing with any federal, state, local or foreign
governmental or regulatory authority is required to be made by ALT or any of its
Subsidiaries in connection with the execution, delivery or performance by ALT of
this Agreement and the Plan of Merger or the consummation by ALT of the
transactions contemplated hereby or thereby.
ARTICLE 5.
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of FiberCore and Sub. During the period from the date of this
Agreement and continuing until the Effective Time of the Merger, and except as
specified in Schedules 5.1 or 3.2, FiberCore and Sub agree (except as expressly
contemplated by this Agreement or to the extent that ALT shall otherwise consent
in writing) that:
(a) Dividends; Changes in Stock. Each of FiberCore and Sub and their
Subsidiaries shall not: (i) declare, pay or promise to pay any dividends on or
make other distributions in respect of any of its capital stock, (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of FiberCore or (iii) repurchase or otherwise
acquire any shares of its capital stock.
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(b) Issuance of Securities. Each of FiberCore and Sub and their
Subsidiaries shall not issue, deliver or sell or authorize, promise or propose
the issuance, delivery or sale of, or purchase or promise or propose the
purchase of, any shares of its capital stock or any class or securities
exercisable or convertible into or exchangeable for, or rights, warrants or
options to acquire, any such shares or other convertible securities, other than
at fair value.
(c) Governing Documents. Each of FiberCore and Sub shall not amend its
Articles of Incorporation or By-laws, except as contemplated in this Agreement
or the Plan of Merger.
(d) Accounting Practices. Each of FiberCore and Sub and their
Subsidiaries shall not alter the manner of keeping its books, accounts or
records, or change in any manner the accounting practices therein reflected.
(e) Other Agreements. Each of FiberCore and Sub shall not agree, in
writing or otherwise, to do any of the foregoing.
5.2 Covenants of ALT. During the period from the date of this Agreement and
continuing until the Effective Time of the Merger, and except as specified in
Schedule 5.2 or 4.2, ALT agrees (except as expressly contemplated by this
Agreement or to the extent that FiberCore and Sub shall otherwise consent in
writing) that:
(a) Dividends; Changes in Stock. ALT and its Subsidiaries shall not:
(i) declare, pay or promise to pay any dividends on or make other distributions
in respect of any of its capital stock, other than a distribution of its
interest in Allied Controls Holding LLC, (ii) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of capital stock of ALT
or (iii) repurchase or otherwise acquire any shares of its capital stock.
(b) Issuance of Securities. ALT and its Subsidiaries shall not issue,
deliver or sell or authorize, promise or propose the issuance, delivery or sale
of, or purchase or promise or propose the purchase of, any shares of its capital
stock or any class or securities exercisable or convertible into or exchangeable
for,
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or rights, warrants or options to acquire, any such shares or other convertible
securities, other than at fair value.
(c) Governing Documents. ALT shall not amend its Articles of
Incorporation or By-laws, except as contemplated in this Agreement or the Plan
of Merger.
(d) Accounting Practices. ALT and its Subsidiaries shall not alter the
manner of keeping its books, accounts or records, or change in any manner the
accounting practices therein reflected.
(e) Other Agreements. ALT shall not agree, in writing or otherwise, to
do any of the foregoing.
ARTICLE 6.
OMITTED
ARTICLE 7.
ADDITIONAL AGREEMENTS
7.1 Legal Conditions to the Merger. Each party will take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
such party with respect to the Merger and will promptly cooperate with and
furnish information to the other party in connection with any such requirements
imposed upon such other party in connection with the Merger. Each party will
take all reasonable actions to obtain (and to cooperate with the other party)
any consent, authorization, order or approval of, or any exemption by, any
governmental entity, or other third party, required to be obtained or made by
such party or its Subsidiaries in connection with the Merger or the taking of
any action contemplated thereby or by this Agreement.
7.2 Delivery of Stock Certificates. FiberCore will issue and deliver as and when
required by the provisions of this Agreement, certificates representing the
shares of FiberCore Capital Stock into which the shares of ALT outstanding
immediately prior to the Effective Time of the Merger shall have been converted
as provided herein and deliver substitute option and warrants into
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which the options and warrants outstanding immediately prior to the Effective
Time of the Merger shall have been converted as provided herein.
7.3 Tax Treatment. FiberCore, Sub, and ALT shall use best efforts to qualify the
Merger, and shall use best efforts not to take any action to cause the Merger
not to qualify, as a reorganization under Section 368(a) of the Code. From and
after the Effective Time of the Merger, (i) ALT shall continue ALT's historic
business or use a significant portion of ALT's historic business assets in a
business within the meaning of Treasury Regulation Section 1.368-1(d), and (ii)
FiberCore, Sub and ALT shall treat the Merger as a "reorganization" within the
meaning of Section 368(a) of the Code and shall file such information with their
income tax returns as may be required by Treasury Regulation Section 1.368-3 or
other applicable law.
7.4 Board of Directors. ALT will cause Mohd A. Aslami, Charles DeLuca, Hedayat
Amin-Arsala, and Steven Phillips to be the only members of its Board of
Directors immediately following the Closing.
ARTICLE 8.
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligations to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the required affirmative vote or consent of the holders of the
outstanding shares of ALT Capital Stock and the sole shareholder of Sub Common.
(b) Government Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any governmental entity necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to, such
requirements under applicable state securities laws, shall have been filed,
occurred or been obtained, other than filings with
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and approvals by foreign governments relating to the Merger if failure to make
such filings or obtain such approvals would not be materially adverse to ALT or
its Subsidiaries taken as a whole, or FiberCore or its Subsidiaries taken as a
whole.
(c) Third-Party Approvals. Any and all consents or approvals required
from third parties shall have been obtained.
(d) Legal Action. No temporary restraining order, pre liminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any federal or state court and remain in
effect, and no litigation seeking the issuance of such an order or injunction,
or seeking the imposition against ALT, FiberCore or Sub of substantial damages
if the Merger is consummated, shall be pending which, in the good faith judgment
of ALT's, FiberCore's or Sub's Board of Directors has a reasonable probability
of resulting in such order, injunction or damages. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(e) Statutes. No statute, rule or regulation shall have been enacted by
the government of the United States or any state or agency thereof which would
make the consummation of the Merger illegal.
(f) Appraisal Rights. Holders of no more than 2% of the outstanding
shares of ALT shall have commenced pursuit of their rights for demand for
payment or appraisal under the Delaware General Corporation Law.
(g) Registration Rights and Conversion. Other than CII, CDA, and
holders of employee stock options and holders of warrants underlying 85,250
shares, substantially all persons with registration rights with respect to ALT
common stock shall have waived such rights and substantially all persons holding
warrants and debt of ALT shall have converted such instruments into common stock
of ALT.
8.2 Conditions to Obligations of ALT. The obligations of ALT to effect the
Merger are subject to the satisfaction on or prior to
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the Closing Date of the following conditions, unless waived by ALT:
(a) Representations and Warranties. The representations and warranties
of FiberCore and Sub set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date, and ALT shall have received a certificate or certificates to such effect
signed by the Chief Executive Officer of each of FiberCore and Sub.
(b) Performance of Obligations of FiberCore. FiberCore and Sub shall
have performed in all material respects all obligations required to be performed
by them under this Agreement prior to the Closing Date, and ALT shall have
received a certificate signed by the Chief Executive Officers or Chief Financial
Officers of each of FiberCore and Sub to such effect.
(c) Corporate Action. ALT shall have received from FiberCore and Sub
certified copies of resolutions of Sub's shareholder and FiberCore's and Sub's
Board of Directors approving and adopting this Agreement and the transactions
contemplated hereby, and ALT shall have received certificates signed on behalf
of each of FiberCore and Sub by the corporate secretary of each such entity to
such effect.
8.3 Conditions to Obligations of FiberCore and Sub. The obligations of FiberCore
and Sub to effect the Merger are subject to the satisfaction on or prior to the
Closing Date of the following conditions, unless waived by FiberCore and Sub:
(a) Representations and Warranties. The representations and warranties
of ALT set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date, and
FiberCore and Sub shall have received a certificate or certificates to such
effect signed by an executive officer of ALT.
(b) Performance of Obligations of ALT. ALT shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Closing Date, and FiberCore and Sub shall have received a
certificate signed by an executive officer of ALT.
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(c) Corporate Action. FiberCore and Sub shall have received from ALT
certified copies of resolutions of ALT's shareholders and Board of Directors
approving and adopting this Agreement and the transactions contemplated hereby,
and FiberCore and Sub shall have received a certificate signed on behalf of ALT
by the corporate secretary of such entity to such effect.
ARTICLE 9.
OMITTED
ARTICLE 10.
CLOSING
10.1 Closing Date. The Closing under this Agreement (the "Closing") shall be
held not more than two (2) business days following the later of (a) the approval
of the Merger by the shareholders of ALT and (b) satisfaction of all other
conditions precedent to the Merger specified in this Agreement, unless duly
waived by the party entitled to satisfaction thereof. The parties hereto
anticipate that the Closing will occur on or before September 15, 1995. In any
event, if the Closing has not occurred on or before September 30, 1995, this
Agreement may be terminated as provided in Article 13. Such date on which the
Closing is to be held is herein referred to as the "Closing Date." The Closing
shall be held at the offices of Coleman & Rhine, 1120 Avenue of the Americas,
New York, New York, at 10:00 a.m. on such date, or at such other time and place
as the parties may agree upon in writing.
10.2 Filing Date. Subject to the provisions of this Agreement, on the Closing
Date a fully-executed and acknowledged copy of this Agreement, if required,
along with required related certificates of ALT, FiberCore and Sub meeting the
requirements of the Delaware General Corporation Law, shall be filed with the
Delaware Secretary of State, all in accordance with the provisions of this
Agreement.
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ARTICLE 11.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations, warranties and covenants contained in this
Agreement shall survive only up to the closing of the Merger. All
representations, warranties and covenants in or pursuant to this Agreement shall
be deemed to be conditions to the Merger, and in the event this Agreement shall
be terminated in accordance with the terms thereof, the provisions of Section 12
of this Agreement shall survive any termination of this Agreement.
ARTICLE 12.
PAYMENT OF EXPENSES
If for any reason the Merger as contemplated herein is not consummated
ALT, FiberCore, and Sub shall each pay their own out-of-pocket expenses incurred
incident to the preparation and carrying out of the transactions herein
contemplated; provided that, unless the Merger is not consummated because of a
failure of FiberCore or Sub to satisfy any of the conditions of Section 8.2,
FiberCore will reimburse ALT the actual documented costs incurred, up to a
maximum of Five Thousand Dollars $5,000, in consideration of the expenses
incurred by ALT and the termination of this Agreement and the Merger; provided
further, that if the Merger is not consummated because of a failure of ALT to
satisfy any of the conditions of Section 8.3, ALT will reimburse FiberCore
actual documented costs incurred, up to a maximum of Five Thousand Dollars
($5,000), in consideration of the expenses incurred by FiberCore and Sub and the
termination of this Agreement and the Merger.
ARTICLE 13.
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after the approval by the ALT's
or Sub's shareholders of matters presented in connection with the Merger :
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(a) by mutual written consent of ALT, Sub, and FiberCore;
(b) by ALT, on the one hand or FiberCore and Sub, on the other hand, as
the non-defaulting party or parties, if there has been a material breach of any
material representation, warranty, covenant or agreement contained in this
Agreement on the part of the other party or parties set forth in this Agreement
and, if such breach is curable, such breach has not been cured within a ten (10)
day period after written notice of such breach;
(c) by either ALT, on the one hand, or FiberCore and Sub, on the other
hand, if the Merger shall not have been consummated on or before September 30,
1995; provided, however, that if the Merger shall not be consummated on or
before September 30, 1995 because of a party's failure to satisfy any of the
conditions set forth in Sections 8.2 or 8.3, neither ALT, on the one hand, or
FiberCore and Sub, on the other hand, may rely upon such party or parties own
actions or lack thereof to terminate the Agreement;
(d) ALT, on the one hand, or FiberCore and Sub, on the other hand, if
(i) there shall be a final nonappealable order of a federal or state court in
effect preventing consummation of the Merger or (ii) there shall be any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the Merger by any governmental entity which would make
consummation of the Merger illegal; and
(e) ALT, on the one hand, or FiberCore and Sub, on the other hand, if
there shall be any action taken, or any statute, rule, regulation or order
enacted, promulgated or issued or deemed applicable to the Merger by any
governmental entity, which would (A) prohibit FiberCore's or Sub's ownership or
operation of all or a material portion of the business or assets of ALT or Sub
and its Subsidiaries taken as a whole, or compel FiberCore to dispose of or hold
separate all or a material portion of the business or assets of ALT and its
Subsidiaries taken as a whole or FiberCore and its Subsidiaries taken as a
whole, as a result of the Merger or (B) render ALT or FiberCore unable to
consummate the Merger, except for any waiting period provisions; or
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(f) by any party, provided however that the terminating party shall be
liable for the expenses of the non-terminating parties, in an amount not to
exceed a maximum of $5,000.
Where action is taken to terminate this Agreement pursuant to this
Section 13.1, it shall be sufficient for such action to be authorized by the
Board of Directors of the party taking such action.
13.2 Effect of Termination. In the event of termination of this Agreement by
either FiberCore, Sub or ALT as provided in Section 13.1, this Agreement and the
Plan of Merger shall forthwith become void and there shall be no liability or
obligation on the part of ALT, FiberCore or Sub or their respective officers or
directors except as set forth in Article 12 and Article 14.
13.3 Amendment. This Agreement may be amended by the parties hereto, by action
taken by their respective Board of Directors, at any time before or after
approval of matters presented in connection with the Merger by the shareholders
of ALT and Sub but, after any such shareholder approval, no amendment shall be
made which by law requires the further approval of shareholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
13.4 Extension; Waiver. At any time prior to the Effective Time of the Merger,
any party hereto, by such corporate action as shall be appropriate, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
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ARTICLE 14.
LIMITATION ON LIABILITY
14.1 Liabilities of ALT, FiberCore, and Sub. The aggregate liability of all
entities for breaches by FiberCore and Sub and their officers and directors
under this Agreement and the Plan of Merger and the transactions contemplated
hereby and thereby shall be limited to $5,000 (including the amounts set forth
in sections 12 and 13).
ARTICLE 15.
GENERAL
15.1 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and delivered personally
or sent by certified mail, postage prepaid, as follows:
If to FiberCore or Sub:
Dr. Mohd A. Aslami, President
FiberCore, Inc.
P.O. Box 206
174 Charlton Road
Sturbridge, Massachusetts 01566
If to ALT:
Automated Light Technologies, Inc.
P.O. Box 802
Tolland, Connecticut 06084
Attn: Charles DeLuca
15.2 Headings. The headings of the several sections of this Agreement are
inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
15.3 Counterparts. This Agreement may be executed in counter parts, and when so
executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
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15.4 Binding Nature. This Agreement shall be binding upon and inure to the
benefit of the parties hereto. Neither ALT, Sub or FiberCore may assign or
transfer any rights under this Agreement.
15.5 Other Agreements. All written agreements heretofore made between the
parties hereto in contemplation of this Agreement are superseded by this
Agreement and are hereby terminated in their entirety.
15.6 Good Faith. Each of the parties hereto agrees that it shall act in good
faith in an attempt to cause all the conditions precedent to their respective
obligations to be satisfied.
15.7 Applicable Law. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of New York and
each party agrees to submit to the jurisdiction of the courts of the State of
New York.
15.8 No Third Party Beneficiaries. The terms and provisions of this Agreement
are intended for the benefit of each party hereto and their respective
successors and permitted assigns, and it is not the intention of the parties to
confer third party beneficiary rights upon any other person or entity.
15.9 Severability. A determination that any portion of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of any
of the remaining portions hereof or of this Agreement as a whole. In the event
that any part of any of the covenants, sections or provisions herein may be
determined by a court of law to be overly broad or against applicable precedent
or public policy, thereby making such covenants, sections or provisions invalid
or unenforceable, the parties hereto agree, and it is their desire that, such
court shall substitute a reasonable and judicially enforceable limitation in
place of the invalid and unenforceable part of such covenants, sections or
provisions, and that, as so modified, the covenants, sections or provisions
shall be as fully enforceable as if set forth herein by the parties themselves
in the modified form. If, however, any court of law shall refuse to substitute
any reasonable and judicially enforceable provisions in their place, the parties
shall attempt to reach agreement with respect to a valid and enforceable
substitute for the deleted provisions which shall be as close in its intent and
effect as possible to the deleted portions.
24
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first written above.
FIBERCORE, INC.
By:/s/ Mohd Aslami
------------------------
Name: Mohd Aslami
---------------------
Title: President
---------------------
ALT MERGER CO.
By:/s/ Mohd Aslami
------------------------
Name: Mohd Aslami
---------------------
Title: President
---------------------
AUTOMATED LIGHT TECHNOLOGIES, INC.
By:/s/ Mohd Aslami
------------------------
Name: Mohd Aslami
---------------------
Title: President
---------------------
25
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 12th day of September, 1995, before me personally came
Mohd Aslami, to me known, who, being by me duly sworn, did depose and say that
he has a business address at 174 Charlton Road, Sturbridge, MA ; that he is the
President of FiberCore, Inc. and ALT Merger Co., the corporations described in
and which executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of said corporations.
/s/ Maureen Mulle
--------------------
Maureen Mullen
Notary Public
26
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On the 14th day of September, 1995, before me personally came
Charles DeLuca, to me known, who, being by me duly sworn, did depose and say
that he has a business address at 174 Charlton Road, Sturbridge, MA; that he is
the Secretary of Automated Light Technologies, Inc., the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Lucille Christian
--------------------
Lucille Christian
Notary Public
A:\ALTAGREE.DOC
27
<PAGE>
EXHIBIT A
PLAN OF MERGER
THIS PLAN OF MERGER (the "Plan of Merger") is dated as of
September 18th, 1995 and is entered into by and between ALT Merger Co., a
Delaware corporation ("Acquisition Sub"), and Automated Light Technologies,
Inc., a Delaware corporation (the
"Company").
W I T N E S S E T H
WHEREAS, the Company and Acquisition Sub and the respective
Boards of Directors thereof have approved as desirable and in the best interests
of each corporation that Acquisition Sub be merged with and into the Company by
a statutory merger upon the terms and conditions contained in this Plan of
Merger and in a certain Agreement and Plan of Reorganization, dated as of
September 18th, 1995 by and among FiberCore, Inc. ("Parent"), the Company and
Acquisition Sub (the "Merger Agreement") (which Merger Agreement shall be deemed
part of this Plan of Merger and is hereby incorporated by reference to the same
extent as if fully set forth herein), and in accordance with the applicable laws
of the State of Delaware.
NOW, THEREFORE, in consideration of the premises and the
mutual promises contained herein, IT IS AGREED AS FOLLOWS:
FIRST: At the Effective Date of the Merger (as hereinafter
defined), Acquisition Sub shall be merged with and into the Company by a
statutory merger (the "Merger") in accordance with the General Corporation Law
of the State of Delaware (the "GCL") and upon the terms and conditions
hereinafter expressed. At the Effective Date of the Merger, Acquisition Sub
shall be merged with and into the Company, the separate existence of Acquisition
Sub shall cease, and the Company shall be the surviving corporation (Acquisition
Sub and the Company are hereinafter sometimes referred to as the "Constituent
Corporations," and the Company, as the party surviving the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation") all in the
manner intended by Section 251 of the GCL.
28
<PAGE>
SECOND: The Merger shall become effective at the time of
filing of the certificate of merger with the Secretary of State of the State of
Delaware (the "Certificate of Merger") in accordance with the provision of the
GCL. The date and time when the Merger shall become effective is herein referred
to as the "Effective Date."
THIRD: The manner and basis for converting the shares of the
capital stock of the Company and Acquisition Sub upon the Merger shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be as follows:
a. Each share of the Company's common stock, par value
$.01 per share, actually issued and outstanding at
the Effective Date ("Company Common Stock"), except
for Dissenting Shares (as defined below) shall, by
virtue of the Merger and without any action on the
part of the holder thereof, at the Effective Date,
be converted into the right to receive a number of
shares equal to the ratio of (x) 8,811,137 over (y)
the number of shares of Company Common Stock
outstanding on a fully diluted basis (other than
shares underlying warrants issued to the Connecticut
Development Authority and Connecticut Innovations,
Inc. and other than 85,250 shares underlying certain
warrants and 275,000 shares underlying certain
incentive stock options, but including approximately
4.53 million shares underlying warrants and debt to
be issued at the Effective Time) (the "ALT
Outstanding") immediately prior to the Merger
(hereinafter, the "Exchange Ratio" or the "Per Share
Merger Consideration") of issued and outstanding
shares of the Common Stock, par value $.001 per
share, of Parent (the "Parent Common Stock") (the
"Per Share Merger Consideration"). The exact
exchange ratio is set forth on Attachment 1. An
aggregate of 8,811,137 shares of Parent Common Stock
will be issued in the Merger if all shares of ALT
Outstanding are converted into shares of Parent
Common Stock.
29
<PAGE>
b. All payments shall be made in Parent Common Stock
pursuant to the terms and conditions of the Merger
Agreement.
c. Each share of the Company Common Stock held in the
Company's treasury at the Effective Date shall, by
virtue of the Merger, be canceled without payment of
any consideration therefor and without any
conversion thereof.
d. All shares of Company Common Stock held of record by
shareholders who shall not have voted such shares in
favor of the Merger and who shall properly exercise
rights to demand payment of the fair value of such
shares in accordance with Section 262 of the GCL
(the "Dissenting Shares"), if any, shall be canceled
upon such exercise and shall be entitled to payment
of the fair value of such shares in accordance with
the provisions of Section 262 inclusive of the GCL
(the "Dissenting Consideration").
e. After the Effective Date, each holder of an
outstanding certificate which at the Effective Date
represented outstanding shares of Company Common
Stock (the "Certificates"), upon surrender of such
Certificates, together with a transmittal letter
(which shall specify that delivery shall be
effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery
of the Certificates) shall be entitled to receive in
exchange for each share of Company Common Stock
represented thereby, the Per Share Merger
Consideration or Dissenting Consideration, as the
case may be. No interest will be paid or accrued on
the Per Share Merger Consideration or the Dissenting
Consideration, as the case may be, payable upon the
surrender of such Certificates, except to the extent
required by law.
f. After the Effective Date, there shall be no further
transfers on the stock transfer books of the
Surviving Corporation of the shares of Company
Common Stock or Options (as defined below) which
30
<PAGE>
are outstanding at the Effective Date. If, after the
Effective Date, Certificates are presented to the
Surviving Corporation for transfer, they shall be
canceled and there shall be issued to the transferee
in exchange therefor the consideration as provided
above.
g. Each share of Acquisition Sub common stock, par
value $.01 per share (the "Acquisition Sub Common
Stock"), issued and outstanding at the Effective
Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, at the
Effective Date, be converted into and exchangeable
for one fully paid and nonassessable share of
Surviving Corporation Common Stock, par value $0.01
per share (the "Surviving Corporation Common
Stock"). From and after the Effective Date, each
outstanding certificate theretofore representing
Acquisition Sub Common Stock shall be deemed for all
purposes to evidence ownership of, and to represent
the number of shares, of Surviving Corporation
Common Stock into which such shares of Acquisition
Sub Common Stock shall be converted.
h. With respect to unexpired, unexercised options,
warrants or other convertible securities
("Convertible Securities"), whether or not
exercisable or convertible at the Effective Date,
outstanding on the Effective Date, each such option,
warrant or convertible security, by virtue of the
Merger and without any action on the part of the
holder thereof other than proper execution of a
notice of exercise or conversion of such convertible
security, shall be converted into the right to
receive, for the number of shares of ALT Capital
Stock to which the warrantholder, optionholder, or
convertible security holder is entitled (the
"Underlying Share Count"), the number of shares of
Parent Capital Stock determined by multiplying the
aforesaid number by the Per Share Merger
Consideration, upon payment of an amount equal to
the exercise price specified in such Option or
Warrant or conversion price
31
<PAGE>
specified in such Convertible Security multiplied by
the Underlying Share Count, subject to the
expiration date and other terms of such Option or
Warrant or Convertible Securities.
FOURTH: Until otherwise amended in accordance with law or such
Certificate of Incorporation, the Certificate of Incorporation of the Company,
and the By-laws of the Company in effect at the Effective Date of the Merger,
shall be the Certificate of Incorporation and By-laws of the Surviving
Corporation following the Merger.
FIFTH: All officers and directors of the Company at the
Effective Date shall, from and after the Effective Date, be the officers and
directors, respectively, of the Surviving Corporation, and shall hold office
until their successors are elected or appointed and qualify as provided in the
Certificate of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by law. At the Effective Date, all directors of the
Acquisition Sub shall cease to be directors thereof and shall be considered
removed from office. If, at the Effective Date, a vacancy shall exist on the
Board of Directors of the Surviving Corporation, such vacancy may thereafter be
filled in the manner provided in the Certificate of Incorporation and Bylaws of
the Surviving Corporation, or as otherwise provided by law.
SIXTH: At the Effective Date of the Merger, all respective
property, assets, rights, privileges, powers, franchises and immunities of each
of the Constituent Corporations shall vest in the Surviving Corporation and all
of the respective debts, liabilities and obligations of each of the Constituent
Corporations shall become the debts, liabilities and obligations of the
Surviving Corporation.
32
<PAGE>
SEVENTH: Prior to the filing of the Certificate of Merger,
this Plan of Merger may be terminated as provided in the Merger Agreement.
33
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first written above.
AUTOMATED LIGHT TECHNOLOGIES, INC.
By: /s/ Charles DeLuca
-------------------------------
Name: Charles DeLuca
------------------------
Title: Vice President
------------------------
ALT MERGER CO.
By: /s/ Mohd Aslami
-------------------------------
Name: Mohd Aslami
------------------------
Title: President
------------------------
Agreed To:
FIBERCORE, INC.
By: /s/ Mohd Aslami
--------------------------
Name: Mohd Aslami
------------------------
Title: President
------------------------
34
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 12th day of September, 1995, before me personally came
Mohd Aslami, to me known, who, being by me duly sworn, did depose and say that
he has a business address at 174 Charlton Road, Sturbridge, MA ; that he is the
President of FiberCore, Inc. and ALT Merger Co., the corporations described in
and which executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of said corporations.
/s/ Maureen Mullen
Notary Public
35
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On the 14th day of September, 1995, before me personally came
Charles DeLuca, to me known, who, being by me duly sworn, did depose and say
that he has a business address at 174 Charlton Road, Sturbridge, MA; that he is
the Secretary of Automated Light Technologies, Inc., the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Lucille Christian
Notary Public
36
<PAGE>
Schedule 2.3
Exchange Ratio
1.051615
37
<PAGE>
Schedule 3.2
Warrants, Options and Other
Outstanding Convertible Equity Securities of FiberCore
$5,000,000 convertible debt held by AMP, Inc. plus interest
accumulating at a rate of LIBOR plus one percent may be converted into common
stock of FiberCore through April 17, 2005. For the first five years the
conversion price is $1.1576258 per share; thereafter the conversion price is
equal to the price per share paid by a third party investor in the private sale
of common stock by FiberCore immediately prior to such conversion.
348,774 employee stock options are outstanding and 305,000 additional
options are available for issuance.
1,560,305 options may be issued to a new chief operating
officer.
Additional warrants exercisable into 550,696 shares of FiberCore
Capital Stock are due to be issued to Middle Eastern Specialized Cable Company
("MESC"), upon signing of certain agreements.
238,635 shares of FiberCore Capital Stock are due to be issued to MESC
upon the exercise of the warrants listed in the above paragraph.
An additional 679,192 shares of FiberCore Capital Stock are to be
issued to MESC upon the signing of certain agreements.
An additional 367,131 shares are in the process of being issued to
MESC, upon the closing of a certain agreement.
An additional 820,996 warrants are outstanding (subject to adjustment).
Additional warrants may be due the Armand Group in an amount dependent
on the number of the Company's securities placed by them, in a contemplated
private placement.
All warrants and options reflect pre-dilution numbers. Such dilution
may have occurred from issuance of other warrants, options or sales of stock. In
addition, the terms of this agreement may further dilute options and warrants.
38
<PAGE>
Schedule 3.5(a)
Financial Statements
39
<PAGE>
Schedule 3.5(b)
Financial Statements
40
<PAGE>
Schedule 3.7
FiberCore Violations and Conflicts Arising from Merger
None.
Schedule 4.2
Warrants, Options and Other
Outstanding Equity Securities of ALT
None.
41
<PAGE>
Schedule 4.5(a)
Financial Statements
42
<PAGE>
Schedule 4.5(b)
Financial Statements
43
<PAGE>
Schedule 4.7
ALT Violations or Conflicting Agreements
ALT is required to register shares underlying certain warrants
immediately upon consummation of a merger. Such registration is supposed to be a
condition to a merger.
Schedule 5.1
FiberCore's Covenants Relating to Conduct of Business
See attached Amendment.
44
<PAGE>
Schedule 5.2
ALT's Covenants Relating to Conduct of Business
None.
45
<PAGE>
Attachment 1
Exchange Ratio
1.051615
46
EXH2-4
PURCHASE & SALE AGREEMENT
BETWEEN ALT AND NORSCAN
AGREEMENT, made as of this 7th day of September, 1986, by and between
Norscan Instruments, Ltd., a Canadian corporation having its principal place of
business at Winnipeg, Manitoba, Canada (hereinafter "Norscan") and Automated
Light Technologies, Inc. a Delaware corporation, having its principal place of
business at Sturbridge, Massachusetts 01566 (hereinafter "ALT").
WITNESSETH:
WHEREAS, FOCMS, a fiber optic cable monitoring system, is a new and
useful technology and all the uses of FOCMS have not been identified or fully
explored;
WHEREAS, ALT is a recently formed corporation;
WHEREAS, it is the desire of ALT to engage in R&D, Engineering,
Manufacturing, and Sales activities with respect to applications for FOCMS
worldwide (except Canada);
WHEREAS, ALT expects that such activities will result in specially
constructed or developed FOCMS; WHEREAS, Norscan owns patents relating to FOCMS
in the United Kingdom and the United States (see Appendix);
WHEREAS, ALT plans to investigate and manufacture specialized FOCMS
which may be impeded in the absence of patented inventions and related know-how
technology from Norscan;
WHEREAS, Norscan desires that FOCMS know-how technology be advanced as
quickly as possible and its patented inventions be used to promote, and not
hinder, such advancement;
WHEREAS, Norscan's know-how technology may assist ALT to develop
specially constructed FOCMS; and
WHEREAS, for the foregoing reasons, ALT has offered to purchase patents
and know-how from Norscan for worldwide sale and use (except Canada), under
Norscan patents and know-how technology whereby ALT may pursue its plans and
desires and Norscan is willing to sell such patents and know-how.
NOW, THEREFORE, in consideration of the grants, covenants, and promises
herein contained, Norscan and ALT agree as follows
ARTICLE I - DEFINITIONS
The following terms, whenever used in this Agreement, shall have the
meaning set forth below:
<PAGE>
A. "FOCMS" shall mean all methods and apparatus for fiber optic cable
monitoring systems developed or acquired, by Norscan. Such FOCMS instruments,
components, or systems may be leased, sold, and used in any appropriate
application including but not limited to the fields of Telecommunications and
Data communica-tions.
B. "Norscan Patents" shall mean each foreign patent (non-Canadian)
filed or acquired by Norscan which relates to FOCMS and which has a filing date
or acquisition date prior to September 1, 1991.
C. "Norscan Know-How" shall mean technical information of any kind
relating to the manufacture, use or sale of FOCMS and which is owned by Norscan.
ARTICLE II - PATENT ASSIGNMENT
A. Norscan assigns to ALT all rights, title and interest to each of the
foreign "Norscan Patents" and foreign Patent Applications filed and unfiled in
consideration for which ALT grants to Norscan 150 shares of common stock of ALT.
(At present, there are 3,000 shares of ALT common stock issued.) Executed
Assignments of U.K. Patent 2,082,406 and U.S. Patent 4,480,251 are being
prepared by Norscan for prompt transmittal to ALT. All "Norscan Patents" having
a filing date or acquisition date prior to September 1, 1991 will be promptly
assigned to ALT at the time of filing or acquisition.
B. All future costs for (a) maintaining issued foreign patents and (b)
filing, prosecuting and maintaining future foreign applications shall be paid by
ALT . Norscan will provide ALT with all necessary assistance from the inventors
in the filing and prosecution of all foreign patent applications .
ARTICLE III - KNOW-HOW
A. NORSCAN KNOW-HOW
It is in the interest of ALT, Norscan and the public that the
development work of ALT not be impeded because ALT does not possess certain
know-how. To avoid such impediment, the parties agree that Norscan shall provide
to ALT all technical know-how information required to develop and manufacture
all components and related products defined as FOCMS. This technical know-how
information includes but is not limited to drawings, blueprints, part lists,
vendor's lists, etc. . Furthermore, the parties agree that their representatives
shall meet periodically for the purpose of discussing current development work
at ALT and Norscan with respect to FOCMS. ALT and Norscan agree that: (1) When
such meetings are convened, each party shall be free to designate its respective
representative or representatives; and (2) Each party shall be free to require
that such discussions shall be subject to and conditioned upon conventional
non-disclosure agreements, copies of which are attached hereto. Either as a
result of such discussions or otherwise, (1) ALT may request that Norscan
provide to ALT such know-how as Norscan may have with respect to a particular
FOCMS, or (2) Norscan may offer to supply to ALT such know-how as Norscan has
and wishes to provide with respect to a particular FOCMS.
<PAGE>
ARTICLE IV - ASSIGNMENT
This Agreement can be assigned by ALT to its subsidiaries.
ARTICLE V - TERMS AND CONDITIONS
A. Norscan shall not provide know-how, patent rights or in any way
directly or indirectly compete with ALT worldwide (except Canada) in the FOCMS
products and applications as covered under the Norscan Patents (defined in
Article I-C).
B. Norscan shall obtain clearance from the ALT corporate counsel or Dr.
Mohd A. Aslami and Mr. Charles DeLuca (jointly) prior to the sale of any of its
shares in ALT that it has met all of its obligations under this purchase and
sale agreement, for sales prior to September 1, 1991. For sale after September
1, 1991 , Norscan stall obtain only ONE clearance from ALT corporate counsel or
Dr. Mohd A. Aslami and Mr. Charles DeLuca (jointly) that Norscan has met all its
obligations to ALT under this Purchase and Sale Agreement up to September 1,
1991. If Norscan's request for clearance to sell shares in ALT either prior to
or after September 1, 1991 is withheld by ALT corporate counsel or Mohd Aslami
and Charles DeLuca as provided herein, then the clearance request shall be
submitted for resolution to arbitration subject to the rules of the American
Arbitration Association.
C. Mr. David Vokey of Route 5, Hickory, N.C. 28601, a co-inventor of
Norscan patents and a principal stockholder of Norscan agreed to join ALT at its
request under a mutually and reasonably agreed upon compensation plan.
D. Mr. Ken Sontag of 11 Bluegrass Road, Winnipeg, Manitoba, Canada
R2C-2Z2, a principal stockholder of Norscan agrees to join ALT at its request
(within one month) under a mutually and reasonably agreed upon compensation
plan.
ARTICLE VI - COMMUNICATIONS
All notices and reports to be delivered to ALT and Norscan under the
terms of this Agreement shall be considered as so delivered when sent to the
other party by registered mail, postage prepaid, at the address hereinafter set
forth, or to such other addresses as may subsequently be designated in writing:
Norscan Instruments, Ltd.
P.O. Box 44
Winnipeg, Manitoba
Canada R3C-2G1
Attention: President
ALT, Inc.
P.O. Box 945
Sturbridge, Massachusetts 01S66
Attention: President
<PAGE>
ARTICLE VII - MISCELLANEOUS
A. Nothing in this Agreement is to be construed as, nor is there any
other agreement between the parties which is to be construed as, an undertaking
by either party to refrain from doing any act as to which a patent right is not
granted by this Agreement.
B. This Agreement has been entered into in, and shall be construed in
accordance with the laws of the State of Massachusetts.
C. This Agreement may not be waived, altered or modified except by
written agreement of the parties.
D. A waiver or any breach of any portion of this Agreement shall not
constitute a waiver of a prior, concurrent or subsequent breach of the same or
any other provision hereof and a waiver shall not be effective unless in
writing. In the event that any provision of this Agreement shall be declared
unenforceable, such provision shall be severed and the balance of the Agreement
shall continue in full force and effect.
E. Neither Norscan nor ALT shall make any press or public release
concerning this Agreement except in form agreed to in writing by the other
party; provided, however, neither party shall be precluded from making any
disclosure concerning this Agreement which is deemed necessary to comply with
the law. Any reference to or description of this Agreement which ALT desires to
appear in any registration statement or offering by or on behalf of ALT shall be
an accurate reference or description, consisting of material information. ALT
and Norscan shall not otherwise disclose the terms and conditions of this
Agreement to any third party without the prior written consent of the other;
provided, however, that: (a) ALT may, in connection with any public offering or
private placement by ALT, disclose the terms and conditions of this Agreement to
underwriters and placement agencies associated therewith, and (b) Norscan, after
providing written notice to ALT, shall have the right to disclose the terms and
conditions of this Agreement to a third party, with whom it is having licensing
negotiations and subject to a non-disclosure agreement, that lasts as long as
this agreement is confidential, and shall have the right to produce this
Agreement in connection with any litigation to which it is a party, provided
that such production is subject to a protective order, that lasts as long as
this Agreement is confidential, entered by the Court.
F. The headings of this Agreement are intended solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
ARTICLE VIII - ENTIRE AGREEMENT
The terms and provisions herein contained constitute the entire
agreement between the parties relating to the patent rights and know-how granted
herein and supersede all previous communications, representations, agreements or
understandings, either oral or written, between the parties with respect
thereto. Any modifications of this Agreement shall not be effective unless
signed by duly authorized officers or representatives of the parties.
<PAGE>
ARTICLE IX - FORCE MAJEURE
If the performance of any obligation under this Agreement is prevented
by any cause beyond the reasonable control of a party, such party shall be
excused from such performance for so long as is reasonable. The party so
prevented shall use all practical efforts to perform its obligations as soon as
possible.
IN WITNESS THEREOF, the parties have caused this Agreement to be signed
by their respective authorized officers as of the day and year first above
written.
Norscan Instruments, Ltd. Norscan Instruments, Ltd.
By__/S/____________ _____ By___/S/___________ _____
Secretary Date President Date
ALT, Inc.
By__/S/____________ _____ By___/S/___________ _____
Secretary Date President Date
<PAGE>
APPENDIX
Norscan Foreign Patents
(1) U.K. Patent 2,082,406B entitled -
MONITORING ELECTRICAL CABLES AND JOINTS
FOR THE INGRESS OF MOISTURE
by David Ernest Vokey
John Paul McNaughton
Wayne Edward Domenco
(2) U.S. Patent 4,480,251 issued October 30, 1984 entitled -
APPARATUS TO MONITOR ELECTRICAL CABLES, INCLUDING SPLICE
JOINTS AND THE LIKE, FOR THE INGRESS OF MOISTURE
by John P. McNaughton
Wayne E. Domenco
David E. Vokey
(3) Norscan Foreign Patent Applications relating to FOCMS acquired or filed
prior to September 1, 1991.
<PAGE>
NORSCAN INSTRUMENTS LTD., 11 Bluegrass Road, Winnipeg, Manitoba, Canada in
consideration of One Dollar ($1.00) and other good and valuable consideration,
the receipt of which is hereby acknowledged, do hereby sell and assign to
AUTOMATED LIGHT TECHNOLOGIES INC., 7 Laurel Hill Road, Sturbridge,
Massachusetts, USA, hereinafter called the assignee, the entire, right, title
and interest in and to the invention entitled "APPARATUS TO MONITOR ELECTRICAL
CABLES, INCLUDING SPLICE JOINTS AND THE LIKE, FOR THE INGRESS OF MOISTURE " as
disclosed in the United States Patent No. 4,480,251 issued the 13th day of June,
1984 and in and to any and all reissues and extensions thereof, in and for the
United Kingdom, and all other countries in the world save and except Canada, the
same to be held and enjoyed by the said assignee, its successors, assigns, or
legal representatives to the full ends of the terms for which all Letters Patent
therefor are granted, as fully and entirely as the same would have been held and
enjoyed by us if this assignment and sale had not been made, this assignment
including the right to take action and recover in respect of any infringement of
the patent that took place prior to the date of this assignment.
SIGNED at the City of Winnipeg, in the Province of Manitoba, Canada, this 13th
day of February, 1987.
NORSCAN INSTRUMENTS LTD.
PER:___/S/______________ Pres.
PER:___/S/______________ Sec.
<PAGE>
NORSCAN INSTRUMENTS LTD., 11 Bluegrass Road, Winnipeg, Manitoba, Canada in
consideration of One Dollar ($1.00) and other good and valuable consideration,
the receipt of which is hereby acknowledged, do hereby sell and assign to
AUTOMATED LIGHT TECHNOLOGIES INC., 7 Laurel Hill Road, Sturbridge,
Massachusetts, USA, hereinafter called the assignee, the entire, right, title
and interest in and to the invention entitled "APPARATUS TO MONITOR ELECTRICAL
CABLES, INCLUDING SPLICE JOINTS AND THE LIKE, FOR THE INGRESS OF MOISTURE" as
disclosed in the United Kingdom Patent No. 2082406 issued the 13th day of June,
1984 and in and to any and all patents of confirmation and extensions thereof,
in and for the United Kingdom, and all other countries in the world save and
except Canada, the same to be held and enjoyed by the said assignee, its
successors, assigns, or legal representatives to the full ends of the terms for
which all Letters Patent therefor are granted, as fully and entirely as the same
would have been held and enjoyed by us if this assignment and sale had not been
made, this assignment including the right to take action and recover in respect
of any infringement of the patent that took place prior to the date of this
assignment.
SIGNED at the City of Winnipeg, in the Province of Manitoba, Canada, this 13th
day of February, 1987.
NORSCAN INSTRUMENTS LTD.
PER:___/S/______________ Pres.
PER:___/S/______________ Sec.
================================================================================
State Of Nevada [Seal] Department Of State
I, FRANKIE SUE DEL PAPA, Secretary of State of the State of Nevada, do
hereby certify that VENTURECAP, INC. did on the FOURTEENTH day of MAY, 1987,
file in this office the original Articles of Incorporation; that said Articles
are now on file and of record in the office of the Secretarey of State of the
State of Nevada, and further, that said Articles contain all the statements of
facts required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have set my hand and affixed the Great Seal of State,
at my office in Carson City, Nevada, this FOURTEENTH day of MAY, A.D. 1987.
[SEAL]
/S/ Frankie Sue Del Papa
------------------------
Secretary of State
By /S/ Nancy [Illegible]
------------------------
Deputy
================================================================================
<PAGE>
- ----------------------------------------
SECRETARY OF STATE
STATE OF NEVADA
MAY 14, 1987
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/S/Frankie Sue Del Papa
No. 3690 - 87
- ----------------------------------------
ARTICLES OF INCORPORATION
OF
VENTURECAP, INC.
I. NAME The name of the corporation is:
VENTURECAP, INC.
II. PRINCIPAL OFFICE: The location of the principal office of this corporation
within the State of Nevada is located at: c/o Lloyd G. Hollis, 3751 So. Nellis
Blvd. Space 310, Las Vegas, Nevada 89121.
III. PURPOSE: The purpose for which this corporation is formed is to engage in
any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK : The amount of the total authorization of
capital stock of the corporation shall be TWENTY THOUSAND DOLLARS ($20,000.00),
consisting of twenty Million (20,000,000) shares of common stock with a par
value of ONE TENTH OF ONE CENT ($0.001) per share.
V. INCORPORATORS: The names and addresses of each of the incorporators signing
these Articles of Incorporation are as follows:
1. James E. Glavas, 6640 So. 2475 East Salt Lake City, Utah 84121.
2. Bonnie Hollis, 3633 So. 3325 West, West Valley City, Utah 84119.
3. Lloyd G. Hollis, 3751 So. Nellis Blvd. Space 310, Las Vegas, Nevada
89121
VI. DIRECTORS: The governing board of this corporation shall be known as
directors and the number of directors may from time to time be increased or
decreased in such manner as shall be specified by the bylaws of the corporation;
provided, however, the number of directors shall not be reduced to less than
three (3).
The names and addresses of the Directors comprising the first Board of
Directors are as follows:
1. James E. Glavas, 6640 So. 2475 East Salt Lake City, Utah 84121.
2. Bonnie Hollis, 3633 So. 3325 West, West Valley City, Utah 84119.
3. Lloyd G. Hollis, 3751 So. Nellis Blvd. Space 310, Las Vegas, Nevada
89121.
The name and residence address within the State of Nevada of this
corporation's initial resident agent shall be: Lloyd G. Hollis, 3751 So. Nellis
Blvd. Space 310, Las Vegas, Nevada 89121.
VII. STOCK NON-ASSESSABLE: The capital stock or the holders thereof, after the
amount of the subscription price has been paid in, shall not be subject to any
assessment whatsoever to pay the debts of the corporation.
<PAGE>
VIII. TERM OF EXISTENCE: This corporation shall have perpetual existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in the election
of Directors.
X. PREEMPTIVE RIGHTS: Stockholders shall not be entitled to preemptive rights.
XI. The directors of the corporation above named, and their duly elected and
qualified successors shall have the unqualified right of adoption of and
subsequent revision or amendment to the by-laws of this corporation, without
resort to approval thereof by shareholders of this corporation.
XII. The directors of the corporation above named, and their duly elected and
qualified successors shall have the unqualified right to authorize and issue
other and additional classes of stock of this corporation in addition to those
herein provided, without resort approval thereof by the shareholders of this
corporation.
IN WITNESS WHEREOF, we have hereunto set our hands and seals this 30th day
of Dec. 1986.
/S/ James E. Glavas
-----------------------------
JAMES E. GLAVAS
/S/ Bonnie Hollis
-----------------------------
BONNIE HOLLIS
/S/ Lloyd G. Hollis
-----------------------------
LLOYD G. HOLLIS
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On this 30th day of Dec. 1986 , before me, a Notary Public, personally
appeared James E. Glavas and Bonnie Hollis who acknowledge they executed the
above instrument.
/S/ JOAN M. NORTH
-----------------------------
Notary Public
[SEAL] NOTARY PUBLIC
STATE OF NEVADA
County of Clark
JOAN M. NORTH
My Appointment Expires Jan. 22, 1989
<PAGE>
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
On this 30 day of December, 1986, before me, a Notary Public, personally
appeared Lloyd G. Hollis who acknowledged he executed the above instrument.
/S/ JOAN M. NORTH
-----------------------------
Notary Public
[SEAL] NOTARY PUBLIC
STATE OF NEVADA
County of Clark
JOAN M. NORTH
My Appointment Expires Jan. 22, 1989
<PAGE>
- --------------------------------
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE
STATE OF NEVADA
JUL 11, 1995
No. 3690 - 87
/S/ [ILLEGIBLE]
[ILLEGIBLE] SECRETARY OF STATE
- --------------------------------
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
VENTURECAP, INC.
THE UNDERSIGNED President and Secretary of Venturecap, Inc., of the
corporation, pursuant to the provisions of Sections 78.385 and 78.390 of the
Nevada Revised Statutes, for the purpose of amending the Articles of
Incorporation of said Corporation, do hereby certify as follows:
That the shareholders of said Corporation at its Special Meeting in Lieu of
Annual Meeting of Shareholders duly convened and held on the 5th day of July,
1995, adopted a resolution to amend the Articles of Incorporation of the
Corporation as follows:
FIRST: Article IV shall be amended to read as follows:
"IV. Authorization of Capital Stock: The aggregate number of shares which the
Corporation will have authority to issue is One Hundred Million (100,000,000)
shares of common stock, par value $.001 per share, each share of common stock
having equal rights and preferences; and Ten Million (10,000,000) shares of
preferred stock, par value $.001 per share, which shares of preferred stock may
be issued in various series and with terms, rights, voting privileges and
preferences to be determined by the Board of Directors at the time of issuance."
The foregoing amendment to the Articles of Incorporation was duly adopted
by the shareholders of the Corporation on the 5th day of July, 1995.
At the date of the Meeting of Shareholders, the number of shares of the
Corporation's common stock outstanding and entitled to vote on the foregoing
amendment to the Articles of Incorporation was 955,450. A total of 765,550
shares voted FOR the aforesaid amendment (representing approximately 80% of the
issued and outstanding shares of the Corporation) and -0- shares voted AGAINST
such amendment.
DATED this 5th day of July, 1995.
The undersigned President and Secretary of the Corporation hereby declare
that the foregoing Certificate of Amendment To The Articles of Incorporation is
true and correct to the best of their knowledge and belief.
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
- ------------------------------------ /S/ Linda Fredrickson
[SEAL] Notary Public -----------------------------
LINDA FREDRICKSON Notary Public
751 West 300 South
Salt Lake City, Utah 84104 Residing at Salt Lake City, Utah
My Commission Expires
August 26, 1996
State Of Utah
- ------------------------------------
My Commission Expires:
AUG. 25, 1998
- ----------------------
On this 6th day of July, 1995, before me, the undersigned, a Notary Public,
in and for said State, personally appeared James R. Glavas and Don Danielsen ,
who first being duly sworn, did each hereby affirm that they are the President
and Secretary, respectively of Venturecap, Inc., a Nevada corporation, and that
they did execute the foregoing Amendment to the Articles of Incorporation on
behalf of said Corporation and that such instrument was executed pursuant to a
resolution of the Board of Directors and ratified by more that a 50% majority of
the issued and outstanding shares of the Corporation's common stock.
- ------------------ /S/ James R. Glavas
RECEIVED -----------------------------
JUL 11 1995 JAMES R. GLAVAS, President
[ILLEGIBLE]
SECRETARY OF STATE /S/ Don Danielsen
- ------------------ -----------------------------
DON DANIELSEN, Secretary
<PAGE>
- ------------------
RECEIVED
JUL 11 1995
[ILLEGIBLE]
SECRETARY OF STATE
- ------------------
<PAGE>
- --------------------------------
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE
STATE OF NEVADA
JUL 18, 1995
/S/ [ILLEGIBLE]
[ILLEGIBLE] SECRETARY OF STATE
No. 3690 - 87
- --------------------------------
ARTICLES OF MERGER
OF
FiberCore Incorporated,
a Nevada Corporation
Into
Venturecap, Inc.,
A Nevada Corporation
THE UNDERSIGNED, as the President and the Secretary of Venturecap, Inc., a
Nevada corporation (the "Surviving Corporation"), as and for the purpose of
complying with the provisions of Nevada Revised Statutes ("NRS") Sections 78.451
et seq., and in order to effectuate the merger of FiberCore Incorporated, a
Nevada Corporation into Venturecap, Inc., a Nevada Corporation, hereby certifies
as follows:
1. The name of the Constituent Corporation is FiberCore Incorporated and
its place of incorporation was the State of Nevada. The name of the Surviving
Corporation is Venturecap, Inc. and its place of incorporation was also the
State of Nevada.
2. A plan of merger has been adopted by the Board of Directors of each
corporation that is a party to this merger.
3. The plan of merger was submitted by the Board of Directors of the
Surviving Corporation to is stockholders pursuant to the Nevada Revised
Statutes. Of the 955,451 outstanding shares of Venturecap common stock, par
value, $.001 per share at the time of the vote, all were entitled to vote on the
plan of the merger, 765,550 were represented at the shareholders meeting,
765,550 shares were voted in favor of the plan of merger and 0 shares were voted
against the plan and the number of votes cast in favor of the plan was
sufficient for approval of the plan of merger.
4. The plan of merger was submitted by the Board of Directors of the
Constituent Corporation to its stockholders pursuant to the Nevada Revised
Statutes. Of the 6,605,277 outstanding shares of FiberCore common stock, par
value, $.01 per share, holders representing 5,333,334 shares agreed to the plan
of merger by written consent, and the consent of such stockholders was
sufficient for approval.
<PAGE>
4. The Articles of Incorporation of the Surviving Corporation are hereby
amended as follows:
Article 1 of the Articles of Incorporation is deleted in its entirety and
replaced by the following:
The Name of the Corporation is FiberCore, Inc.
5. A complete executed plan of merger is on file at the office of the
registered agent of the Surviving Corporation which is hereby changed to be:
Corporation Trust Company
One East 1st Street, Suite 1600
Reno, Nevada 89501
Formerly the registered agent was:
Broadmoor Associates, Inc.
3916 Orville Circle
Las Vegas, Nevada 89108
6. A copy of the plan of merger will be furnished by the Surviving
Corporation on request and without any cost to any stockholder of any
corporation which is a party to this merger.
7. The effective date of the merger is the date upon which these Articles
of Merger are filed in the Office of the Secretary of State of the State of
Nevada.
<PAGE>
IN WITNESS WHEREOF, we have set forth our hands as of the 18th day of July,
1995.
VENTURECAP, INC
By__________________
Name:
Title: President
By__________________
Name:
Title: Secretary
FIBERCORE, INCORPORATED
By /S/ Mond Aslami
-----------------------
Name: MOND ASLAMI
Title: President
By /S/ Charles De Luca
-----------------------
Name: CHARLES DE LUCA
Title: Secretary
- ------------------
[ILLEGIBLE]
JUL 18 1995
[ILLEGIBLE]
- ------------------
<PAGE>
IN WITNESS WHEREOF, we have set forth our hands as of the 18 day of July,
1995.
VENTURECAP, INC
By /S/ James R. Glavas
----------------------
Name:
Title: President
By /S/ Don Danielsen
----------------------
Name:
Title: Secretary
FIBERCORE INCORPORATED
By__________________
Name:
Title: President
By__________________
Name:
Title: Secretary
<PAGE>
THE CORPORATION TRUST COMPANY OF NEVADA hereby accepts the appointment as
Resident Agent of FIBERCORE, INC.
Date: July 12, 1995
THE CORPORATION TRUST COMPANY OF NEVADA
Resident Agent
By /S/ Timothy E. Carlson
-------------------------------------
TIMOTHY E. CARLSON
ASSISTANT SECRETARY
- ------------------
RECEIVED
JUL 18 1995
[ILLEGIBLE]
- ------------------
<PAGE>
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On this 18 day of July, 1995, before me, the undersigned, a Notary Public,
in and for said State, personally appeared James R. Glavas and Don Danielsen,
who first being duly sworn, did each hereby affirm that they are the President
and Secretary, respectively of Venturecap, Inc., a Nevada corporation, and that
they did execute the forgoing Article of Merger on behalf of said Corporation
and that such instrument was executed pursuant to a resolution on the Board of
Directors and ratified by more than 50% majority of the issued and outstanding
shares of the Corporation's common stock.
/S/ Kelly A. Henderson
-----------------------------
Notary Public
Residing at Salt Lake City, Utah
My Commission Expires:
JAN-25-1999
- ----------------------
- ------------------------------------
[SEAL] Notary Public
/S/ KELLY A. HENDERSON
455 South 300 East ____
Salt Lake City, Utah 84111
My Commission Expires
January 5, 1999
State Of Utah
- ------------------------------------
<PAGE>
- ------------------
RECEIVED
JUL 18 1995
[ILLEGIBLE]
- ------------------
THE BYLAWS OF
FIBERCORE, INC
Section 1. Annual Meeting.
An annual meeting of the stockholders for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held on such date and at such
time and at such place within or without the State of Nevada, as the Board of
Directors shall each year fix.
Section 2. Special Meetings
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of Directors
or the chief executive officer and shall be held at such place, on such date,
and at such time as they or he or she shall fix.
Section 3. Notice of Meetings
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than five nor more than sixty days before
the date on which the meeting as to be held, to each stockholder entitled to
vote at such meeting, except as otherwise provided herein or required by law
(meaning, here and hereinafter, as required from time to time by the Nevada
Corporation Act or the Certificate of Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty day s
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting,. written notice of the place, date, and
time of the adjourned meeting, shall be given in conformity herewith. At any
adjourned meeting, any business
1
<PAGE>
may be transacted which might have been transacted at the original meeting.
Section 4. Quorum
At any meeting of the stockholders, the holders of a majority of all of
shares of the stock entitled to vote at the meetings present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law.
If a quorum shall fail to attend meeting, the chairman of meeting or the
holder of a majority of the shares of stock entitled to vote who are present, in
person or by proxy, may adjourn the meeting to another place. date. or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting, a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
Section 5 Organization
Such person as the Board of Directors may have designated or, in the
absence of such a person, the chief executive officer of the Corporation or, in
his or her absence, such person as may be chosen by the holders of a majority of
the shares entitled to vote who are present, in person or by proxy, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the Corporation, the secretary of the meeting
shall be such person as the chairman appoints.
Section 6. Conduct of Business
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including, such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
2
<PAGE>
Section 7. Proxy and Voting
At any meeting of the stockholders every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing, filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock; entitled to
vote which is registered in his or her name on the record date for the meeting,
except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast.
Section 8. Stock List
A complete list of stockholder entitle to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) day, prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified a the notice of
the meeting, or if not so specified. at the place where the meeting is to be
held
The stock list shall also be kept at the place of meeting during the whole
time thereof and shall be open to the examination of any such stockholder who is
present. This list shall presumptively determine the identity of the stockholder
entitled to vote at the meeting and the
3
<PAGE>
number of shares held by each of them.
Section 9. Consent of Stockholder in Lieu of Meeting
Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all share entitled to vote thereon were
present and voted.
ARTICLE II- BOARD OF DIRECTORS
Section 1. Number and Term of Office.
The number of directors who shall constitute the whole board shall be such
number as the Board of Directors shall at the time have designated, except that
in the absence of any such designation, such numbers shall be not less than
three (3) and not more than nine (9). Each director shall be elected for a term
of one year and until his or her successor is elected and qualified. except
otherwise provided herein or required by law.
Whenever the authorized number of directors is increased between annual
meetings of the stockholders, a majority of the directors then in office shall
have the power to elect such new directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of directors shall not become effective until the expiration of the term
of the directors then in office unless, at the time or such decrease, there
shall be vacancies on the board which are being eliminated by the decrease.
The Board of Dictators shall have a Chairman of the Board of Dictators,.
who shall preside at all meetings of the Board of Dictators and the Stockholders
at which such person is present. The Chairman of the Board shall make all final
rulings of procedure at meetings of the Board or Stockholders. The Chairman of
the Board shall be the Chief Executive Officer of the Corporation, an ex-office
member of all committees, and shall have the general and active
4
<PAGE>
management of the business of the Corporation, and shall have executory
authority over all resolutions of the Board of Directors.
Section 2. Vacancies
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until his or her successor is elected and
qualified.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings
Special meetings of the Board of Director may be called by one-third of the
directors then in office (rounded up to the nearest whole number) or by the
chief executive officer and shall he held at such place. on such date and at
such time as they or he or she shall fix. Notice of the place, date, and time of
each such special meeting shall be given each director by whom it is not waived
by mailing written notice not less than five days before the meeting or by
telegraphing the same not less than a twenty-four hours before the meeting.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 5. Quorum
At any meeting of the Board of Directors, a majority of the total number of
the whole Board then holding office shall constitute a quorum for all purposes.
If a quorum shall fail to attend any meeting, a majority of those present may
adjourn the meeting to another place, date,
5
<PAGE>
or time, without further notice or waiver thereof.
Section 6. Participation in Meeting By Conference Telephone
Member of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 7. Conduct of Business
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 8. Power
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or privileges on
such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it may
determine of written obligations of every kind negotiable or non-negotiable,
secured or unsecured, and to do all things necessary in connection therewith;
6
<PAGE>
(4) To remove any officer of the Corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon any other
person for the time being;
(5) To confer upon any officer of the Corporation with or without cause,
and from time to time to devolve. the powers and duties of any officer upon any
other person for the time being;
(6) To adopt from time to time such stock option, stock purchase, bonus or
other compensation plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance retirement, and other benefit
plans for directors, officers, employees and agents of the Corporation and its
subsidiaries as it may determine; and,
(8) To adopt from time to time regulations, not inconsistent with these
bylaws, for the management of the Corporation's business and affairs.
Section 9. Compensation of Directors
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors
The Board of Directors, by a vote of a majority of the whole Board, may
from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so designated
may exercise
7
<PAGE>
the power and authority of the Board of Directors to declare a dividend or to
authorize the issuance of stock if the resolution which designates the committee
or a supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may be unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third of the members shall constitute
a quorum unless the committee shall consist of one or two members, in which
event one member shall constitute a quorum; and all makers shall be determined
by a majority vote of the members present. Action may be taken by any committee,
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of such
committee.
ARTICLE IV - OFFICERS
Section 1. General
The officers of the Corporation shall consist of a President, a Secretary
and such other officers as may from time to time be appointed by The Board of
Directors. Officers shall be elected by the Board of Directors, which shall
consider that subject at its first meeting after every, annual meeting of
stockholders. Each officer shall hold office until his or her successor is
elected and qualified or until his or her earlier resignation or removal. The
President shall be a member of the Board of Directors. Any number of offices may
be hold by the same person.
Section 2. President
The President shall be the principal operating and administrative office or the
8
<PAGE>
Corporation. Subject to the provision of those bylaws and to the direction of
the Board of Directors, he or she shall have the responsibility for the general
management and control of the business and affairs of the Corporation and shall
perform all duties and have all powers which are commonly incident to the office
of chief executive or which are delegated to him or her by the Board of
Directors. He or she shall have power to sign all stock certificates, contracts
and other instruments of the Corporation which are authorized and shall have
general supervision and direction of all of the other officers, employees and
agents of the Corporation. In the absence of the Chairman of the Board, or in
the event of a vacancy in such position, the President shall exercise all of the
powers of the Chairman of the Board.
Section 3. Vice Presidents
Each Vice President shall have such powers and duties as may be delegated
to him or her by the Board of Directors. One Vice President shall be designated
by the Board to perform the duties and exercise the power of the President in
the even of the President's absence or disability.
Section 4. Treasurer
The Treasurer shall have the responsibility for maintaining the financial
records of the Corporation and shall have custody of all monies and securities
of the Corporation. He or she shall make such disbursement of the funds of the
Corporation as are authorized and shall render from time to time an account of
all such transactions and of the financial condition of the Corporation. The
Treasurer shall also perform such other duties as the Board of Directors may
from time to time prescribe.
Section 5. Secretary
The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He or
she shall have charge of the corporate book and shall perform such other duties
as the Board of Directors may from time to time prescribe.
9
<PAGE>
Section 6. Delegation of Authority
The Board of Directors may from time to time delegate the power or duties
of any officer to any other officer or agents, notwithstanding any provision
hereof
Section 7. Removal
Any officer of the Corporation may be removed at any time, with or without
cause, by the Board of Directors.
Section 8. Action with Respect to Securities of Other Corporations
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting, of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock
Each stockholder shall be entitled to a certificates signed by, or in the
name of the Corporation by, the President, and by the Secretary, or the
Treasurer, certifying the number of shares owned by him or her. Any of or all
the signatures on the certificate may be facsimile.
Section 2. Transfer of Stock
Transfer of stock shall be made only upon the transfer books of the
Corporation kept at
10
<PAGE>
an office of the Corporation or by transfer agents designated to transfer shares
of the stock of the Corporation. Except where a certificate is issued in
accordance with Section 4 of Article V of these bylaws, an outstanding
certificate for the number of shares involved shall be surrendered for
cancellation before a new certificate is issued therefor.
Section 3. Record Date
The Board of Directors may fix a record date, which shall not be more than
sixty nor less than ten days before the date of any meeting of stockholders, nor
more than sixty days prior to the time for the other action hereinafter
described, as of which there shall be determined the stockholders who are
entitled; to notice of or to vote at any meeting of stockholders or any
adjournment thereof; to express consent to corporate action in writing without a
meeting; to receive payment of any dividend or other distribution or allotment
of any rights; or to exercise any rights with respect to any change, conversion
or exchange of stock or with respect to any other lawful action.
Section 4. Loss, Stolen or Destroyed Certificates
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
11
<PAGE>
ARTICLE VI - NOTICES
Section 1. Notices
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or mailgram. Any
such notice shall be addressed to such stockholder, director, officer, employee
or agent at his or her last known address as the same appears on the books of
the Corporation. The time when such notice is received, if hand delivered or
dispatched, if delivered through the mails or by telegraph or mailgram, shall be
the time of the giving of the notice.
Section 2. Waivers
A written waiver of any notice, signed by a stockholder, director, officer.
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder, director officer, employee or agent. Neither the
business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE VII - MISCELLANEOUS
Section 1. Facsimile Signatures
In addition to the provisions for use of facsimile signature elsewhere
specifically authorized in these bylaws, facsimile signature of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
12
<PAGE>
Section 2. Corporate Seal
The Board of Directors may provide a suitable seal. containing, the name of
the Corporation, which seal shall be in the charge of the Secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Treasurer or the Secretary, or by the Assistant
Secretary.
Section 3. Reliance upon Books, Reports and Records
Each director, each member of any committee designated by the Board of
Directors and each officer of the Corporation shall, in the performance of his
duties, be fully protected in relying in good faith upon the books of account or
other records of the Corporation, including reports made to the Corporation by
any of its officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
Section 4. Fiscal Year
The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
Section 5. Time Periods
In applying any provision of these bylaws which require that an act be done
or not done a specified number of days prior to an event or that an act be done
during a period of a specified number of days prior to an event, calendar days
shall be used, the day of the doing of the act shall be excluded, and the day of
the event shall be included.
13
<PAGE>
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification
Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director, officer, [employee or
agent] of the Corporation or it or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including services with
respect to an employee benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Nevada Corporation Act,
as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than such law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee or agent and
shall insure to the benefit of the indemnitee's heirs, executor and
administrators, provided, however, that, except as provided in Section 2 hereof
with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the Corporation. The right
to indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending, any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Nevada
Corporation Act requires, an advancement of expanses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
14
<PAGE>
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section otherwise.
Section 2. Right of Indemnitee to Bring Suit
If a claim under Section I of this Article is not paid in full by the
Corporation within sixty days after a written claim has been received by the
Corporation except in the case of a claim for an advancement or expenses in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the Corporation
shall be entitled to recover such expenses upon a final adjudication that the
indemnitee has not met the applicable standard of conduct set forth in the
Nevada Corporation Act. Neither the failure of the Corporation (including its
board of directors independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Nevada Corporation Act nor
actual deter.
15
EXH10-1
LOAN AGREEMENT
AGREEMENT, made this 2nd day of August, 1990, by and between AUTOMATED
LIGHT TECHNOLOGIES, INC., a Delaware corporation with an office and principal
place of business located at 176 Bolton Road in the Town of Vernon, County of
Tolland and State of Connecticut (the "Borrower"), and CONNECTICUT INNOVATIONS
INCORPORATED, a corporation constituted a quasi-public instrumentality of the
State of Connecticut with an office located at 845 Brook Street, in the Town of
Rocky Rill, County of Hartford and State of Connecticut ("CII").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that CII shall lend the Borrower
the sum of THREE HUNDRED THOUSAND and NO/100 DOLLARS ($300,000.00) under the Eli
Whitney (Eli) Loan Fund; and
WHEREAS, CII has agreed to make said loan upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties agree as follows:
l. CII shall lend the Borrower the sum of THREE HUNDRED THOUSAND AND
NO/100 DOLLARS ($300,000.00) in accordance with the terms and conditions set
forth in this Agreement and under a promissory note ("Note") of even date
herewith, a copy of which may be attached hereto.
2. Contemporaneously with the execution and delivery of this Agreement,
the Borrower will execute and deliver to CII a Security Agreement and a
Collateral Assignment and Security Agreement (the "Security Agreements"), a
Subordination Agreement executed by Mohd A. Aslami and Charles DeLuca (the
"Subordina-tion"), a Warrant for 66,667 shares of common stock of Borrower (the
"Warrant") and such other documents collectively, the ("Financing Documents") as
are set forth in Exhibit "A" to this Agreement.
3. The Borrower agrees:
a. To furnish upon request to CII (i) its balance sheet and the
related statements of earnings and retained earnings within
ninety (90) days after the end of each fiscal year,
including all supporting schedules and comments, all of
which shall be prepared by an independent public accountant
of recognized standing; (ii) a balance sheet and related
statements of earnings within forty-five (45) days after the
end of each fiscal quarter, such quarterly statements may be
prepared by the Borrower; (iii) a report on the amount of
new employment created as a result of development
<PAGE>
of the product within forty-five (45) days after the end of
each fiscal quarter, to accompany said quarterly financial
statements; and (iv) such further financial and other
information as CII may in its discretion reasonably require
from time to time;
b. To furnish to CII, upon request, its employment records and
any other personnel records that CII may reasonably request
in order to verify the creation of new employment;
c. To notify CII promptly of any material adverse change in the
financial condition of the Borrower;
d. To provide such security for the loan as CII may require as
described in the Security Agreements and to execute and
deliver all documents in connection therewith as of the date
hereof except as may be provided in the Financing Documents;
e. That the funds provided will not be used otherwise than for
working capital;
f. To maintain fire and other hazard insurance policies
covering the property securing this loan ("Property") in an
amount satisfactory to CII. Such insurance policies shall be
provided by a company licensed to provide such insurance in
the State of Connecticut and shall be satisfactory in form
to CII. The policies shall name CII as Loss Payee as its
interests may appear and a copy of the policies shall be
deposited with CII upon the execution hereof;
g. To maintain a policy of liability insurance in form and
amount satisfactory to CII, such policy to be issued by a
company licensed to provide such insurance in the State of
Connecticut;
h. To obtain the permission of CII prior to any move of its
principal place of business within the State of Connecticut.
The Borrower may not relocate its principal place of
business outside of the State of Connecticut; and
i. To obtain and maintain during the term of the loan life
insurance on the life of Mohd A. Aslami in the amount of
$200,000.00 and Charles DeLuca in the amount of $100,000.00
and to assign the same to CII, the proceeds of which shall
be used to pay down outstanding principal and interest on
the loan, with any surplus being returned to the designated
beneficiaries.
<PAGE>
4. The Borrower represents and warrants that:
a. It is a technology based company engaged in product
innovation in an area listed as a "ELI Eligibility Area";
b. It and its officers have the power and authority to enter
into and perform this Agreement and to incur the obligations
herein provided for and that all documents and agreements
executed and delivered pursuant hereto, when delivered, will
be valid and binding in accordance with their respective
terms;
c. There has been no material adverse change in the financial
condition of the Borrower since April 30, 1990;
d. It has obtained or will obtain funding for the project equal
to or greater than the amount of the loan from the
Connecticut Development Authority or other source and shall
close such transaction within ninety (90) days of the date
of this Agreement;
e. It is unable, on reasonable terms, to obtain sufficient
assistance to undertake development of the project from
commercial sources alone: and
f. Over the term of the loan, the project for which the funds
are provided is expected to create at least one new job for
every ten thousand dollars borrowed.
5. CII shall from time to time, in its discretion, and without notice
to the Borrower, during regular business hours, have the privilege of making an
inspection of the Property and the Borrower shall assist CII in making said
inspection and shall make available such books and other records as CII may
reasonably request. CII agrees that it shall keep confidential, except as may be
required by law and provided that Borrower is not in default hereunder
(including expiration of any applicable grace and cure periods), all proprietary
information regarding Borrower's operations and products in the possession of or
known to CII.
6. This Agreement may not be modified or amended in any manner except
in writing executed by all of the parties hereto.
7. This Agreement and any of the documents related hereto and the
rights hereunder may not be assigned by the Borrower without the written consent
of CII This Agreement and any o f the documents related hereto and the rights
hereunder may be assigned by CII; provided, however, that CII agrees that,
unless Borrower
<PAGE>
is in default hereunder (including the expiration of any applicable grace and
cure periods) and the loan has been accelerated by CII, it shall not assign the
same to a competitor of Borrower. For the purposes hereof, a "competitor of
Borrower" shall be any person or entity that develops, manufactures or markets
systems for monitoring or locating breaks and damages in fiber optic and/or
copper lines or any other system or systems currently or in the future
developed, manufactured or marketed by Borrower.
8. The terms and conditions of the Financing Documents are incorporated
herein, and any breach of said terms and conditions is a breach hereunder, and a
breach hereunder shall be a breach of any of the Financing Documents.
9. Any misrepresentation, breach of warranty or other breach of any
agreement or covenant contained herein not cured within any applicable cure
period, including, without limitation, the cure periods set forth in the
Financing Documents, shall entitle CII to declare the unpaid balance of the loan
due and payable without further notice to the Borrower, or to exercise any
remedy it may have with respect to the Property as set forth in the Financing
Documents, subject to the limitations set forth therein, or otherwise provided
by law, or to exercise any such remedies cumulatively.
10. The Borrower shall provide CII with the opinion of the Borrower's
counsel in the form of Exhibit B attached hereto.
11. The Borrower agrees and warrants that in the performance of this
contract it will not discriminate or permit discrimination against any person or
group of persons on the grounds of race, color, religious creed, age, marital
status, national origin, sex, mental retardation or physical disability,
including, but not limited to blindness, unless it is shown by such Borrower
that such disability prevents performance of the work involved, in any manner
prohibited by the laws of the United States or of the State of Connecticut, and
further agrees to provide the Commission on Human Rights and Opportunities with
such information requested by the Commission concerning the employment practices
and procedures of the Borrower as relate to the provisions of this section.
12. Any words or phrases used herein that are defined in Section 32-34
of the Connecticut General Statutes or in the Regulations of Connecticut State
Agencies adopted and promulgated under said Sections of said Statutes shall have
the meanings set forth in said definitions.
13. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
14. This Agreement shall terminate upon payment in full of the loan.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date and year first above written.
CONNECTICUT INNOVATIONS
INCORPORATED
BY:
________________________ _______________________________
DAVID C. DRIVER
Its Executive Director
________________________ AUTOMATED LIGHT TECHNOLOGIES,
INC.
BY:
________________________ _______________________________
MOHD A. ASLAMI
Its President,
Duly Authorized
________________________
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this ___ day of August, 1990, before me, the undersigned officer,
personally appeared David C. Driver, who acknowledged himself to be the
Executive Director of CONNECTICUT INNOVATIONS INCORPORATED, a corporation, and
that he as such Executive Director, being authorized so to do, executed the
foregoing instrument for the purposes herein contained, by signing the name of
the corporation by himself as Executive Director.
In Witness Whereof I hereunto set my hand.
-----------------------------
Commissioner of the Superior
Court/Notary Public
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this 2nd day of August, 1990, before me, the undersigned officer,
personally appeared Mohd A. Aslami, who acknowledged himself to be the President
of Automated Light Technologies, Inc., a corporation, and that he as such
President, being authorized so to do, executed the foregoing instrument for the
purposes herein contained, by signing the name of the corporation by himself as
President.
In Witness Whereof I hereunto set my hand.
----------------------------
Commissioner of the Superior
Court/Notary Public
THIS PROMISSORY NOTE IS SUBJECT TO CERTAIN RESTRICTIONS ON ITS TRANSFERABILITY
AS SET FORTH IN PARAGRAPH 7 OF A LOAN AGREEMENT EXECUTED BY MAKER AND HOLDER AS
OF THE DATE HEREOF.
PROMISSORY NOTE
$300,000.00 Hartford, Connecticut
August 2, 1990
FOR VALUE RECEIVED, AUTOMATED LIGHT TECHNOLOGIES, INC., a Delaware
corporation having a principal office and place of business located at 176
Bolton Road in the Town of Vernon, County of Tolland and State of Connecticut,
(the "Maker"), promises to pay to the order of CONNECTICUT INNOVATIONS
INCORPORATED, a corporation constituted a quasi-public instrumentality of the
State of Connecticut ("Holder"), at 845 Brook Street in the Town of Rocky Hill,
County of Hartford and State of Connecticut or at such other place as Holder
hereof may designate in writing, the principal sum of THREE HUNDRED THOUSAND AND
NO/100 DOLLARS ($300,000.00), together with interest thereon in arrears from the
date hereof at the rate of eight and one-half per centum (8.5%) per annum. Said
principal and interest shall be due and payable as follows, viz:
Upon the execution of this Note, interest from the 2nd day of August,
1990 to and including August 31 ,1990 shall be due and payable; thereafter Maker
shall make payments to interest in the amount of TWO THOUSAND ONE HUNDRED
TWENTY-FIVE AND NO/100 DOLLARS ($2,125.00) on the first day of October, 1990 and
a like sum on the first day of each month thereafter to and including March 1,
1991; thereafter Maker shall make payments to principal and interest in the
amount of FIVE THOUSAND SEVEN HUNDRED SIX AND 23/100 DOLLARS ($5,702.23) on the
first day of April, 1991, and a like sum on the first day of each and every
month thereafter until the entire said principal sum, with interest, has been
fully paid, except that if not sooner paid, the final payment of principal and
interest in the amount of FIVE THOUSAND SEVEN HUNDRED SIX AND 41/100 DOLLARS
($5,706.41) shall be due and payable on September 1, 1996. Each installment
shall be applied first to the payment of interest on the unpaid principal of
this Note and the balance on the account of the principal of this Note.
Maker agrees to pay all taxes, other than income taxes, or duties
levied or assessed upon said sum against Holder or other owner of this Note, the
debt evidenced hereby or the collateral securing the same (the "Collateral") and
to pay all costs, expenses, and attorneys' reasonable fees incurred by Holder in
any proceeding for the collection of the debt evidenced hereby or in any action
to enforce its rights in premises granted under a
<PAGE>
Security Agreement and Collateral Assignment and Security Agreement (the
"Security Agreements") upon the happening of a default as provided for in the
Security Agreements or in protecting or sustaining the lien of the Security
Agreements or in any litigation or controversy arising from or connected with
this Note or the Security Agreements.
There shall be an event of default: (i) if the Maker defaults in making
any payment of principal or interest on this Note for fifteen (15) days or in
making any payment of taxes or any municipal assessment, any insurance premiums
or any lien or charge upon any property by which this Note is secured as the
same become due, or (ii) if Maker fails to perform any covenant contained in the
Loan Agreement or the Security Agreements or if the Maker defaults under this
Note, the Loan Agreement or the Security Agreements or any other document signed
by Maker in connection therewith and the same is not cured within fifteen (15)
days of its occurrence, or (iii) if an order for relief is sought by or against
Maker under the Federal Bankruptcy Code or acts amendatory thereof or
supplemental thereto or under any other statute either of the United States or
any state in connection with insolvency or reorganization or upon the
appointment of a receiver or trustee of all or a portion of Maker's property and
any such order for relief, receiver or trustee is not withdrawn, dismissed,
discharged, or removed within sixty (60) days, or (iv) if an assignment of
Maker's property is made for the benefit of creditors, or (v) if Maker abandons
any Collateral securing this Note not otherwise permitted in the Security
Agreements, or (vi) if Maker declares in writing its inability to pay debts as
they come due, or (vii) if Maker liquidates or dissolves or is liquidated or
dissolved, or (viii) if the Collateral securing this Note is damaged in any
manner and is not covered by insurance as required by the Security Agreements,
or (ix) it the United States of America, the State of Connecticut or any agency
or subdivision thereof imposes a tax, levy, or assessment on or concerning this
Note, which Maker is obligated to pay and cannot lawfully or does not pay when
due, or (x) if title to any position or all of the Collateral securing this Note
becomes vested in a party other than Maker hereof or is encumbered by financing
without Holder's prior written consent not otherwise permitted in the Security
Agreements or (xi) if Maker relocates its principal place of business outside of
the State of Connecticut, or (xii) if Maker relocates its principal place of
business within the State of Connecticut without first obtaining the written
consent of Holder.
Upon the occurrence of an event of default, the entire principal sum
with accrued interest thereon due under this Note shall at the option of Holder
become due and payable. No failure to exercise such option shall be deemed a
waiver on the part of Holder of any right accruing thereafter. In addition, in
the event Hiker becomes a wholly owned subsidiary of another entity or all or
substantially all of its assets are purchased by
-2-
<PAGE>
another entity or Maker relocates its principal place of business outside of the
State of Connecticut, then the entire principal sum with accrued interest
thereon due-under this Note shall at the option of Holder become due and
payable.
Holder may collect a "late charge" not to exceed an amount equal to
five percent (5%) of any installment of interest or principal or both which is
not paid within ten (10) days of the date on which said payment i8 due. Late
charges shall be separately charged to and collected from Maker and shall be due
upon demand by Holder.
Maker shall have the right to prepay this Note in whole or in part
without premium or penalty upon any scheduled payment date.
Maker of this Note and all others whom may become liable for all or any
part of this obligation do hereby waive demand, presentment for payment,
protest, notice of protest and notice of non-payment of this Note and do hereby
consent to any number of renewals or extensions of the time of payment hereof
and agree that any such renewals or extensions may be made without notice to any
of said parties and without affecting their liability herein and further consent
to the release of any part or parts or all of the security for the payment
hereof and to the release of any party or parties liable hereon, all without
affecting the liability of the other persons, firms or corporations liable for
the payment of this Note.
Upon the occurrence of an event of a default, at the option of the
Holder, the Holder may pay insurance premiums, taxes and assessments and any and
all other expenses which may be reasonable or necessary to protect the
Collateral securing this Note or to protect or sustain the lien of the Security
Agreements. Any such payment made by the Holder hereof pursuant to said option
shall be added to the principal balance due hereunder and shall bear interest
from the date of payment by Holder or shall be payable on demand with interest
from the date of payment by Holder.
Maker agrees that al 1 expenditures incurred by Holder under this Note
or the Security Agreements other than principal, and the principal of this Note
after maturity or acceleration or upon an event of default or after a judgment
hereon, shall bear interest at the rate of twelve percent (12%) per annum from
the date of demand, acceleration, default or judgment as applicable.
TO INDUCE HOLDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY THIS NOTE, THE LOAN AGREEMENT AND THE SECURITY AGREEMENTS, THE
MAKER HEREOF AGREES THAT THE SAID TRANSACTION IS A COMMERCIAL AND NOT A CONSUMER
TRANSACTION AND WAIVES THE RIGHT TO NOTICE OF AND A HEARING ON THE RIGHT OF
HOLDER UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES OR OTHER STATUTE
OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND
-3-
<PAGE>
AUTHORIZES HOLDER'S ATTORNEY TO ISSUE A WRIT FOR PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THE WAIVER.
"Holder", as used herein, Shall include any holder or
holders hereof.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut.
AUTOMATED LIGHT TECHNOLOGIES, INC.
By /s/ MOHD A. ASLAMI
-----------------------
MOHD A. ASLAMI
Its President
Duly Authorized
This Note is secured by a Security Agreement and a Collateral Assignment and
Security Agreement, each of even date herewith.
-4-
EXH10-3
SECURITY AGREEMENT
AGREEMENT, made as of the ____ day of August, 1990, by and between
AUTOMATED LIGHT TECHNOLOGIES, INC., a corporation organized and existing under
the laws of the State of Delaware, having its principal office at 176 Bolton
Road, Vernon, Connecticut (the "DEBTOR"), and CONNECTICUT INNOVATIONS
INCORPORATED, a corporation constituted a quasi-public instrumentality of the
State of Connecticut, having its principal office at 845 Brook Street in the
Town of Rocky Hill, County of Hartford and State of Connecticut (the "SECURED
PARTY").
W I T N E S S E T H:
To secure the payment of an indebtedness in the total amount of THREE
HUNDRED THOUSAND AND NO/100 ($300,000.00) DOLLARS plus interest, payable in
accordance with the terms of a note of even date herewith from DEBTOR to SECURED
PARTY, a copy of which may be attached hereto as Exhibit A (the "Note") and to
secure the performance or payment of all debts, liabilities and obligations of
any kind, whenever and however incurred, of DEBTOR to SECURED PARTY whether or
not evidenced by any notes or other instrument (the "indebtedness"), DEBTOR
hereby grants and conveys to the SECURED PARTY a security interest in the
property described in Schedule A attached hereto (the "Collateral"), which
Collateral the DEBTOR represents will be used primarily in business, all
proceeds thereof, if any, and all substitutions, replacements and accessions
acquired by the DEBTOR subsequent to the execution of this Agreement and prior
to its termination.
1. Debtor's Covenants: DEBTOR warrants, covenants and agrees as
follows:
a. To pay and perform all of the obligations secured by this
Agreement according to their terms.
b. To defend the title to the Collateral against all other
persons and against all other claims, except claims which are
permitted herein.
c. On demand of SECURED PARTY to do the following: furnish
further assurance of title, execute any written agreement or
do any other acts necessary to effectuate the purposes and
provisions of this Agreement, execute any instrument or
statement required by law or otherwise in order to perfect,
continue or terminate the security interest of SECURED PARTY
in the Collateral and pay all costs of filing in connection
therewith.
d. To retain possession of the Collateral during the existence of
this Agreement and not to sell, exchange, assign, loan,
deliver, lease, mortgage or otherwise dispose of the same,
except for inventory sold in the ordinary course of business,
without the prior written consent of SECURED PARTY, which
consent will not unreasonably be withheld.
<PAGE>
e. To keep the Collateral at its present locations and not to
remove same, except for inventory sold in the ordinary course
of business and other assets as permitted herein, without the
prior written consent of SECURED PARTY, which consent will not
unreasonably be withheld.
f. To keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments.
g. To pay, when due, all taxes, assessments and license fees
relating to the Collateral.
h. To keep the Collateral, at DEBTOR's own cost and expense, in
good repair and condition and to use it for the purposes
intended and not to misuse, abuse, waste or allow it to
deteriorate except for normal wear and tear and to make the
same available for inspection by SECURED PARTY during normal
business hours.
i. To keep the Collateral insured against loss by fire, including
extended coverage, theft and other hazards as SECURED PARTY
may require in an amount no less than eighty percent (80%) of
the value of the insurable Collateral. Policies covering the
Collateral shall be obtained from responsible insurers
authorized to do business in Connecticut. Certificates Of
insurance or policies shall have attached thereto a loss
payable clause making loss payable to SECURED PARTY as its
interest may appear, and a copy of such policies and renewal
policies shall be deposited with SECURED PARTY. Each policy or
endorsement shall contain a clause requiring the insurer to
give not less than ten (10) days' written notice to SECURED
PARTY in the event of cancellation of the policy for any
reason whatsoever, and a clause that the interest of SECURED
PARTY shall not be impaired or invalidated by any act or
neglect of DEBTOR or owner of the Collateral nor by the
occupation of the premises where the Collateral is located for
purposes more hazardous than are permitted by said policy.
DEBTOR shall give immediate written notice to SECURED PARTY
and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with insurers. DEBTOR hereby
appoints SECURED PARTY an attorney-in-fact of DEBTOR in
obtaining and adjusting any such insurance and endorsing
settlement drafts and hereby assigns to SECURED PARTY all sums
which may become payable under such insurance, including
return premiums and dividends, as additional security for the
indebtedness. In the event of termination or threatened
termination of insurance and provided DEBTOR has not provided
SECURED PARTY with notice no less than thirty (30) days prior
to the termination or threatened termination date, that it is
changing or has changed insurance companies together with
evidence of premium payment or has otherwise replaced the
insurance which is the subject of the termination or
threatened termination, SECURED PARTY has the right to obtain
its own insurance covering the Collateral and to add the costs
of obtaining and maintaining such insurance as an additional
obligation of DEBTOR to SECURED PARTY. Nothing herein shall
relieve
<PAGE>
DEBTOR of its duty or obligation to do any act for which
SECURED PARTY may be hereby appointed attorney for DEBTOR.
j. In the conduct of its business, DEBTOR will comply with all
applicable laws, ordinances, rules and regulations of all
governmental authorities having jurisdiction over DEBTOR
and/or its business.
k. DEBTOR authorizes SECURED PARTY, if DEBTOR fails to do so, to
do all things required of DEBTOR herein and charge all
expenses incurred to DEBTOR and charge interest on the same
until repayment to it at the interest rate provided in the
Note. Failure to repay any said advance with interest upon
demand by SECURED PARTY shall constitute a default hereunder.
l. To provide SECURED PARTY financial statements within
forty-five (45) days of the end of each fiscal quarter of
DEBTOR, and to provide annual financial statements prepared by
DEBTOR'S independent accountant within ninety (90) days of the
end of DEBTOR'S fiscal year, and to make all its books and
records available for inspection by SECURED PARTY during
reasonable business hours.
2. Non-Waiver: Waiver of or acquiescence in any default by DEBTOR
or failure of SECURED PARTY to insist upon strict performance by DEBTOR of any
warranties or agreements in this Security Agreement shall not constitute a
waiver of any subsequent or other default or failure.
3. Default: The following shall constitute a default:
a. Failure to pay any installment of the indebtedness
set forth in the Note within the applicable grace
period.
b. Failure by DEBTOR to comply with any material
provision of this Agreement within fifteen (15) days
of the date for performance or of the Note or other
obligations secured hereby with in any applicable
grace and cure period.
c. Materially false or misleading representations or
warranties made or given by DEBTOR in connection with
this Agreement, the Loan Agreement, the Note or any
other financing document delivered to SECURED PARTY
in connection with the Loan made by SECURED PARTY to
the DEBTOR of even date herewith.
d. Commencement of any bankruptcy or other insolvency
proceeding by or against DEBTOR which is not
withdrawn, dismissed, discharged or removed within
sixty (60) days of commencement.
e. Any act of DEBTOR which SECURED PARTY, in its sole
discretion and in good faith, deems will imperil the
prospect of full performance or satisfaction of
DEBTOR' S obligations to SECURED PARTY .
<PAGE>
f. Depreciation (except depreciation as reflected for
tax or accounting purposes) or impairment of the
Collateral, or material adverse change in the
financial status of DEBTOR which jeopardizes the
prospect of repayment of the Loan or of performance
of any of the covenants herein or renders false or
misleading any warranties made herein.
g. Default after expiration of any applicable grace and
cures periods under any other loan agreement,
promissory note, mortgage deed or security agreement
executed by DEBTOR in respect of any debt owed to
SECURED PARTY or to any other person which in the
sole, reasonable opinion of the SECURED PARTY
materially affects the credit of the Borrower.
4. Remedies on Default: Upon any default and upon demand DEBTOR agrees
immediately to assemble the Collateral and make it available to SECURED PARTY at
the place and time designated in the said demand. SECURED PARTY shall be
entitled to immediate possess ion of the Collateral and SECURED PARTY may (i)
enter any premises where any Collateral may be located for the purpose of taking
possession of and removing the same; and (ii) sell, assign, lease or otherwise
dispose of the Collateral or any part thereof, either at public or private sale
acceptable to SECURED PARTY, all at SECURED PARTY's sole option and as it, in
its sole discretion, may deem advisable, and SECURED PARTY may bid or become
purchaser at any such sale, if public, free from any right of redemption which
is hereby expressly waived by DEBTOR. Until such sale, SECURED PARTY may store
the Collateral on the premises where it is located when seized and, if said
premises be the property of DEBTOR, DEBTOR agrees not to charge SECURED PARTY f
or storage thereof for a period of ninety (90) days before or after sale or
disposition of said Collateral. Unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold in a recognized
market, SECURED PARTY will give DEBTOR reasonable notice of the time and place
of any public sale or the time after which any private sale or other intended
disposition will be made. The requirement of reasonable notice shall be met if
such notice is mailed to DEBTOR at least fifteen (15) business days before the
time of the ;sale or disposition.
The net cash proceeds resulting from the collection, liquidation, sale
or other disposition of the Collateral shall be applied first to the expenses
(including all attorneys' reasonable tees) Of storing, processing and preparing
for sale, selling, collecting, liquidating and the like, and then to the
satisfaction of all liabilities of the DEBTOR to SECURED PARTY, with application
as to particular obligations or against principal or interest under the Note to
be in SECURED PARTY's sole discretion. DEBTOR shall be liable to SECURED PARTY
and shall pay to SECURED PARTY, on demand, any deficiency which may remain after
such sale, disposition, collection or liquidation of Collateral, and SECURED
PARTY in turn agrees to remit to DEBTOR, or other persons as their interests
appear, any surplus remaining after all such liabilities have been paid in full.
To facilitate the exercise by SECURED PARTY of the rights and remedies
set forth in this section in the event of default, DEBTOR hereby constitutes
SECURED PARTY or any other person whom SECURED PARTY may designate, as
attorney-in-fact for the DEBTOR, at DEBTOR's expense, to
<PAGE>
exercise all or any of the foregoing powers and other powers incidental to the
foregoing, all of which, being coupled with an interest, shall be irrevocable,
shall continue until all obligations have been paid in full and shall be in
addition to any other rights and remedies that SECURED PARTY may have.
5. Attorneys' Fees, etc.: Upon any event of default, SECURED PARTY t 8
attorneys' reasonable fees and the legal and other expenses for pursuing,
searching for, receiving, taking, keeping, storing, advertising and selling the
Collateral shall be chargeable to and paid by DEBTOR.
6. Other Rights: In addition to all rights and remedies herein, upon
default, SECURED PARTY shall have such other rights and remedies as are set
forth in the Uniform Commercial Code and the Connecticut General Statutes, as
amended.
7. PREJUDGMENT REMEDIES WAIVER: DEBTOR HEREBY ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS SECURITY AGREEMENT FORMS A PART IS A COMMERCIAL
TRANSACTION AS DEFINED UNDER SECTION 52-278a OF THE CONNECTICUT GENERAL
STATUTES, AS AMENDED, AND HEREBY WAIVES ANY RIGHT TO NOTICE AND A HEARING UNDER
SECTION 52-278a ET SEQ. OF SAID STATUTES AND AUTHORIZES SECURED PARTY'S ATTORNEY
TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER.
8. Binding Effect: The terms, warranties and agreements herein
contained shall be binding upon and inure to the benefit of the respective
parties hereto and their respective legal representatives, successors and
assigns. This Agreement may be assigned only to a permitted assignee of the
Note.
9. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties have respectively signed and sealed
these presents at Hartford, Connecticut the day and year first above written.
WITNESSED BY: CONNECTICUT INNOVATIONS INCORPORATED
___________________________ BY:__________________________________
DAVID-C. DRIVER
Its Executive Director
___________________________
AUTOMATED LIGHT TECHNOLOGIES, INC.
___________________________ BY:__________________________________
MOHD A. ASLAMI
Its President
Duly Authorized
<PAGE>
STATE OF CONNECTICUT)
) ss. at Rocky Hill
COUNTY OF HARTFORD )
On this ___ day of August, 1990, before me, the undersigned officer,
personally appeared David C. Driver, who acknowledged himself to be the
Executive Director of CONNECTICUT INNOVATIONS INCORPORATED, a corporation, and
that he as such Executive Director, being authorized so to do, executed the
foregoing instrument for the purposes herein contained, by signing the name of
the corporation by himself as Executive Director.
In Witness Whereof I hereunto set my hand.
-----------------------------
Commissioner of the Superior
Court/Notary Public
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this 2nd day of August, 1990, before me, the undersigned officer,
personally appeared Mohd A. Aslami, who acknowledged himself to be the President
of Automated Light Technologies, Inc., a corporation, and that he as such
President, being authorized so to do, executed the foregoing instrument for the
purposes herein contained, by signing the name of the corporation by himself as
President.
In Witness Whereof I hereunto set my hand.
-----------------------------
Commissioner of the Superior
Court/Notary Public
<PAGE>
SCHEDULE A
(a) All goods of Debtor, including without limitation all machinery,
equipment furniture, furnishings, fixtures, t0018, supplies and motor
vehicles of every kind and description now or hereafter owned by the
Debtor or in which the Debtor may have or may hereafter acquire any
interest, together with all customer lists and records of the business
and all improvements thereto;
(b) All inventory of Debtor, including, but not limited to all merchandise,
raw material, parts, supplies, work in process, finished products
intended for sale of every kind and description now or hereafter owned
by and in the custody of or possession, actual or constructive, of
Debtor including such inventory as is temporarily out of Debtor's
custody or possession and including any returns upon any accounts or
other proceeds, includlng insurance proceeds, resulting from the sale
or disposition of any of the foregoing, including, among other things,
but not limited to, raw materials and finished products and including
all other classes of merchandise, materials, parts, supplies, work in
process, inventories and finished products intended for sale by Debtor
including inventory temporarily removed from its customary location;
(c) All contract rights and general intangibles of Debtor, including
without limitation, goodwill, copyrights, trademarks, trade styles,
trade names, patents, patent applications and deposit accounts:
(d) All present and future accounts, accounts receivable and other
receivables and all books and records relating thereto; and
(e) All documents, instruments and chattel paper;
whether any of the foregoing types or items of property referred to in (a)
through (e) above (the "Collateral") shall be acquired or created by Debtor at
any time hereafter, wherever located, and the products and proceeds of the
Collateral and any replacements, additions, accessions, or substitutions of the
Collateral, after acquired property, and the accounts or proceeds arising from
the sale of disposition thereof including any returns thereof, and including,
where applicable, the proceeds of insurance covering the Collateral.
DEBTOR: SECURED PARTY:
Automated Light Technologies, Connecticut Innovations
Inc. Incorporated
176 Bolton Road 845 Brook Street
Vernon, CT Rocky Hill, CT
EXH10-4
SUBORDINATION
The undersigned officers and shareholders of AUTOMATED LIGHT
TECHNOLOGIES, INC. having its offices in the Town of Vernon, County of Tolland
and State of Connecticut, (the "Debtor"), in consideration of a loan in the
amount of THREE HUNDRED AND NO/100 DOLLARS ($300,000.00) (the "Loan"), to Debtor
by CONNECTICUT INNOVATIONS INCORPORATED of 845 Brook Street, Rocky Hill,
Connecticut, ("CII"), and to induce CII to make said Loan agree as follows:
1. SUBORDINATION. Until all the indebtedness of the Loan has been fully
paid with interest thereon, the undersigned shall not demand or receive from the
Debtor, any part of the moneys now owing by the Debtor to the undersigned, or
that may hereafter be due and payable to the undersigned by the Debtor, or any
security therefor, exclusive of payments of current salaries of the undersigned;
and the Debtor shall not make payment or give security to the undersigned except
in conformity with this Agreement. The undersigned waives all notice of the
acceptance of this Agreement by CII or of the creation, renewal, extension or
accrual of any obligations of the Debtor to CII or of the reliance of CII upon
this Agreement. The undersigned hereby directs the Debtor to make such prior
payments to CII, except that with the prior written consent of CII which consent
shall be given or withheld in the sole discretion of CII, the Debtor may make
payments to the undersigned to which this Agreement shall not apply. CII
acknowledges and agrees that unless and until Debtor is in default under the
Loan, Debtor may make payments on the interest due on two $100,000.00 existing
loans from City Trust to the undersigned or any subsequent bank loans which
arise from the refinancing of the City Trust loans, to the extent they do not
exceed the existing loans. The principal amount of such loans shall, however, be
subordinate to the Loan and subject to the terms of this Agreement. CII also
acknowledges that the undersigned are owed deferred salary and agrees that six
(6) months from the date hereof it shall review the financial situation of the
Debtor and, provided that Debtor is not in default of the Loan and is generating
gross profits, shall, at that time, agree with the undersigned upon a payment
schedule for such deferred salaries.
2. ASSIGNMENT. Except for the payments specifically referred to in
Paragraph 1 hereinabove, the undersigned hereby assigns to CII, as collateral
security for all such indebtedness of the Debtor to CII, all of the claims and
demands of the undersigned against the Debtor and all interest accrued and that
may hereafter accrue thereon. If at any time while this Agreement is in effect,
any petition for relief is filed by or against the Debtor, a receiver is
appointed for the Debtor or any of its property, an assignment for creditors is
made by the Debtor or the Debtor is involved in any insolvency proceedings, CII
shall have the right to file a claim on behalf of the undersigned in all such
proceedings and to collect and receive all payments that may be declared or
become payable on such claim in any such proceedings and CII i8 hereby
irrevocably appointed attorney for the undersigned with full power to act in the
name of the undersigned in all such proceedings. Any payments so collected shall
be applied against outstanding principal and interest of the Loan. The
undersigned agree that they shall have no right of subrogation whatsoever with
respect to any monies so collected unless and until CII shall have received
payment in full of all sums at any time due on the Loan.
<PAGE>
3. CREDITOR'S RECEIPTS. Except as may be specifically permitted herein,
if the Debtor shall make any payments or give any security to the undersigned
without the prior consent of CII, then the undersigned shall forthwith deliver
such payment or security to CII, in precisely the form received, except for the
undersigned's endorsement when necessary, for application on account of such
indebtedness of the Debtor to CII and until so delivered such payment or
security shall be held in trust by the undersigned as the property of CII. In
the event of the failure of the undersigned to endorse any instrument for the
payment of money so received by the undersigned, CII is irrevocably appointed
attorney for the undersigned with full power to make such endorsement and with
full power of substitution.
4. MODIFICATIONS. Without notice to or further assent by the
undersigned, the liability of the Debtor or any other party to CII on any such
indebtedness may from time to time, in whole or in part, be renewed, extended,
modified, compromised or released by CII and any collateral or liens for any
such indebtedness may be exchanged, sold or surrendered by CII, all without
affecting the obligations of the undersigned and the Debtor under this
Agreement.
<PAGE>
Dated at Hartford, Connecticut this 2nd day of August, 1990.
- -------------------- -----------------------------------
MOHD A. ASLAMI
- --------------------
- -------------------- -----------------------------------
CHARLES DeLUCA
- --------------------
Acknowledged and consented to by Connecticut Innovations Incorporated.
By:
------------------------
David C. Driver
Its Executive Director
EXH10-5
COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
THIS AGREEMENT, made as of this _2nd of August, 1990, by and between AUTOMATED
LIGHT TECHNOLOGIES, INC., a Connecticut corporation with an office at 176 Bolton
Road, Vernon, Connecticut ("Assignor") and CONNECTICUT INNOVATIONS INCORPORATED,
a corporation constituted a quasi-public instrumentality of the State of
Connecticut with an office at 845 Brook Street, Rocky Hill, Connecticut, 06067
("CII").
WHEREAS, Assignor has executed and delivered to CII a promissory note in the
principal amount of $300,000.00 (the "Note"), pursuant to a certain loan
agreement between Assignor and CII dated August 2, 1990 (the "Loan Agreement");
and
WHEREAS, in order to induce CII to execute and deliver the Loan Agreement and to
make the loan and as security for the performance by Assignor of its duties
under the Note, the Loan Agreement and other documents executed in connection
therewith, Assignor has agreed to assign to CII certain patent, trademark and
copyright rights and to grant to CII a security interest therein.
NOW THEREFORE, in consideration of the premises and the agreements contained
herein, Assignor hereby agrees with CII as follows:
1. To secure the complete and timely performance of Assignor's
responsibilities under the Note, the Loan Agreement and other documents
delivered in connection therewith, Assignor hereby rants, assigns and conveys to
CII its entire right, title and interest in and to the patents, trademarks,
copyrights and intellectual property or licenses thereto listed in Schedule A
attached hereto, including without limitation all proceeds thereof, the right to
sue for past, present and future infringements, all rights corresponding thereto
throughout the world and all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof and all improvements thereon
(collectively called the "Rights") and all future patents, trademarks,
copyrights and intellectual property which may be obtained by Assignor and
acquired or created by Assignor after the date hereof ("After Acquired Rights").
For the purposes of this Agreement the term "intellectual property" shall mean
all creations, inventions and ideas developed, created, acquired or obtained by
Assignor during such time as the Note is outstanding whether or not such items
are patentable, patented, trademarkable, trademarked, copyrightable or
copyrighted.
2. Assignor covenants and warrants:
a. the Rights are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part
<PAGE>
b. to the best of Assignor's knowledge, each of the Rights is
valid and enforceable and Assignor has notified CII in writing of all prior acts
with respect to the Rights (including public uses and sales) of which it is
aware:
c. Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the rights, free and
clear of any liens, charges and encumbrances, including without limitation
licenses, shop rights and covenants not to sue; and
d. Assignor has the unqualified right to enter into this
Agreement and perform its terms and has entered into written agreements with
each of its employees, agents and consultants which will enable it to comply
with the covenants herein contained.
Assignor agrees that, until all of the liabilities under the Note and the Loan
Agreement have been satisfied in full, it will not enter into any agreement
which is inconsistent with Assignor's obligations hereunder without CII's prior
written consent, which consent shall not be unreasonably withheld.
3. If, before all liabilities under the Note shall have been satisfied
in full, Assignor shall become entitled to the benefit of any patent, trademark
or copyright application or patent, trademark or copyright for reissue,
division, continuation, renewal, extension or continuation-in-part of any Right
or any After Acquired Right or any improvement on any Right or any After
Acquired Right, Assignor shall give CII prompt notice of the same and the
provisions of Paragraph 1 shall apply thereto.
4. If Assignor has not filed a formal application for any of the Rights
or After Acquired Rights within three months of the date hereof or if any such
application lists the inventor, owner, product, trademark or copyright by a name
different from that set forth on Schedule A, then Assignor agrees to execute, if
necessary, a separate agreement for such Right or After Acquired Right at the
time such application is filed.
5. Assignor hereby authorizes CII to modify this Agreement by amending
Schedule A to include any reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any Rights, After Acquired Rights and
any improvements thereon.
6. Unless and until there shall have occurred an event of default as
defined in the Loan Agreement or the Note, CII hereby grants to Assignor the
exclusive, nontransferable right and license to make, have made, use and sell
the inventions, trademarks and copyrights disclosed and claimed in the Rights
and After Acquired Rights for Assignor's own benefit and account and for none
other. Assignor agrees not to sell or assign its interest in, or grant any
sublicenses under the license granted herein without the prior written consent
of CII, which consent shall not be unreasonably withheld.
7. If any event of default under the Loan Agreement, Note or any other
document executed in connection with the loan shall have occurred and not be
cured within any applicable cure
<PAGE>
period or extended period as permitted by CII, Assignor's license of the Rights
and After Acquired Rights as set forth in Paragraph 6 shall terminate forthwith,
and CII shall have, in addition to all other rights and remedies given it by
this Agreement, those allowed by law and the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in any jurisdiction in which
the Rights and After Acquired Rights may be located and, without limiting the
generality of the foregoing, CII may, without demand for performance,
immediately sell, assign, lease or otherwise dispose of the Rights, the After
Acquired Rights or any part thereof, either at public or private sale acceptable
to CII, all at CII's sole option and as it, in its sole discretion, may deem
advisable. CII will give Assignor reasonable notice of the time and place of any
public sale or the time after which any private sale or other intended
disposition will be made. The requirement of reasonable notice shall be met if
such notice is mailed to Assignor at least fifteen (15) business days before the
time of the sale or disposition. After deducting from the proceeds of sale or
other disposition of the Rights and After Acquired Rights all expenses
(including all reasonable expenses for brokers' fees and legal services), CII
shall apply the residue of such proceeds towards the payment of the Note. Any
remainder of the proceeds after payment in full of the Note shall be paid over
to the Assignor. At any such sale or other disposition of the Rights and After
Acquired Rights, any holder of the Note or CII may, to the extent permitted
under applicable law, purchase the whole or any part of the Rights and After
Acquired Rights, free from any right of redemption on the part of Assignor,
which right is hereby waived and released.
8. At such time as Assignor shall completely satisfy all of the
liabilities under the Note, CII shall execute and deliver to Assignor all deeds,
assignments and other instruments as may be necessary or proper to revest in
Assignor full title to the Rights and After Acquired Rights, subject to any
disposition thereof which may have been made by CII pursuant hereto.
9. Any and all fees, costs and expenses, of whatever kind and nature,
including reasonable attorneys' fees and legal expenses, incurred by CII in
connection with the preparation of this Agreement and all other documents
relating hereto and the consumation of this transaction, the filing or recording
of any documents (including all taxes in connection therewith) in public
offices, the payment or discharge of any taxes, counsel fees, maintenance fees,
encumbrances or otherwise protecting, maintaining, preserving the Rights and
After Acquired Rights or in defending or prosecuting any actions or proceedings
arising out of or related to the Rights and After Acquired Rights, shall be
borne and paid by Assignor on demand by CII and until so paid shall be added to
the principal amount of the Note and shall bear interest at the rate set forth
in the Note.
10. Assignor shall have the duty, through counsel reasonably acceptable
to CII, to prosecute diligently any application of the Rights and After Acquired
Rights pending as of the date hereof or thereafter until the Note has been paid
in full, to make application on unpatented but patentable inventions and to
preserve and maintain all rights in patent, trademark and copyright applications
and patents, trademarks and copyrights of the Rights and After Acquired Rights
Any expenses incurred in connection with such an application and/or preservation
or maintenance of the Rights and After Acquired Rights shall be borne by
Assignor. The Assignor shall not abandon any right to any patent, trademark or
copyright or intellectual property, any patent, trademark, copyright application
or to file a patent, trademark or copyright application or extension, division,
continuation,
<PAGE>
renewal, reissue, continuation-in-part or improvement thereof without the
consent of CII, which consent shall not be unreasonably withheld.
11. CII shall have the right but shall in no way be obligated to bring
suit in its own name to enforce the Rights, After Acquired Rights and any
license thereunder, in which event Assignor shall at the request of CII do any
and all lawful acts and execute any and all proper documents required by CII in
aid of such enforcement. Assignor shall promptly, upon demand, reimburse and
indemnify CII for all costs and expenses incurred by CII in the exercise of its
rights hereunder. In the event that CII does not exercise its right to bring
suit to enforce the Rights, After Acquired Rights and any license thereunder,
then Assignor shall have the duty, through counsel reasonably acceptable to CII,
to bring suit to enforce the Rights, After Acquired Rights and any license
thereunder .
12. No course of dealing between Assignor and CII, nor any failure to
exercise, nor any delay in exercising, on the part of CII, any right, power or
privilege hereunder or under the Loan Agreement or Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
13. All of CII's rights and remedies with respect to the Rights and
After Acquired Rights, whether established hereby or by the Loan Agreement or
Note, or by any other agreements or by law shall be cumulative and may be
exercised singularly or concurrently.
14. The provisions of this Agreement are severable, and if any clause
shall be held invalid and unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction, and shall not in any manner
affect such clause or provision in any other jurisdiction, or any other clause
or provision of this Agreement in any jurisdiction.
15. This Agreement is subject to modification only by a writing signed
by the parties, except as provided in Paragraph 5.
16. The benefits and burdens of this Agreement shall inure to the
benefit of and be binding upon the respective successors and permitted assigns
of the parties. CII agrees that, unless Assignor 18 in default under the loan
made by CII to Assignor as of the date hereof and such loan has been accelerated
by CII, it shall not have the right to assign this Agreement to a competitor of
Assignor. For the purposes hereof, a "competitor of Assignor" shall be any
person or entity that develops, manufactures or markets systems for the
monitoring of or the locating of breaks and damages in fiber optic and/or copper
lines or any other system or systems currently or in the future developed,
manufactured or marketed by Assignor.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
<PAGE>
IN WITNESS WHEREOF, the parties hereunto set their hands and seals as of the
_____ day of August, 1990.
AUTOMATED LIGHT TECHNOLOGIES, INC.
By:______________________________
MOHD A. ASLAMI
Its President
Duly Authorized
CONNECTICUT INNOVATIONS
INCORPORATED
By:_____________________________
DAVID C. DRIVER
Its Executive Director
Duly authorized
<PAGE>
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
The foregoing was acknowledged before me, the undersigned officer, this 2nd day
of August, 1990 by Mohd A. Aslami, President of Automated Light Technologies,
Inc., a corporation, on behalf of the corporation.
-------------------------------
Commissioner of the Superior
Court/Notary Public
STATE OF CONNECTICUT)
) ss. at Rocky Hill
COUNTY OF HARTFORD )
The foregoing was acknowledged before me, the undersigned officer, this _____
day of August, 1990 by David C. Driver Executive Director of Connecticut
Innovations Incorporated, a corporation, on behalf of the corporation.
-------------------------------
Commissioner of the Superior
Court/Notary Public
<PAGE>
SCHEDULE A
I. PATENTS
A. CABLE MONITORING SYSTEM PATENTS
l. Original Patents
a. U.S. Patent Number 4,480,251
b. U.K. Patent Number GB 2082406B
2. Cable Failure Detection System
a. U.S. Patent Application Number 512,318 - Filed 4/20/90
b. U.S. Patent Application Number 339,967 - Filed 4/19/89
c. U.S. Patent Application Number 175,251 - Filed 3/30/88
d. Filings of Patents of Confirmation
B. LONG RANGE FAULT LOCATOR PATENT FILINGS
1. Resistive Fault Location Means & Device for Use on
Electrical Cables
a. U.S. Patent Application Number 07/293,288 - Filed 1/4/89
b. European Patent Application EP 0372191 A2
c. British Preliminary Patent Application
d. Japanese Patent Application Number PA-05440
II. TRADEMARKS
A. "FLOODHOUND" - Registration Number 1,485,151
EXH10-6
LOAN AGREEMENT
THIS AGREEMENT, made this 5th day of December, 1990, between AUTOMATED
LIGHT TECHNOLOGIES, INC. having an office at and principal place of business
located at 176 Bolton Road, in the Town of Vernon, County of Tolland, and State
of Connecticut (the "Borrower"), and the CONNECTICUT DEVELOPMENT AUTHORITY
having an office at 217 Washington Street, in the city of Hartford, County of
Hartford and State of Connecticut (the "Authority").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Authority shall lend the
Borrower the SUM of THREE HUNDRED THOUSAND AND NO/100 ($300,000.00) DOLLARS from
the Connecticut Growth Fund established under section 25 of Public Act 88-265
(Reg. Sess.) (the "Loan"): and
WHEREAS , the Authority has agreed to make the Loan upon the terms and
conditions hereinafter set forth in order to stimulate and encourage the growth
and development of the economy of the State of Connecticut;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the Borrower and the Authority agree as follows:
1. The Authority shall lend the Borrower the sum of THREE HUNDRED
THOUSAND AND NO/100 DOLLARS ($300,000.00) in accordance with the terms and
conditions set forth in this Agreement, in a promissory note (the "Note") and in
a security agreement and collateral assignment and security agreement (the
"Security Agreements"), each executed of even date herewith.
2. Contemporaneously with the execution and delivery of this Agreement,
the Borrower will execute and deliver to the Authority the Note, the Security
Agreements, and such other documents as may be required by the Authority (all
collectively hereafter referred to 88 the "Financing Documents"), all of which
are set forth in Exhibit "A" to this Agreement.
3. The Borrower agrees:
a. To furnish to the Authority (i) its balance sheet and the
related statements of earnings and retained earnings within
ninety (90) days after the end of each fiscal year, including
all supporting schedules and comments, all of which shall be
prepared by an independent public accountant of recognized
standing, (ii) a balance sheet and related statements of
earnings within forty-five (45) days after the end of each
fiscal quarter, all of which may be prepared by the Borrower,
and (iii) such further financial and other information the
Executive Director of the Authority may require from time to
time in his discretion.
<PAGE>
b. To notify the Authority promptly of any material adverse
change in the financial condition or business prospects of the
Borrower.
c. Not to relocate its business premises or any material portion
of its workforce or business assets from the location at which
it currently conducts its business without the prior written
consent of the Authority.
d. To provide such security for the Loan 8s the Authority may
require as described in the Security Agreements and to execute
and deliver all documents in connection therewith.
e. That the funds provided will not be used otherwise than for
the purposes or project for which the Loan was approved.
f. To maintain fire and other hazard insurance policies covering
the property and collateral securing the Loan (the
"Collateral") in an amount not less than eighty percent (80%)
of the full value of the insurable Collateral. Such insurance
policies shall be issued by a company licensed to provide such
insurance in the State of Connecticut and shall be
satisfactory in form to the Executive Director of the
Authority. The policies shall name the Authority as an insured
person as its interests appear. A copy of the policies shall
be delivered to the Authority at the time of the execution of
this Agreement.
g. To maintain a liability insurance policy form and amount
satisfactory to the Executive Director of the Authority. Such
insurance policy shall be issued by a company licensed to
provide such insurance in the State of Connecticut and shall
be satisfactory in form to the Authority. A copy of the policy
shall be delivered to the Authority at the time of the
execution of this Agreement.
h. To obtain and maintain key man life insurance on the lives of
Charles DeLuca and Mohd A. Aslami in the amount of $100,000.00
each and to assign the same to the Authority.
i. To provide to the Authority the study being prepared by CASE
for Connecticut Innovations Incorporated, which study shall be
satisfactory to the Authority.
j. To perform the majority of its manufacturing in the State of
Connecticut and/or to hire a majority of its subcontractors
from corporations or businesses located in the State of
Connecticut, both within one (1) year of the date of this
Agreement; provided, however, that compliance does not
adversely and materially effect the financial viability of the
Borrower. Failure to do so shall result in the increase in the
number of shares the Authority is entitled to purchase under
the Warrant to 200,000 and shall increase the put value of the
Warrant to $300,000.00 and the shares of common stock issued
thereunder to S600.000.00. '
<PAGE>
4. The Borrower represents and warrants that:
a. It, its officers or partners and its guarantor(s) if any, have
the power and authority to enter into and perform this
Agreement and to incur the obligations herein provided for and
that all documents and agreements executed ant delivered
pursuant hereto, when delivered, will be valid and binding in
accordance with their respective terms and that it will
deliver at closing an opinion from its counsel with respect
thereto.
b. There has been no material adverse change in the financial
condition of the Borrower and its guarantor(s), if any, since
the date of application for this loan. '
c. It will comply with the Affirmative Action Policy of the
Authority, and has delivered to the Authority within six
months of the date hereof a copy of an Affirmative Action Plan
covering Borrower and any related guarantors, if any, such
Affirmative Action Plan to be acceptable to the Authority.
d. It has obtained and put into place financing from Connecticut
Innovations Incorporated in an amount equal to the amount of
the loan.
5. The Authority shall from time to time, in its discretion, during
regular business hours, have the privilege of making an inspection of the
Collateral and the Borrower shall assist the Authority in said inspection and
shall make available such books and other records as the Authority may
reasonably request. The Authority agree that, unless Borrower is in default
hereunder or under any of the documents executed in connection herewith, it
shall keep confidential to the extent permitted by law, the proprietary
information regarding Borrower's operations and products in the possession of or
known to the Authority.
6. This Agreement may not be modified or amended in any manner except
in writing executed by all of the parties hereto.
7. This Agreement and any of the documents related hereto and the
rights thereunder may not be assigned by the Borrower without the written
consent of the Authority. In the event that the Authority receives a bona fide
third party offer (the "Offer") to purchase this Agreement prior to the
termination hereof and desires to accept such offer, then the Authority shall
give notice of such Offer to the Borrower. The Borrower shall have the right to
purchase this Agreement on the same terms and conditions as are set forth in the
Offer. If the Borrower elects to exercise its rights to purchase this Agreement,
it shall give notice of the same to the Authority within thirty (30) days of the
date of the Authority's notice to the Borrower. Failure of the Borrower to
provide such notice within said thirty (30) days shall terminate the Borrower' 8
right of first refusal with respect to the Offer.
8. The terms and conditions of the Financing Documents are incorporated
herein, and any breach of said terms and conditions is a breach hereunder, and a
breach hereunder shall be a breach of any of the Financing Documents.
9. Any misrepresentation, breach of warranty or other breach of any
agreement or covenant contained in this Agreement shall entitle the Authority to
declare the unpaid balance of the Note due and payable without further notice to
the Borrower, or to exercise any remedy it may have with respect to the
Collateral as set forth in the Financing Documents or otherwise provided by law,
or to exercise any such remedies cumulatively.
10. Any default under the terms of this Agreement shall constitute a
default under the Note, the Financing Documents, and any other documents or
instruments evidencing or securing any other loan now existing or hereafter made
by the Authority to the Borrower, and a default under the Note, the Financing
Documents or such other documents or instruments shall constitute a default
under this Agreement.
11. The security interest, liens and other rights and interests in or
relating to any of the real or personal property of the Borrower or its
guarantors, if any, now or hereafter granted to the Authority by the Borrower or
its guarantors, if any, including but not limited to the Security Agreement,
shall serve as security for any and all liabilities of the Borrower and its
guarantors to the Authority including but not limited to the liabilities
described in this Agreement and the Note but excluding the Borrower's
obligations under the Warrant and, for the repayment thereof, the Authority may
resort to any security held by it in such order and manner as it may elect.
12. Any event of default under this Agreement shall entitle the
Authority, at its sole discretion, to demand immediate and full payment of the
principal on the Note, together with accrued interest, remaining unpaid at the
time of such event of default.
13. The Borrower shall provide the Authority with an opinion of its
counsel that the Borrower in substantially the same form as Exhibit B attached
hereto and made a part hereof.
14. This Agreement shall terminate upon payment in full of the loan.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly signed, sealed, acknowledged
and delivered by the Borrower and the Authority as of the date and year first
above written as of the date and year first above written.
Signed and Delivered in the CONNECTICUT DEVELOPMENT AUTHORITY
Presence of:
- ---------------------------
____________________________ By:__________________________
EDWARD A. ZELINSKY
Its Loan Officer
AUTOMATED LIGHT TECHNOLOGIES, INC.
- ---------------------------
____________________________ By:__________________________
MOHD A. ASLAMI
Its President
Duly Authorized
<PAGE>
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this 5th day of December, 1990, before me, the undersigned officer,
personally appeared Edward A. Zelinsky, who acknowledged himself to be the Loan
Officer of the Connecticut Development Authority and that he, as such officer
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the Authority by himself as such
officer, and that the same is his free act and deed and the free act and deed of
the Authority.
In Witness Whereof I hereunto set my hand.
____/s/___________________________
Commissioner of the Superior Court
Notary Public
My commission expires:
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this 5th day of December, 5990, before me, the undersigned officer,
personally appeared Mohd A. Aslami, who acknowledged himself to be the President
of Automated Light Technologies, Inc., a corporation, and that he as such
President, being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
President.
In Witness Whereof I hereunto set my hand.
____/s/___________________________
Commissioner of the Superior Court
Notary Public
My commission expires:
<PAGE>
EXHIBIT A
to
LOAN AGREEMENT
between
AUTOMATED LIGHT TECHNOLOGIES, INC.
and the
CONNECTICUT DEVELOPMENT AUTHORITY
<PAGE>
List of Financing Documents
Promissory Note
Security Agreement
UCC-1 Financing Statement
Collateral Assignment and Security Agreement
Guaranty of the full value of the loan executed by Mohd A. Aslami and Charles
DeLuca
Warrant
Subordination Agreement
Shared Priority Agreement
Corporate Resolutions of Automated Light Technologies, Inc. authorizing the
Corporation to borrow the funds and to take all other action necessary for the
completion of this loan and authorizing its officers to execute all necessary
documents on its behalf
Certificate of the Secretary of Automated Light Technologies, Inc. certifying
the accuracy of the Corporate Resolutions
Certificate of Good Standing issued by the Secretary of the States of Delaware
and Connecticut for Automated Light Technologies, Inc.
Certificate of No Adverse Change
Certificate of Non-Relocation
Opinion Letter of Borrower's Counsel
Certificate(s) of Insurance establishing the existence of (a) liability
insurance and (b) fire and other casualty insurance covering the property listed
in Schedule A of the Security Agreement, which insurance shall name the
Connecticut Development Authority as a loss payee and mortgagee as its interest
may appear
Affirmative Action Plan Approval
Evidence of Life Insurance in the amount of $100,000.00 each on the lives of
Mohd A. Aslami and Charles DeLuca
Assignment of Life Insurance Policy on the lives of Mohd A. Aslami and Charles
DeLuca acknowledged by the home office of the insurer
EXH10-7
PROMISSORY NOTE
$300,000.00 Hartford, Connecticut
December 5, 1990
FOR VALUE RECEIVED, AUTOMATED LIGHT TECHNOLOGIES, INC., a Delaware
corporation having 8 principal office and place of business in the Town of
Vernon, County of Tolland and State of Connecticut, (the "Maker"), promises to
pay to the order of the CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority") at
its principal office at 217 Washington Street in the City of Hartford, County of
Hartford and State of Connecticut or at such other place as Authority hereof may
designate in writing, the principal sum of THREE HUNDRED THOUSAND AND NO/100
($300,000.00) DOLLARS, together with interest in arrears thereon from the date
hereof at the rate of ten (10%) per centum per annum upon the whole of said
principal sum remaining from time to time unpaid. Said principal and interest
shall be due and payable in monthly installments as follows, viz:
Upon the execution of this Note, interest from the 5th day of December,
1990 to the 31st day of December, 1990, and thereafter, Maker shall make equal
monthly payments to principal and interest commencing on the first day of
January, 1991, and a like sum on the first day of each and every month
thereafter, which payments shall be in an amount that will fully amortize the
loan on January 1, 1996. As of the date hereof, the Authority has advanced the
sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) to Maker and the
monthly payments to be made hereunder equal TWO THOUSAND ONE HUNDRED TWENTY-FOUR
AND 70/100 DOLLARS ($2,124.70) except for the last payment to be made, which
equals TWO THOUSAND ONE HUNDRED TWENTY-FIVE AND NO/100 DOLLARS ($2,125.00). The
Authority shall advance the remainder of the THREE HUNDRED THOUSAND AND NO/100
DOLLAR ($300,000.00)loan upon the written request of Maker provided the
following conditions are met: a) Maker shall have bona fide purchase orders or
contracts for the purchase of products from Maker and shall have valid accounts
receivable for the sale of such products; b) Maker shall provide to the
Authority satisfactory evidence to support the existence of such orders or
contracts and accounts receivable; c) such advances shall be in amounts of Fifty
Thousand Dollars ($50,000.00) or greater; d) Maker shall not be in default under
this Note or any of the documents executed in connection herewith; e) Maker
shall not have granted any security interests in its property which would be
prior in right to the amount advanced; and f) such request is made within one
year of the date of this Note. In the event subsequent advances are made, then
the monthly payment dues hereunder shall be adjusted to reflect such advance and
to ensure payment in full of this Note by January 1, 1996. Each monthly
installment shall be applied first to the payment of interest on the unpaid
principal of this Note and the balance on the account of the principal of this
Note.
Maker agrees to pay all taxes or duties levied or assessed upon said
sum against Authority or other owner of this Note, the debt evidenced hereby, or
the security agreements securing the same (the "Security Agreements"), and upon
the collateral granted under the Security Agreements and, upon the event of
default to pay all costs, expenses, and attorneys' fees incurred by Authority
<PAGE>
in any proceeding for the collection of the debt evidenced hereby, or in any
action to enforce its rights in collateral granted under the Security Agreements
upon the happening of a default as provided for in the Security Agreements, or
in protecting or sustaining the lien of the Security Agreements or in any
litigation or controversy arising from or connected with this Note, the loan
agreement, of even date herewith, executed by and between Maker and the
Authority with respect to the sum evidenced by this Note (the "Loan Agreement")
or the Security Agreements.
There shall be an event of default: (i) If Maker defaults for fifteen
(15) days in making any payment of principal or interest on this Note, in making
any payment of taxes or any municipal assessment, any insurance premiums, or any
lien or charge upon any property by which this Note is secured, as the same
become due, or (ii) if Maker fails to perform any covenant contained in the Loan
Agreement or the Security Agreements or if Maker defaults under the Loan
Agreement or the Security Agreements, or (iii) if an order for relief is sought
by or against Maker under the Federal Bankruptcy Code or acts amendatory thereof
or supplemental thereto or under any statute either of the United States or any
state in connection with insolvency or reorganization or for the appointment of
a receiver or trustee of all or a portion of Maker's property and any such order
for relief, receiver or trustee is not withdrawn, dismissed, discharged, or
removed within sixty (60) days, or (iv) if an assignment of Maker ' s property
is made for the benefit of creditors or (v) if Maker abandons any property
securing this Note or declares in writing its inability to pay debts as they
come due, or (vi) if Maker liquidates or dissolves or is liquidated or
dissolved, or (vii) if any collateral securing this Note is substantially
damaged in any manner and is not covered by insurance deemed adequate by
Authority, or (viii) if the United States of America, the State of Connecticut,
or any agency or subdivision thereof, imposes a tax, levy, or assessment on or
concerning this Note, which Maker cannot lawfully or does not pay when due, or
(ix) if title to any portion or all of the collateral securing this Note becomes
vested in other than Maker hereof, or is encumbered by financing without
Authority's prior written consent. Upon the occurrence of an event of default,
the entire principal sum with accrued interest thereon due under this Note shall
at the option of Authority become due and payable. No failure to exercise such
option shall be deemed a waiver on the part of Authority of any right accruing
thereafter.
Authority may collect a "late charge" not to exceed an amount equal to
two (2%) percent of any installment of interest or principal or both which is
not paid within ten (10) days of the date on which said payment is due. Late
charges shall be separately charged to and collected from Maker, and shall be
due upon demand by Authority.
Maker shall have the right to prepay this Note in whole or in part upon
any interest payment date, without penalty. In the event that the Authority
receives a bona fide third party offer (the "Offer") to purchase this Note prior
to the termination hereof and desires to accept such offer, then the Authority
shall give notice of such Offer to Maker. Maker shall have the sight to purchase
this Agreement on the same terms and conditions as are set forth in the Offer.
If Maker elects to exercise its rights to purchase this Agreement, it shall give
notice of the same to the Authority within thirty t30) days of the date of the
Authority's notice to Maker. Failure of Maker to provide such notice within said
thirty (30) days shall terminate Maker's right of first refusal with respect to
the Offer.
<PAGE>
Maker and each and every endorser, guarantor, and surety of this Note
and all others who may become liable for all or any part of this obligation do
hereby waive demand, presentment for payment, protest, notice of protest, and
notice of nonpayment of this Note, and do hereby consent to any number of
renewals or extensions of the time of payment hereof and of the time for
advances under the Security Agreement, if any, and agree that any such renewals
or extensions may be made without notice to any of said parties and without
affecting their liability herein and further consent to the release of any part
or parts or all of the security for the payment hereof and to the release of any
party or parties liable hereon, all without affecting the liability of the other
persons, firms, or corporations liable for the payment of this Note.
Upon the occurrence of an event of a default, at the option of the
Authority, the Authority may pay insurance premiums, taxes and assessments, and
any and all other expenses which may be reasonable or necessary to protect the
property securing this Note or to protect or sustain the lien of the Security
Agreement. Any such payment made by the Authority hereof pursuant to said option
shall be added to the principal balance due hereunder and shall bear interest as
set forth herein from the date of payment by Authority or shall be payable on
demand with interest from the date of payment by Authority.
Maker agrees that all expenditures incurred by Authority under this
Note other than principal, and the principal of this Note after maturity or upon
an event of default or after a Judgment hereon, shall bear interest at the rate
of twelve percent (12%) per annum, from the date of demand, default or judgment
as applicable.
To induce Authority to enter into the commercial loan transaction
evidenced by this Note, the Security Agreements and other security hereof, each
maker, endorser and guarantor hereof agrees that the said transaction is a
commercial and not a consumer transaction and waives any right to notice of and
a hearing on the right of Authority under Chapter 903a of the Connecticut
General Statues or other statute or statutes affecting prejudgment remedies and
authorizes Authority's attorney to issue a writ for prejudgment remedy without
court order, provided the complaint shall set forth a copy of the waiver.
Should this Note be signed by more than one maker, the references in
this Note to Maker in the singular shall include the plural and a11 obligations
herein contained shall be joint and several obligations of each maker hereof.
The term the "Authority" as used in this Note shall include the
Authority and any subsequent holder or holders hereof.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut.
AUTOMATED LIGHT TECHNOLOGIES, INC.
By:__/S/_________________________
MOHD A. ASLAMI
Its President
Duly Authorized
This Note is secured by a security agreement and by a guaranty all of even date
herewith.
EXH10-8
GUARANTY
This Guaranty made this 5th day of December, 1990, by the undersigned
(the "Guarantor") to and for the benefit of the CONNECTICUT DEVELOPMENT
AUTHORITY having its principal office at 217 Washington Street in the City of
Hartford, County of Hartford and State of Connecticut (the "Authority"),
W I T N E S S E T H:
WHEREAS, AUTOMATED LIGHT TECHNOLOGIES, INC. (the "Debtor") has applied
to the Authority for a loan in the total amount of THREE HUNDRED THOUSAND AND
NO/100 ($300,000.00) DOLLARS to be evidenced by its note in that amount of even
date herewith (the "Note"), a copy of which is attached hereto, secured by a
security agreement bearing the same date as the Note (the "Security Agreement");
and
WHEREAS, to induce the Authority to make said loan, the Guarantor has
agreed with the Authority to guarantee the payment of principal and interest and
any other charges provided for in the Note and the Security Agreement and the
performance by the Debtor of all of the covenants on its part to be performed
and observed pursuant to the provisions thereof;
NOW, THEREFORE, in consideration of the premises and of the sum of ONE
DOLLAR ($1.00) paid by the Authority to the Guarantor at or before delivery of
this Guaranty, the receipt and sufficiency of which is hereby acknowledged, the
Guarantor:
1. Unconditionally and absolutely guarantees the due and punctual
payment of the principal of the Note, the interest thereon and other monies due
or which may become due thereon, and the due and punctual performance and
observance by the Debtor of all the other terms, covenants and conditions of the
Note and the Security Agreement, whether according to the present terms thereof,
at any earlier or accelerated date or dates as provided therein, or pursuant to
any extension of time or to any change or changes in the terms, covenants and
conditions thereof now or at any time hereafter made or granted.
2. Waives diligence, presentment, protest, notice of dishonor, demand
for payment, extension of time for payment, notice of acceptance of this
Guaranty, nonpayment at maturity and indulgence and notices of every kind, and
consents to any and all forebearances and extensions of the time of payment of
the Note and the Security Agreement and to any and all changes in the terms,
covenants and conditions thereof made or granted and to any and all
substitutions, exchanges or releases of all or any part of the collateral
therefor or of any other guarantor therefor; it being the intention hereof that
Guarantor shall remain liable as principal until the full amount of the
principal of the Note ant the Security Agreement, with interest, and any other
sums due or to become due thereunder shall have been fully paid and the terms,
covenants and conditions shall have been fully performed and observed by the
Debtor, notwithstanding any act, omission or thing
<PAGE>
which might otherwise operate as a legal or equitable discharge of the
Guarantor. The Guarantor also waives all rights waived in the Note by the maker
thereof and all rights under Section 49-1 of the General Statutes of
Connecticut.
3. Agrees that it shall have no right of subrogation whatsoever with
respect to the aforesaid indebtedness, or to any monies due and unpaid thereof
or any collateral securing the same, unless and until the Authority shall have
received payment in full of all sums at any time due on the Note and/or secured
by the Security Agreement.
4. Agrees that this Guaranty may be enforced by the Authority without
first resorting to or exhausting any other security, collateral or guarantor and
without first having recourse to the Note or any of the property or collateral
secured by the Security Agreement through court proceedings or otherwise;
provided, however, that nothing herein contained shall prevent the Authority
from suing on the Note with or without making the Guarantor a party to the suit
or from exercising other rights thereunder and if such suit or other remedy is
availed of only the net proceeds therefrom, after deduction of all charges and
expenses of every kind and nature whatsoever incurred in connection with the
collection or enforcement of the Note and/or the Security Agreement, shall be
applied and the Authority shall not be required to institute or prosecute
proceedings to recover any deficiency as a condition of payment hereunder or
enforcement hereof. At any sale of the property or collateral securing the
indebtedness, or any part thereof, whether upon judgment or otherwise the
Authority may at its discretion purchase all or any part of such collateral so
sold or offered for sale for its own account and may apply against the amount
bid therefor an equal amount out of the balance due it pursuant to the terms of
the Note and/or the Security Agreement.
5. Agrees that the Guarantor's obligation to make payment in accordance
with the terms of this Guaranty shall not be impaired, modified, changed,
released, or limited in any manner whatsoever by any impairment, modification,
change, release or limitation of the liability of the Debtor or its estate in
bankruptcy resulting from the operation of any present or future provision of
the Federal Bankruptcy Code or other similar statute, or from the decision of
any court.
6. Agrees that in the event this Guaranty is placed in the hands of any
attorney for enforcement, the Guarantor will reimburse the Authority for all
expenses incurred, including reasonable attorneys fees.
7. Agrees that this Guaranty shall inure to the benefit of and may be
enforced by the Authority, and any subsequent holder of the Note and/or the
Security Agreement and shall be binding upon and enforceable against the
Guarantor and the Guarantor's heirs, administrators, executors, successors and
assigns.
8. Agrees that the Guarantor has the power and authority to enter into
and perform this Guaranty and to incur the obligations herein provided for and
that all documents and agreements executed and delivered pursuant hereto, when
delivered, will be valid ant binding in accordance with their respective terms
and will deliver an opinion of counsel with respect thereto.
<PAGE>
9. Agrees to provide the Authority with annual personal financial
statements and/or tax return of the Guarantor on each anniversary of the date of
this Guaranty
10. As used hereinabove, unless the context clearly indicates a
contrary context, pronouns of any gender shall include the other genders, and
either the singular or plural shall include the other.
11. If this Guaranty is executed by more than one Guarantor, the
liability of the Guarantors hereunder shall be joint and several.
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly signed, sealed and
delivered by the Guarantor the day and year first above written.
Signed, Sealed and Delivered in the Presence of:
- ------------------------
- ------------------------ ------------------------
MOHD A . ASLAMI
- ------------------------
- ------------------------ ------------------------
CHARLES DeLUCA
<PAGE>
5. Agrees that the Guarantor's obligation to make payment in accordance
with the terms of this Guaranty shall not be impaired, modified, changed,
released, or limited in any manner whatsoever by any impairment, modification,
change, release or limitation of the liability of the Debtor or its estate in
bankruptcy resulting from the operation of any present or future provision of
the Federal Bankruptcy Code or other similar statute, or from the decision of
any court.
6. Agrees that in the event this Guaranty is placed in the hands of any
attorney for enforcement, the Guarantor will reimburse the Authority for all
expenses incurred, including reasonable attorneys fees.
7. Agrees that this Guaranty shall inure to the benefit of and may be
enforced by the Authority, and any subsequent holder of the Note and/or the
Security Agreement and shall be binding upon and enforceable against the
Guarantor and the Guarantor's heirs, administrators, executors, successors and
assigns.
8. Agrees that the Guarantor has the power and authority to enter into
and perform this Guaranty and to incur the obligations herein provided for and
that all documents and agreements executed and delivered pursuant hereto, when
delivered, will be valid ant binding in accordance with their respective terms
and will deliver an opinion of counsel with respect thereto.
9. Agrees to provide the Authority with annual personal financial
statements and/or tax return of the Guarantor on each anniversary of the date of
this Guaranty
10. As used hereinabove, unless the context clearly indicates a
contrary context, pronouns of any gender shall include the other genders, and
either the singular or plural shall include the other.
11. If this Guaranty is executed by more than one Guarantor, the
liability of the Guarantors hereunder shall be joint and several.
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly signed, sealed and
delivered by the Guarantor the day and year first above written.
Signed, Sealed and Delivered in the Presence of:
- ------------------------
- ------------------------ ------------------------
MOHD A . ASLAMI
- ------------------------
- ------------------------ ------------------------
CHARLES DeLUCA
EXH10-9
COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
THIS AGREEMENT, made as of this 5th day of December, 1990 by and between
AUTOMATED LIGHT TECHNOLOGIES, INC., a Connecticut corporation with an office at
176 Bolton Road, Vernon, Connecticut ("Assignor") and the CONNECTICUT
DEVELOPMENT AUTHORITY, a body politic and corporate constituting a public
instrumentality of the State of Connecticut with an office at 217 Washington
Street, Hartford, Connecticut ("Assignee")
WHEREAS, Assignor has executed and delivered to Assignee a promissory note in
the principal amount of $300,000.00 (the "Note"), pursuant to a certain loan
agreement between Assignor and Assignee dated December 5, 1990 (the "Loan
Agreement"): and
WHEREAS, in order to induce Assignee to execute and deliver the Loan Agreement
and to make the loan and as security for the performance by Assignor of its
duties under the Note the Loan Agreement and other documents executed in
connection therewith, Assignor has agreed to assign to Assignee certain patent,
trademark and copyright rights and to grant to Assignee B security interest
therein.
NOW THEREFORE, in consideration of the premises and the agreements contained
herein, Assignor hereby agrees with Assignee as follows:
1. To secure the complete and timely performance of Assignor's
responsibilities under the Note, the Loan Agreement and other documents
delivered in connection therewith, exclusive of the obligations of Assignor
under the Warrant, Assignor hereby grants, assigns and conveys to Assignee its
entire right, title and interest in and to the patents, trademarks, copyrights
and intellectual property listed in Schedule A attached hereto, including
without limitation a11 proceeds thereof, the right to sue for past, present and
future infringements, all rights corresponding thereto throughout the world and
a11 reissues, divisions, continuations, renewals extensions ant
continuations-in-part thereof and all improvements thereon (collectively called
the "Rights") and a11 future patents, trademarks, copyrights and intellectual
property which may be obtained by Assignor and acquired or created by Assignor
after the date hereof ("After Acquired Rights"). For the purposes of this
Agreement the term "intellectual property" shall mean all creations, inventions
and ideas developed, created, acquired or obtained by Assignor during such time
as the Note is outstanding whether or not such items are patentable, patented,
trademarkable, trademarked, copyrightable or copyrighted.
2. Assignor covenants and warrants:
a. the Rights are subsisting and have not been adjudged
invalid or unenforceable, in whole or in part:
<PAGE>
b. to the best of Assignor's knowledge, each of the Rights is
valid and enforceable and Assignor has notified Assignee in writing of all prior
acts with respect to the Rights (including public uses and sales) of which it is
aware:
c. Assignor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Rights, free and
clear of any liens, charges and encumbrances, including without limitation
licenses, shop rights and covenants not to sue; and
d. Assignor has the unqualified right to enter in this
Agreement and perform its terms and has entered into written agreements with
each of its employees, agents and consultants which will enable it to comply
with the covenants herein contained.
Assignor agrees that, until all of the liabilities under the Note and the Loan
Agreement have been satisfied in full, it will not enter into any agreement
which is inconsistent with Assignor's obligations hereunder without Assignee's
prior written consent, which consent shall not be unreasonably withheld.
3. If, before all liabilities under the Note shall have been satisfied
in full, Assignor shall become entitled to the benefit of any patent, trademark
or copyright application or patent, trademark or copyright for reissue,
division, continuation, renewal, extension or continuation-in-part of any Right
or any After Acquired Right or any improvement on any Right or any After
Acquired Right, Assignor shall give Assignee prompt notice of the same and the
provisions of Paragraph 1 shall apply thereto.
4. If Assignor has not filed a formal application for any of the Rights
or After Acquired Rights within three months of the date hereof or if any such
application lists the inventor, owner, product, trademark or copyright by a name
different from that set forth on Schedule A, then Assignor agrees to execute, if
necessary, a separate agreement for such Right or After Acquired Right at the
time such application is filed.
5. Assignor hereby authorizes Assignee to modify this Agreement by
amending Schedule A to include any reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any Rights, After Acquired Rights and
any improvements thereon.
6. Unless and until there shall have occurred an event of default as
defined in the Loan Agreement or the Note, Assignee hereby grants to Assignor
the exclusive, nontransferable right and license to make, have made, use and
sell the inventions, trademarks and copyrights disclosed and claimed in the
Rights and After Acquired Rights for Assignor's own benefit and account and for
none other. Assignor agrees not to sell or assign its interest in, or grant any
sublicenses under the license granted herein without the prior written consent
of Assignee, which consent shall not be unreasonably withheld.
7. If any event of default under the Loan Agreement, Note or any other
document executed in connection with the loan shall have occurred and not be
cured within any applicable cure period or extended period as permitted by
Assignee, Assignor's license of the Rights and After
<PAGE>
Acquired Rights as set forth in Paragraph 6 shall terminate forthwith, and
Assignee shall have, in addition to all other rights and remedies given it by
this Agreement, those allowed by law and the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in any Jurisdiction in which
the Rights and After Acquired Rights may be located and, without limiting the
generality of the foregoing, Assignee may, without demand of performance and
without other notice or demand whatsoever to Assignor, all of which are hereby
expressly waived, and without advertisement, immediately sell, assign, lease or
otherwise dispose of the Rights, the After Acquired Rights or any part thereof,
either at public or private sale acceptable to Assignee, all at Assignee's sole
option and as it, in its sole discretion, may deem advisable. Assignee will give
Assignor reasonable notice of the time and place of any public sale or the time
after which any private sale or other intended disposition will be made. The
requirement of reasonable notice shall be met if such notice is mailed to
Assignor at least five (5) days before the time of the sale or disposition.
After deducting from the proceeds of sale or other disposition of the Rights and
After Acquired Rights all expenses (including all reasonable expenses for
brokers' fees and legal services), Assignee shall apply the residue of such
proceeds towards the payment of the Note. Any remainder of the proceeds after
payment in full of the Note shall be paid over to the Assignor. At any such sale
or other disposition of the Rights and After Acquired Rights, any holder of the
Note or Assignee may, to the extent permitted under applicable law, purchase the
whole or any part of the Rights and After Acquired Rights, free from any right
of redemption on the part of Assignor, which right is hereby waived and
released.
8. At such time as Assignor shall completely satisfy all of the
liabilities under the Note, Assignee shall execute and deliver to Assignor all
deeds, assignments and other instruments as may be necessary or proper to revest
in Assignor full title to the Rights and After Acquired Rights, subject to any
disposition thereof which may have been made by Assignee pursuant hereto.
9. Any and all fees, costs and expenses, of whatever kind and nature,
including reasonable attorneys' fees and legal expenses, incurred by Assignee in
connection with the preparation of this Agreement ant all other documents
relating hereto and the consumation of this transaction, the filing or recording
of any documents (including a11 taxes in connection therewith) in public
offices, the payment or discharge of any taxes, counsel fees, maintenance fees,
encumbrances or otherwise protecting, maintaining, preserving the Rights and
After Acquired Rights or in defending or prosecuting any actions or proceedings
arising out of or related to the Rights and After Acquired Rights, shall be
borne and paid by Assignor on demand by Assignee and until so paid shall be
added to the principal amount of the Note and shall bear interest at the rate
set forth in the Note.
10. Assignor shall have the duty, through counsel reasonably acceptable
to Assignee, to prosecute diligently any application of the Rights and After
Acquired Rights pending as of the date hereof or thereafter until the Note has
been paid in full, to make application on unpatented but patentable inventions
and to preserve and maintain all rights in patent, trademark and copyright
applications and patents, trademarks and copyrights of the Rights and After
Acquired Rights. Any expenses incurred in connection with such an application
and/or preservation or maintenance of the Rights and After Acquired Rights shall
be borne by Assignor. The Assignor shall not abandon any right to any patent,
trademark or copyright or intellectual property, any patent, trademark,
copyright
<PAGE>
application or to file a patent, trademark or copyright application or
extension, division, continuation, renewal, reissue, continuation-in-part or
improvement thereof without the consent of Assignee, which consent shall not be
unreasonably withheld.
11. Assignee shall have the right but shall in no way be obligated to
bring suit in its own name to enforce the Rights, After Acquired Rights and any
license thereunder, in which event Assignor shall at the request of Assignee do
any and all lawful acts and execute any and all proper documents required by
Assignee in aid of such enforcement. Assignor shall promptly, upon demand,
reimburse and indemnify Assignee for all costs and expenses incurred by Assignee
in the exercise of its rights hereunder. In the event that Assignee does not
exercise its right to bring suit to enforce the Rights, After Acquired Rights
and any license thereunder, then Assignor shall have the duty, through counsel
reasonably acceptable to Assignee, to bring suit to enforce the Rights, After
Acquired Rights and any license thereunder.
12. No course of dealing between Assignor and Assignee, nor any failure
to exercise, nor any delay in exercising, on the part of Assignee, any right,
power or privilege hereunder or under the Loan Agreement or Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
13. All of Assignee's rights and remedies with respect to the Rights
and After Acquired Rights, whether established hereby or by the Loan Agreement
or Note, or by any other agreements or by law shall be cumulative and may be
exercised singularly or concurrently.
14. The provisions of this Agreement are severable, and if any clause
shall be held invalid and unenforceable in whole or in part in any Jurisdiction,
then such invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such Jurisdiction, and shall not in any manner
affect such clause or provision in any other Jurisdiction, or any other clause
or provision of this Agreement in any jurisdiction.
15. This Agreement is subject to modification only by a writing signed
by the parties, except as provided in Paragraph 4.
16. The benefits and burdens of this Agreement shall inure to the
benefit of and be binding upon the respective successors and permitted assigns
of the parties.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut. \
IN WITNESS WHEREOF, the parties hereunto set their hands and seals as of the a
5th day of December, 1990.
AUTOMATED LIGHT TECHNOLOGIES, INC.
By:____/s/________________________
MOHD A. ASLAMI
Its President
Duly Authorized
CONNECTICUT DEVELOPMENT AUTHORITY
By:___/s/_________________________
EDWARD A. ZELINS
Its Loan Officer
Duly authorized
<PAGE>
STATE OF CONNECTICUT )
) ss. at Hartford
COUNTY OF HARTFORD )
The foregoing was acknowledged before me, the undersigned officer, this 5th day
of December, 1990 by Mohd A. Aslami, President of Automated Light Technologies,
Inc., a corporation, on behalf of the corporation.
_____/s_____________________
Commissioner of the Superior
Court
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
The foregoing was acknowledged before me, the undersigned officer, this 5th day
of December, 1990 by Edward A. Zelinsky, Loan Officer of the Connecticut
Development Authority, a corporation, on behalf of the corporation.
_____/s_____________________
Commissioner of the Superior
Court
<PAGE>
SCHEDULE A
I. PATENTS
A. CABLE MONITORING SYSTEM PATENTS
l. Original Patents
a. U.S. Patent Number 4,480,251
b. U.K. Patent Number GB 2082406B
2. Cable Failure Detection System
a. U.S. Patent Application Number 512,318 - Filed 4/20/90
b. U.S. Patent Application Number 339,967 - Filed 4/19/89
c. U.S. Patent Application Number 175,251 - Filed 3/30/88
d. Filings of Patents of Confirmation
B. LONG RANGE FAULT LOCATOR PATENT FILINGS
1. Resistive Fault Location Means & Device for Use on Electrical
Cables
a. U. S. Patent Application Number 07/293,288 - Filed
1/4/89
b. European Patent Application EP 0372191 A2
c. British Preliminary Patent Application
d. Japanese Patent Application Number PA-05440
II. TRADEMARKS
A. "FLOODHOUND" - Registration Number 1,485,151
EXH10-10
SECURITY AGREEMENT
This Agreement, made as of the 5th day of December, 1990, by and
between AUTOMATED LIGHT TECHNOLOGIES, INC., having its principal office in the
Town of Vernon, County of Tolland and State of Connecticut (the "DEBTOR"), and
the CONNECTICUT DEVELOPMENT AUTHORITY having its principal office at 217
Washington Street, in the City of Hartford, County of Hartford and State of
Connecticut, (the "AUTHORITY").
W I T N E S S E T H:
In consideration of the mutual promises and covenants herein contained,
the parties agree as follows:
1. Definitions. In this Agreement:
a. "Collateral" means all property of DEBTOR listed and described
in Schedule A hereto, whether any of such property shall be
owned, acquired or crested by DEBTOR at any time hereafter,
wherever located, and the products, accessions, or
substitutions therefor, and the accounts or proceeds arising
from the sale or disposition of any Inventory of the DEBTOR
including any returns thereof, including, where applicable,
the proceeds of insurance covering the above.
b. "Indebtedness" means all debts, liabilities and obligations of
any kind, whenever and however incurred including future
obligations of the DEBTOR to, whether or not evidenced by any
notes, instruments, documents or other writing, excluding the
obligations of DEBTOR pursuant to the Warrant executed and
delivered in connection with this transaction.
c. "Inventory" means all merchandise, raw materials,
work-in-process, parts, supplies, and finished products
intended for sale or lease or to be furnished under contracts
of service of every kind and description, now or at any time
hereafter owned by and in the custody or possession, actual or
constructive, of the DEBTOR, including goods as are
temporarily out of the DEBTOR's custody or possession and
including any returns upon any accounts, or proceeds including
insurance proceeds resulting from the sale or disposition of
any of the foregoing.
d. "State" means any state in which the DEBTOR carries on
business or in which the collateral is at any time located.
<PAGE>
e. Any term not defined herein that is defined in the Uniform
Commercial Code, as enacted in the State, shall have the
meaning as defined therein.
To secure the payment of a loan in the amount of THREE HUNDRED THOUSAND
AND NO/100 ($300,000.00) DOLLARS plus interest, payable in accordance with the
terms of a note of even date herewith, which may be attached hereto and made a
part hereof (the "Note"), and to secure the performance or payment of all
Indebtedness of any kind, whenever and however incurred of the DEBTOR to
AUTHORITY whether or not evidenced by notes or any other instrument, DEBTOR
hereby grants and conveys to a security interest in the Collateral.
2. DEBTOR's Covenants. The DEBTOR warrants, covenants and agrees as
follows:
a. To pay and perform all of the obligations secured by this
Agreement according to their terms.
b. To defend the title to the Collateral against all persons and
against all claims, except claims which are permitted herein.
c. On demand of the AUTHORITY to do the following: furnish
further assurance of title, execute any written agreement or
do any other acts necessary to effectuate the purposes and
provisions of this Agreement, execute any instrument or
statement required by law or otherwise in order to perfect,
continue or terminate the security interest of the AUTHORITY
in the Collateral and pay all costs of filing in connection
therewith.
d. To retain possession of the Collateral during the existence of
this Agreement and not to sell, exchange, assign, loan,
deliver, lease, mortgage or otherwise dispose of same without
the written consent of the AUTHORITY, which consent will not
unreasonably be withheld (except for inventory which may be
sold in the ordinary course of business).
e. To keep the Collateral at its present locations and not to
remove same (except for sales in the usual course of business)
without the prior written consent of the AUTHORITY, which
consent will not be unreasonably withheld.
f. To keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments, except for the security
interest of a prior secured party, and except for any
subsequent encumbrances consented to in writing by the
AUTHORITY.
<PAGE>
g. To pay, when due, all taxes, assessments and license fees
relating to the Collateral.
h. To keep the Collateral, at the DEBTOR's own cost and expense,
in good repair and condition and to use it for the purposes
intended and not to misuse, abuse, waste or allow it to
deteriorate except for normal wear and tear and to make the
same available for inspection by the AUTHORITY during normal
business hours.
i. To keep the Collateral insured against loss by fire, including
extended coverage, theft and other hazards as the AUTHORITY
may require in an amount no less than eighty percent (is0%) of
the full value of the insurable Collateral. Policies covering
the Collateral shall be obtained from responsible insurers
authorized to do business in Connecticut, Certificates of
insurance or policies shall have attached thereto a loss
payable clause making loss payable to the AUTHORITY as its
interest may appear, and all such policies and renewal
policies shall be deposited with the AUTHORITY. Each policy or
endorsement shall contain a clause requiring the insurer to
give not less than ten (10) days' written notice to the
AUTHORITY in the event of cancellation of the policy for any
reason whatsoever, and is clause that the interest of the
AUTHORITY shall not be impaired or invalidated by any act or
neglect of the DEBTOR or owner of the Collateral nor by the
occupation of the Premises where the Collateral is located for
purposes more hazardous than are permitted by said policy. The
DEBTOR shall give immediate written notice to the AUTHORITY
and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with insurers. Subject to the
rights of prior secured parties, the DEBTOR hereby appoints
the AUTHORITY the attorney of the DEBTOR in obtaining and
adjusting any such insurance and endorsing settlement drafts
and hereby assigns to the AUTHORITY all sums which may become
payable under such insurance, including return premiums and
dividends, as additional security for the indebtedness. In the
event of termination is threatened termination of insurance,
the AUTHORITY has the right to obtain its own insurance
covering the Collateral and to add the costs of obtaining and
maintaining such insurance as an additional obligation of the
DEBTOR to the AUTHORITY. Nothing herein shall relieve the
DEBTOR of his duty or obligation to do any ace for which the
AUTHORITY may be hereby appointed attorney for the DEBTOR.
j. In the conduct of its business, the DEBTOR will comply with
all applicable laws , ordinances, rules and
<PAGE>
regulations of all governmental authorities having
Jurisdiction over the DEBTOR and/or its business.
k. The DEBTOR authorizes the AUTHORITY, if the DEBTOR fails to do
so, to do all things required of the DEBTOR herein and charge
all expenses incurred to the DEBTOR and charge interest on the
same until repayment to it at the interest rate provided in
the Note; and that failure to repay any said advance with
interest within fifteen (15) days from the date of demand by
the AUTHORITY shall constitute a default hereunder.
l. To provide the AUTHORITY with a balance sheet within
forty-five (45) days of the end of each fiscal quarter of the
DEBTOR, and to provide annual financial statements prepared by
the DEBTOR's independent accountant within ninety (90) days of
the end of the DEBTOR's fiscal year, and to make all its books
and records available for inspection by the AUTHORITY during
reasonable business hours.
3. Non-Waiver. Waiver of or acquiescence in any default by the
DEBTOR or failure of the AUTHORITY to insist upon strict performance by the
DEBTOR of any warranties or agreements in this Security Agreement shall not
constitute a waiver of any subsequent or other default or failure
4. Default. The following shall constitute a default by the
DEBTOR:
a. The occurrence of a default under the Note.
b. Failure by the DEBTOR to comply with or perform within fifteen
(15) days from the date of performance any provision of this
Agreement.
c. Materially false or misleading representations or warranties
made or given by the DEBTOR in connection with this Agreement.
d. Commencement of any bankruptcy or other insolvency proceeding
by or against the DEBTOR which is not withdrawn, dismissed,
discharged or removed within sixty (60) days of commencement.
e. Any act of the DEBTOR which the AUTHORITY, in its sole
discretion, deems will imperil the prospect of full
performance or satisfaction of the DEBTOR's obligations to the
AUTHORITY.
f. Depreciation (except depreciation as reflected for tax or
accounting purposes) or impairment of the Collateral, or
material and substantial change in the financial status of the
DEBTOR which Jeopardizes the
<PAGE>
prospect of performance of any of the warranties or covenants herein.
g. Default under any other loan agreement, promissory note, or
security agreement executed by the DEBTOR in respect of any
debt owed to the AUTHORITY or to any other person.
5. Remedies on Default. Upon any default and without demand, the DEBTOR
agrees immediately to assemble the Collateral and make it available to the
AUTHORITY at the place and time designated in the said demand. The AUTHORITY
shall be entitled to immediate possession of the Collateral and the AUTHORITY
may: (i) enter any premises where any Collateral may be located for the purpose
of taking possession of and removing same, and (ii) sell, assign, lease or
otherwise dispose of the Collateral or any part thereof, either at public or
private sale acceptable to the AUTHORITY, all at the AUTHORITY's sole option and
as it, in its sole discretion, may deem advisable, and the AUTHORITY may bid or
become purchaser at any such sale if public, free from any right of redemption
which is hereby expressly waived by the DEBTOR. Until sale, the AUTHORITY may
store the Collateral on the premises where it is located when seized, and if
said premises are the property of the DEBTOR, the DEBTOR agrees not to charge
the AUTHORITY for storage thereof for a period of ninety (90) days before or
after sale or disposition of said Collateral. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold in a recognized market, the AUTHORITY will give the DEBTOR reasonable
notice of the time and place of any public sale or the time after which any
private sale or other intended disposition will be made. The requirement of
reasonable notice shall be met if such notice is mailed to the DEBTOR at least
five (5) days before the time of the sale or disposition.
The net cash proceeds resulting from the collection, liquidation, sale,
or other disposition of the Collateral shall be applied first to the expenses
(including a11 attorneys' fees) of preparing for said, storing, processing,
selling, collecting, liquidating the Collateral and the like, and then t-o the
satisfaction of all liabilities of the DEBTOR to the AUTHORITY, application as
to particular obligations or against principal or interest under the Note to be
in the AUTHORITY's sole discretion. The DEBTOR shall be liable to the AUTHORITY
and shall pay to the AUTHORITY on demand, any deficiency which may remain after
such sale, disposition, collection or liquidation of collateral, and the
AUTHORITY in turn agrees to remit to the DEBTOR, or other persons as their
interests appear, any surplus remaining after all such liabilities have been
paid in full.
To facilitate the exercise by the AUTHORITY of the rights and remedies
set forth in this section, the DEBTOR hereby constitutes the AUTHORITY or any
other person whom the AUTHORITY may designate, as attorney-in-fact for the
DEBTOR, at the
<PAGE>
DEBTOR's expense, to exercise all or any of the foregoing powers, and other
powers incidental to the foregoing, all of which, being coupled with an
interest, shall be irrevocable, shall continue until all obligations have been
paid in full and shall be in addition to any other rights and remedies that the
AUTHORITY may have.
6. Attorneys' Fees etc. Upon any default, the AUTHORITY's attorneys'
reasonable fees and the legal and other expenses for pursuing, searching for,
receiving, taking, keeping, storing, advertising, and selling the Collateral
shall be chargeable to the DEBTOR.
7. Cross-Default. Any default under the terms of this Agreement shall
constitute a default under the Note and any other document or instruments
evidencing or securing any other loan now existing or hereafter made by the
Authority to the Borrower, and a default under the Note or such other documents
or instruments shall constitute a default under this Agreement.
8. Other Rights. In addition to all rights and remedies herein, upon
default, the AUTHORITY shall have such other rights and remedies as are set
forth in the Uniform Commercial Code and the Connecticut General Statutes. as
amended.
9. Prejudgment Remedies Waiver. The DEBTOR hereby acknowledges that the
transaction of which this Security Agreement forms a part is a commercial
transaction as defined under Chapter 903^ of the Connecticut General Statutes,
as amended, and hereby waives right to notice and hearing said Statutes and
authorizes the AUTHORITY attorney to issue a writ for a preJudgment remedy
without court order.
10. Binding Effect. The terms, warranties and agreements herein
contained shall bind and inure to the benefit of the respective parties hereto,
and their respective legal representatives, successors and assigns .
11. Assignment. The AUTHORITY may assign without limitation its
security interest in the Collateral. Prior to assigning such security interest
to a bona fide, unrelated third party for value, the AUTHORITY shall give notice
of such proposed assignment to the DEBTOR . The DEBTOR shall have the right to
have the security interest assigned to it on the same terms and conditions as
are set forth in the proposed assignment. If the DEBTOR elects to exercise its
rights to have the security interest assigned to it, it shall give notice of the
same to the AUTHORITY within thirty (30) days of the date of the AUTHORITY's
notice to the DEBTOR. Failure of the DEBTOR to provide such notice within said
thirty (30) days shall terminate the DEBTOR's right of first refusal with
respect thereto.
<PAGE>
12. Choice of Law. The law of the State of Connecticut shall govern the
rights and duties of the parties herein contained.
IN WITNESS WHEREOF, the parties have respectively signed and sealed
these presents at Hartford, Connecticut the day and year first above written.
WITNESSED BY: AUTOMATED LIGHT TECHNOLOGIES, INC.
By: /s/
- ------------------------ --------------------------------------
MOHD A. ASLAMI
Its President
- ------------------------
CONNECTICUT DEVELOPMENT AUTHORITY
By:
- ------------------------ --------------------------------------
EDWARD A. ZELINS
Its Loan Officer
- ------------------------
<PAGE>
STATE OF CONNECTICUT )
) ss. at Hartford
COUNTY OF HARTFORD )
On this 5th day of December, 1990, before me, the undersigned officer,
personally appeared Mohd A. Aslami, who acknowledged himself to be the President
of Automated Light Technologies, Inc., a corporation, and that he as such
President, being authorized so to do, execute the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
President.
In Witness Whereof I hereunto set my hand.
------------------------------------
Commissioner of the Superior Court
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this 5th day of December, 1990, before me, the undersigned officer,
personally appeared Edward A. Zelinsky, who acknowledge himself to be a loan
officer of the Connecticut Development Authority, and that he as such officer,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the Connecticut Development Authority
by himself as such officer.
In Witness Whereof I hereunto set my hand.
------------------------------------
Commissioner of the Superior Court
<PAGE>
SCHEDULE A
(a) All goods of the DEBTOR, including without limitation: machinery,
equipment, furniture, furnishings, fixtures, tools, supplies and motor
vehicles of every kind and description now or hereafter owned by the
DEBTOR or in which the DEBTOR may have or may hereafter acquire any
interest, together with all customer lists and records of the business
and all improvements thereto.
(b) All inventory of the DEBTOR, including, but not limited to: all
merchandise, raw material, parts, supplies, work in process, finished
products intended for sale, of every kind and description now or
hereafter owned by and in the custody of or possession, actual or
constructive, of the DEBTOR including such inventory as is temporarily
out of the DEBTOR's custody or possession and including any returns
upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing,
including, among other things, but not limited to, raw materials and
finished products and including all other classes of merchandise,
materials, parts, supplies, work in process, inventories and finished
products intended for sale by the DEBTOR including inventory
temporarily removed from its customary location.
(c) All contract rights and general intangibles of the DEBTOR, including
without limitation: goodwill, trademarks, trade styles, trade names,
patents, patent applications and deposit accounts.
(d) All present and future accounts, accounts receivable and other
receivables and all books and records relating thereto.
(e) All documents, instruments and chattel paper; and whether any of the
foregoing types or items of property referred to in (a) through (e)
above (the "Collateral") shall be acquired or created by the DEBTOR at
any time hereafter, wherever located, and the products and proceeds of
the Collateral and any replacements, additions, accessions, or
substitutions of the Collateral, after acquired property, and the
accounts or proceeds arising from the sale of disposition of any
inventory of the DEBTOR including any returns thereof; including,
where applicable, the proceeds of insurance covering the Collateral.
EXH10-11
SUBORDINATION
The undersigned officers and shareholders of AUTOMATED LIGHT
TECHNOLOGIES, INC. having its offices in the Town of Vernon, County of Tolland
and State of Connecticut (the "Debtor"), in consideration of a loan of THREE
HUNDRED THOUSAND AND NO/100 ($300.000.00) DOLLARS (the "Loan"), to the Debtor by
the CONNECTICUT DEVELOPMENT AUTHORITY, with offices at 217 Washington Street,
Hartford, Connecticut the Authority") and to induce the Authority to make said
Loan;
Agree as follows:
1. SUBORDINATION. Until all the indebtedness of the Debtor to the
Authority, whether now existing or hereafter incurred, whether or not
represented by negotiable instruments or other writings, and whether or not
originally contracted with the Authority, has been fully paid with interest, the
undersigned shall not demand, or receive from the Debtor, any part of the monies
now owing by the Debtor to the undersigned, or that may hereafter be due and
payable to the undersigned by the Debtor, or any security therefor; and Debtor
shall not make payment or give security to the undersigned, except in conformity
with this Agreement. The undersigned waives all notice of the acceptance of this
agreement by the Authority, or of the creation, renewal, extension or accrual of
any obligations of the Debtor to the Authority or of the reliance of the
Authority upon this agreement. The undersigned hereby directs the Debtor to make
such prior payments to the Authority, except that with the prior written consent
of the Authority, which consent shall be given or withheld in the sole
discretion of the Authority, the Debtor may make payments to the undersigned to
which this Agreement shall not apply. The Authority acknowledges and agrees that
unless and until Debtor is in default under the Loan, Debtor may make payments
on the interest due on two $100,000 00 existing loans from City Trust to the
undersigned or any subsequent bank loans which arise from the refinancing of the
City Trust loans, to the extent they do not exceed the existing loans. The
principal amount of such loans shall, however, be subordinate to the Loan and
subject to the terms of this agreement The Authority also acknowledges that the
undersigned are owed deferred salary and agrees that six (6) months from the
date hereof it shall review the financial situation of Debtor and, provided that
Debtor is not in default of the Loan and is generating gross profits, agree with
the undersigned upon a payment schedule for such deferred salaries.
2. ASSIGNMENT. Except for the payments specifically referred to in
Paragraph l hereinabove, the undersigned hereby assigns to the Authority as
collateral security for all such indebtedness of the Debtor to the Authority all
of the claims and demands of the undersigned against the Debtor, and all
interest accrued and that may hereafter accrue thereon. If at any time
<PAGE>
while this agreement is in effect, any petition for relief is filed by or
against the Debtor, or a receiver is appointed for the Debtor or any of its
property, or an assignment for creditors is made by the Debtor, or the Debtor is
involved in any insolvency proceedings, the Authority shall have the right to
file a claim on behalf of the undersigned in all such proceedings, and to
collect and receive all payments that may be declared or become payable or. s
c'(cent) claim in any such proceedings, and the Authority is hereby irrevocably
appointed attorney for the undersigned with full power to act in the name of the
undersigned in all such proceedings. The undersigned agree that they shall have
no right of subrogation whatsoever with respect to any monies so collected
unless and until the Authority shall have received payment in full of all sums
due on the Loan.
3. CREDITOR'S RECEIPTS. Except as may be specifically permitted herein,
if, prior to the satisfaction of all such indebtedness of the Debtor to the
Authority, the undersigned receives any payment or security for or on account of
the claims and demands of the undersigned against the Debtor, the undersigned
shall forthwith deliver such payment or security to the Authority, in precisely
the form received, except for the undersigned's endorsement when necessary, for
application on account of such indebtedness of the Debtor to the Authority, and
until so delivered such payment or security shall be held in trust by the
undersigned as the property of the Authority. In the event of the failure of the
undersigned to endorse any instrument for the payment of money so received by
the undersigned, the Authority is irrevocable appointed attorney for the
undersigned with full power to make such endorsement and with full power of
substitution.
4. MODIFICATIONS. Without notice to or further assent by the
undersigned, the liability of the Debtor or any other party to the Authority on
any such indebtedness may from time to time, in whole or in part, be renewed,
extended, modified, compromised, or released by the Authority, and any
collateral or liens for any such indebtedness may be exchanged, sold, or
surrendered by the Authority, all without affecting the obligations of the
undersigned and the Debtor under this Agreement.
DATED at Hartford, Connecticut this 5th day of November, 1990.
- ------------------------ -----------------------------------
MOHD A. ASLAMI
- ------------------------ -----------------------------------
CHARLES DeLUCA
- ------------------------
- ------------------------ CONNECTICUT DEVELOPMENT AUTHORITY
By:
- ------------------------ ------------------------------
EDWARD A. ZELINS
Its Loan Officer
- ------------------------
EXH10-12
THIS INSTRUMENT AND THE SHARES OF STOCK INTO WHICH IT IS EXERCISABLE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION UNDER SUCH ACT UNLESS IN AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE.
STOCK WARRANT CERTIFICATE
December 5, 1990 Warrant to Purchase
100,000 Shares of Common Stock
Warrant to Purchase Common Stock
of AUTOMATED LIGHT TECHNOLOGIES, INC.
This is to certify that, FOR VALUE RECEIVED, CONNECTICUT DEVELOPMENT AUTHORITY,
a body politic and corporate constituting public instrumentality and political
subdivision of the State of Connecticut, its successors and assigns ("Holder"),
is entitled to purchase, subject to the provisions of this Warrant, from
AUTOMATED LIGHT TECHNOLOGIES, INC., a Delaware corporation (the "Company"), One
Hundred Thousand (100,000) shares of common stock, $.01 par value, of the
Company ("Common Stock") at a price of ONE HUNDRED FIFTY THOUSAND DOLLARS
($150,000.00) (the "Exercise Price") and in consideration of a loan in the
amount of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) made by the Holder to the
Company of even date herewith (the "Loan").
Section I. EXERCISE OF WARRANT. Subject to and in accordance with the
provisions of Section V hereof, this Warrant may be exercised in whole or in
part at any time, or from time to time, on or after December 5, 1990 but not
later than 3:30 p.m. Eastern Standard Time on January l, 1998, or if January l,
1998 is a day on which banking institutions are authorized by law to close, then
on the next succeeding day which shall not be such a day, by presentation and
surrender to the Company of this Warrant together with the Purchase Form annexed
hereto duly executed and accompanied by payment of the Exercise Price with all
federal and state taxes, if any, applicable upon such exercise. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant and at its expense, execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the shares purchasable hereunder.
Upon receipt by the Company of this Warrant at the office of the Company in
proper form for exercise, accompanied by payment of the Exercise Price and
requisite taxes, if any, the Company shall forthwith issue and deliver, or cause
to be issued and delivered, to the Holder as soon as practicable, but in any
event within thirty (30) days, a certificate or certificates for the shares of
Common Stock issuable upon such exercise. The exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of
<PAGE>
business on the business day on which this Warrant is surrendered to the
Company, and at such time the person in whose name the certificate for shares of
Common Stock shall be issuable upon such exercise shall be deemed to have become
the holder of record of such Common Stock.
Section II. ADJUSTMENTS.
(a) Adjustment for Stock Splits and Combinations. If the Company shall
at any time, or from time to time, after the date hereof, effect a subdivision
of its outstanding capital stock ("Common Stock") then, at the option of the
Holder, (I) the Exercise Price then in effect immediately before that
subdivision shall be proportionately decreased and (ii) the number of shares of
Common Stock issuable upon the exercise of this Warrant (the "Number of Issuable
Shares") shall be proportionately increased, and conversely, if the Company
shall at any time, or from time to time, after the date hereof, combine its
outstanding shares of Common Stock, then, at the option of the Holder, (I) the
Exercise Price then in effect immediately before the combination shall be
proportionately increased and (ii) the Number of Issuable Shares shall be
proportionately decreased. Any adjustment under this Subsection (a) shall become
effective at the close of business on the day any such subdivision or
combination becomes effective. In the event that the Holder fails to make such
election on or before the effective date of such subdivision or combination,
then Holder shall be deemed to have selected option (I).
(b) Adjustment for Certain Dividends and Distributions. If the Company
at any time, or from time to time, after the date hereof, shall make or issue,
or fix a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable, in additional shares of
Common Stock, then, and in each such event, at the option of the Holder:
(i) the Exercise Price then in effect shall be decreased as of the date of such
issuance or, at the time or upon the event such a record date shall have been
fixed, as of the close of business on such record date (the "Record Date") by
multiplying the Exercise Price then in effect by a fraction, determined as
follows:
(x) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the Record Date plus
the number of shares that Holder is entitled to upon full exercise of this
Warrant: and
(y) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the Record Date plus
the number of shares that Holder is entitled to upon full exercise of this
Warrant Rules the number
<PAGE>
of shares of Common Stock issuable in payment of such dividend or distribution,
and
(ii) the Number of Issuable Shares shall be increased to equal the number
derived by dividing the Exercise Price by the adjusted Exercise Price which
would result after application of subsection (i) above.
For purposes of this Subsection (b), If such Record Date shall have been fixed
and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Exercise Price or--the Number of Issuable Shares,
as the case may be, shall be recomputed accordingly as of the close of business
on such Record Date, and thereafter the Exercise Price or the Number of Issuable
Shares, as the case may be, shall be adjusted pursuant to this Subsection (b) as
of the day and time that each actual payment of such dividends or distributions
is made.
(c) Adjustment for Reclassification, Exchange and Substitution. If the
Common Stock issuable upon the exercise hereof shall be changed into the same or
a different number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or other transaction having similar
effect (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for elsewhere in this Section II) then, and in each such event,
the Holder shall have the right thereafter to receive upon the exercise of this
Warrant the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, exchange, substitution or other
transaction having similar effect as did or shall the holders of shares of the
Common Stock as of the day immediately prior to the day that such
reclassification, exchange or substitution is or becomes effective, all subject
to further adjustment as provided in subparagraphs a, b, d and e herein, if
applicable.
(d) Reorganization, Mergers, Consolidations or Sale of Assets. If at
any time, or from time to time, there shall be (other than a subdivision,
combination, reclassification, exchange, substitution of shares provided for
elsewhere {n this Section II) a capital reorganization involving a merger or
consolidation of the Company with or into another corporation, or the sale or
transfer (a "Sale") of all or substantially all of the Company's properties and
assets to any other person; then, as a part of such reorganization, merger,
consolidation or Sale, adequate provision shall be made so that the Holder shall
thereafter be entitled to receive, upon exercise hereof, the number of shares of
stock or other securities or property of the Company, or of the successor
corporation, resulting from such reorganization, merger, consolidation or Sale,
as to which a holder of Common Stock deliverable upon the ultimate exercise
hereof would have been entitled to receive as a result of such capital
reorganization, merger, consolidation or Sale. In the
<PAGE>
case of a Sale in which the Company receives a cash payment equal to that which
a holder of Common Stock deliverable upon the ultimate exercise hereof would
have been entitled to receive as a result of such Sale less the Exercise Price.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section II with respect to the rights of the Holder after the
reorganization, merger, consolidation or Sale to the end that the provisions of
this Section II (including adjustment of the Exercise Price then in effect and
the number of shares issuable upon exercise hereof) shall be applicable after
any such event as nearly equivalent as may be practicable.
(e) Adjustment for Issuance of New Shares. If the Company at any time,
or from time to time, after the date hereof, shall issue additional shares of
Common Stock (other than a subdivision, combination, reclassification, exchange,
substitution of shares, reorganization, merger, consolidation or Sale provided
for elsewhere in this Section II) at a less than the Exercise Price then, and in
each such event:
(i) the Exercise Price then in effect shall be decreased as of the date of such
issuance (the "issuance Date") by multiplying the Exercise Price then in effect
by a fraction, determined as follows:
(x) the numerator of which shall be the total number of shares of
Common Stock issued immediately prior to the Issuance Date plus the number of
shares that Holder is entitled to upon full exercise of this Warrant: and
(y) the denominator of which shall be the total number of shares of
Common Stock issued immediately prior to the Issuance Date plus the number of
shares that Holder is entitled to upon full exercise of this Warrant plus the
number of new shares issued as of the Issuance Date and
(ii) the Number of Issuable Shares shall be increased to equal the number
derived by dividing the Exercise Price by the adjusted Exercise Price which
would result after application of subsection (i) above.
If the Company shall at any time, or from time to time, after the date hereof,
issue additional shares of Common Stock not otherwise described elsewhere in
this Section at a price equal to or greater than the Exercise Price then in
effect , then, and in each such event, the Number of Issuable Shares shall be
increased to equal the number derived by multiplying the number of shares which
Holder is entitled to purchase pursuant to this Warrant by a fraction, the
numerator of which shall be the total number of shares of Common Stock issued
immediately prior to the Issuance Date plus the number of new shares issued as
of the Issuance Date and the denominator of which shall be the total number of
shares of Common Stock issued immediately prior to the Issuance Date. If such
shares are issued at a price greater than three Dollars
<PAGE>
($3.00) per share, then the Exercise Price for such additional shares which
Holder is entitled to purchase as a result of the adjustment set forth herein
shall equal the issuance price of such shares. If such shares are issued at a
price equal to or less than Three Dollars ($3.00) per share, then the exercise
Price for the additional shares which Holder is entitled to purchase as a result
of the adjustment set forth herein shall equal the then existing Exercise Price.
If, at the time a public offering is made of the Common Stock of the Company,
the Company demonstrates to Holder that the provisions of this subsection would
have a material, adverse impact on the Company's ability to make such public
offering, then Holder agrees that it shall negotiate in good faith with the
Company to amend this subsection to provide Holder with a similar position to
that provided by this subsection while ameliorating the impediment to the public
offering.
Section III. RESERVATION OF SHARES; REGISTRATION RIGHTS. The Company
hereby agrees that at all times during the terms of this Warrant there shall be
reserved for issuance such number of shares of its Common Stock as shall be
required to be issued upon exercise of this Warrant. The Company also agrees
that, in the event it registers any of its shares of stock, whatever type, with
the Securities and Exchange Commission, it shall include as part of such
registration, and at no cost to the Holder, any shares of Common Stock which may
be reserved by the Company as required by this Warrant and any shares of Common
Stock which may have been issued to the Holder pursuant to the terms of this
Warrant. If the managing underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten, the managing underwriter
may limit the number of shares of Common Stock to be issued to or issued to the
Holder pursuant to this Warrant to be included in the registration of Common
Stock. The Common Stock held by officers, directors and employees of the Company
shall be excluded from registration before limiting the number of shares of the
Holder to be included therein. If after excluding the shares of the officers,
directors and employees of the Company a limitation is still required, then such
limitation shall be allocated proportionally among all shareholders wishing to
sell their shares of Common Stock pursuant to contractual rights to include
their shares in a Company registration.
Section IV. FRACTIONAL SHARES. This Warrant may be exercised only for a
whole number of shares of Common Stock, and no fractional shares or scrip
certificate representing fractional shares shall be issuable upon the exercise
of this Warrant.
Section V. STOCKHOLDERS' RIGHTS. Until the valid exercise of this
Warrant and as provided herein, in whole or in part, the Holder shall not be
entitled to any rights of a stockholder.
<PAGE>
Section VI. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT
OR SHARES OF COMMON STOCK; RIGHT OF REDEMPTION.
(a) Compliance with Securities Act. The Holder, by acceptance hereof,
agrees that this Warrant and the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of Common Stock
to be issued upon exercise hereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended (the "Act") or
the securities laws of any state. This Warrant (to the extent applicable) and
all shares of Common Stock issued upon exercise of this Warrant (unless either
is registered under the Act) shall be stamped or imprinted with restrictive
legend as appears hereon.
(b) Disposition of Warrant and Shares. With respect to any offer, sale,
transfer, assignment or other disposition of this Warrant or any shares of
Common Stock acquired pursuant to the exorcise of this Warrant prior to
registration of such shares, the Holder and each subsequent holder of the
warrant agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with the written opinion of counsel
satisfactory to the Company, to the effect that such offer, sale , transfer,
assignment or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state law then
in effect) of this Warrant or such shares of Common Stock, and indicating
whether or not under the Act certificates for this Warrant or such shares of
Common Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to ensure compliance
with the Act. Each certificate representing this Warrant or the shares of Common
Stock thus transferred (except a transfer pursuant to Rule 144) shall bear a
legend as to the applicable restriction on transferability in order to ensure
compliance with the Act, unless in the aforesaid opinion of counsel satisfactory
to the Company, such legend is not required in order to ensure compliance with
the Act. The Company may issue stop transfer instructions to its transfer agent
in connection with the foregoing restrictions.
(c) Right of Redemption. At any time between January 1, 1996 and
January 1, 1998 (or if January 1, 1998 is a day on which banking institutions
are authorized by law to close, then on the next succeeding day which shall not
be such a day), the Holder shall have the right to elect, at its option, to
require the Company to redeem this Warrant or, if applicable, any shares of
Common Stock acquired pursuant to the exercise of this Warrant; provided,
however, that in the event registration of such shares shall occur prior to
January 1, 1996 the Holder may immediately elect to exercise its right of
redemption hereunder. The redemption price (the "Redemption Price") for this
Warrant shall
<PAGE>
be One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) and for all of
the shares shall be Three Hundred Thousand and No/100 Dollars ($300,000.00). An
election by the Holder under this subsection (c) may be made at any time after
January 1, 1996 or sooner as provided for herein and, if made, shall be set
forth in a written redemption notice delivered to the Company (the "Redemption
Notice"). The Redemption Notice shall specify a date on which the redemption is
to occur (the "Redemption Date"), which date shall be no less than thirty (30)
days from the date of the delivery of the redemption Notice.
If, for any reason, including but not limited to the unavailability of
funds legally required to do so, the Company is legally unable to effect a
redemption on Redemption Date, such Redemption Date shall be extended until such
time as the Company shall have made the redemption in full, the Company being
obligated to make redemption(s) in whole or in part not earlier than ten (10)
days nor later than twenty (20) days from each date on which it becomes legally
able to do so; provided, however, that if the Company is unable to effect a
redemption within ninety (90) days of the Redemption Date the Holder, at its
option, and without relieving the Company of its redemption obligation, may
exercise any right which it may have to offer, sell or otherwise dispose of all
or part of the Warrant or the shares of Common Stock held by it.
Section VII. REPLACEMENT OF WARRANTS. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant or any subsequent Warrant and receipt of an indemnity
agreement reasonably satisfactory to the Company, the Company at its expense,
will execute and deliver a new Warrant of like tenor.
Section VIII. APPLICABLE LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Connecticut.
Section IX. DEFAULT IN LOAN AGREEMENT. In the event that the Company
fails to comply with the provisions of Paragraph 3(j) of the Loan Agreement
between the Company and Holder executed as of even date herewith, then the
number of shares that Holder is entitled to purchase hereunder shall increase to
200,000 and the redemption price shall increase to $300,000.00 for the
redemption of the Warrant and $600,000.00 for the redemption of the Common Stock
issued pursuant to this Warrant.
COMPANY:
AUTOMATED LIGHT TECHNOLOGIES, INC.
By:
------------------------------
MOHD A. ASLAMI
Its President,
Duly Authorized
Dated as of December 5, 1990
<PAGE>
PURCHASE FORM
100,000 Shares
AUTOMATED LIGHT TECHNOLOGIES, INC.
a Delaware corporation
The undersigned, being the Holder of a Stock Warrant Certificate (the "Warant"),
dated December ___, 1990, entitling the Holder to purchase, on or before January
1, 1998, at 3:30 p.m., One Hundred Thousand (100,000) shares of Common Stock,
$.01 par value of the above corporation at a price of $150,000.00, upon
presentation of this purchase form and payment of the applicable purchase price
at the office of the Company subject to the provisions of the Warrant, this
purchase ______ shares of such Common Stock by presentation of the Warrant, this
purchase form and $_________in full payment of the purchase price for such
shares of Common Stock.
Dated_____________________, 199___.
CONNECTICUT DEVELOPMENT AUTHORITY
By:______________________________
EXH10-13
THIS INSTRUMENT AND THE SHARES OF STOCK INTO WHICH IT IS EXERCISABLE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION UNDER
SUCH ACT UNLESS TN AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AN EXEMPTION
FROM REGISTRATION IS THEN AVAILABLE. THIS INSTRUMENT IS FURTHER SUBJECT TO
CERTAIN RESTRICTIONS REGARDING TRANSFERABILITY SET FORTH IN SECTION VII HEREIN.
WARRANT
Warrant to Purchase
66,667 Shares of Common Stock
Warrant to Purchase Common Stock
of Automated Light Technologies, Inc.
This is to certify that, FOR VALUE RECEIVED, CONNECTICUT INNOVATIONS
INCORPORATED, a Connecticut corporation, its successors ("Holder"), is entitled
to purchase, subject to the provisions of this Warrant, from AUTOMATED LIGHT
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), at the price
hereinafter set forth, 66,667 shares of common stock, $,01 par value of the
Company ("Common Stock") in accordance with the schedule and price shown
hereunder, at any time on or after 3:30 p.m. Eastern Standard Time on August 2,
1990 subject to the limitations set forth herein.
Section I. EXERCISE OF WARRANT. Subject to and in accordance with the provisions
of Section VI hereof, this Warrant may be exercised in whole or in part at any
time or from time to time on or after August 2, 1990 but not later than 3:30
p.m. Eastern Standard Time on September 1, 1996 or it September 1, 1996 is a day
on which banking institutions are authorized by law to close, then on the next
succeeding day which shall not be such a day, by presentation and surrender
hereof to the Company with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price with all federal and state taxes,
if any, applicable upon such exercise. If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the shares purchasable hereunder. Upon receipt by the Company of this Warrant
at the office of the Company, in proper form for exercise, accompanied by
payment of the Exercise Price and requisite taxes, if any, the Company shall
forthwith issue and deliver, or cause to be issued and delivered, to the Holder
as soon as practicable, but in any event within thirty (30) days, a certificate
or certificates for the shares of Common Stock issuable upon such exercise. The
exercise of this Warrant shall be deemed to have been effected immediately prior
to the close of business on the business day on which this warrant is
surrendered to the Company and, at such time, the person in whose name the
certificate for shares of
<PAGE>
Common Stock shall be issuable upon such exercise shall be deemed to have become
the holder of record of such Common Stock.
Section II. ADJUSTMENTS.
(a) Adjustment for Stock Splits and Combinations. If the Company shall
at any time, or from time to time, after the date hereof, effect a subdivision
of its outstanding capital stock then, at the option of the Holder, (i) the
Exercise Price (as defined below) then in effect immediately before that
subdivision shall be proportionately decreased or (ii) the number of shares of
Common Stock issuable upon conversion of this Warrant (the "Number of Issuable
Shares") shall be proportionately increased, and conversely, if the Company
shall at any time, or from time to time, after the date hereof, combine its
outstanding shares of Capital Stock, then, at the option of the Holder, (i) the
Exercise Price then in effect immediately before the combination shall be
proportionately increased or (ii) the Number of Issuable Shares" shall be
proportionately decreased. Any adjustment under this Subsection (a) shall become
effective at the close of business on the day any such subdivision or
combination becomes effective. In the event that Holder fails to make such
election on or before the effective date of such subdivision or combination,
then Holder shall be deemed to have selected option (i).
(b) Adjustment for Certain Dividends and Distributions. If the Company
at any time, or from time to time, after the date hereof, shall make or issue or
fix a record date for the determination of holders of Capital Stock entitled to
receive a dividend or other distribution payable in additional shares of Capital
Stock, then, and in each such event:
(i) the Exercise Price then in effect shall be decreased as of the date of such
issuance or, at the time or upon the event such a record date shall have been
fixed, as of the close of business on such record date (the "Record Date") by
multiplying the Exercise Price then in effect by a fraction, determined as
follows:
(x) the numerator of which shall be the total number of shares of
Capital Stock issued and outstanding immediately prior to the Record Date plus
the number of shares that Holder 1S entitled to upon full exercise of this
Warrant; and
(y) the denominator of which shall be the total number of shares of
Capital Stock issued and outstanding immediately prior to the Record Date plus
the number of shares that Holder is entitled to upon full exercise of this
Warrant plus the number of shares of Capital Stock issuable in payment of such
dividend or distribution and
(ii) the Number of Issuable Shares shall be increased to equal the number
derived by dividing $100,000.00 (or $100,000.00 less
<PAGE>
the price paid for any shares purchased in a partial exercise of this Warrant,
if applicable) by the adjusted Exercise Price after application of (i) above.
For purposes of this Subsection (b), if such Record Date shall have been fixed
and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Exercise Price or the Number of Issuable Shares, as
the case may be, shall be recomputed accordingly as of the close of business on
such Record Date, and thereafter the Exercise Price and the Number of Issuable
Shares shall be adjusted pursuant to this Subsection (b) as of the day and time
that each actual payment of such dividends or distributions is made.
(c) Adjustment for Reclassification. Exchange and Substitution. If the
Common Stock issuable upon the exercise hereof shall be changed into the same or
a different number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or other transaction having similar
effect (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of assets
provided for elsewhere in this Section II) then and in each such event, upon the
exercise of this Warrant, in lieu of shares of Common Stock, the Holder shall
have the right thereafter to receive the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, exchange,
substitution or other transaction having similar effect, as did or shall the
holders of shares of the Common Stock as of the day immediately prior to the day
that such reclassification, exchange or substitution is or becomes effective all
subject to further adjustment as provided in subparagraphs a, b, d and e herein,
if applicable.
(d) Reorganization. Mergers, Consolidations or Sale of Assets. If at
any time, or from time to time, there shall be (other than a subdivision,
combination, reclassification, exchange, substitution of shares provided for
elsewhere in this Section II) a capital reorganization involving a merger or
consolidation of the Company with or into another corporation or the sale or
transfer (a "Sale") of all or substantially all of the Company's properties and
assets to any other person; then, as a part of such reorganization, merger,
consolidation or Sale adequate provision shall be made so that the Holder shall
thereafter be entitled to receive, upon exercise hereof, the number of shares of
stock or other securities or property of the Company, or of the successor
corporation, resulting from such reorganization, merger, consolidation or Sale
as to which a holder of Common Stock deliverable upon the ultimate exercise
hereof would have been entitled to receive as a result of such capital
reorganization, merger, consolidation or Sale. In the case of a Sale in which
the Company receives cash in payment of the purchase price, then the Holder
shall be deemed to have exercised this Warrant immediately prior to the Sale and
shall receive a cash payment equal to that which a holder of Common
<PAGE>
Stock deliverable upon the ultimate exercise hereof would have been entitled to
receive as a result of such Sale less the Exercise Price. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section II with respect to the rights of the Holder after the
reorganization, merger, consolidation or Sale to the end that the provisions of
this Section II (including adjustment of the Exercise Price then in effect and
the number of shares issuable upon exercise hereof) shall be applicable after
any such event as nearly equivalent as may be practicable.
(e) Adjustment for Issuance of New Shares. If the Company at any time,
or from time to time, after the date hereof, shall issue additional shares of
Capital Stock not otherwise described elsewhere in this Section at a price less
than the Exercise Price then in effect, then, and in each such event:
(i) the Exercise Price then in effect shall be decreased as of the date of such
issuance (the "Issuance Date") by multiplying the Exercise Price then in effect
by a fraction, determined as follows:
(x) the numerator of which shall be the total number of shares of
Capital Stock issued immediately prior to the Issuance Date plus the number of
shares that Holder is entitled to upon full exercise of this Warrant; and
(y) the denominator of which shall be the total number of shares of
Capital Stock issued immediately prior to the Issuance Date plus the number of
shares that Holder is entitled to upon full exercise of this Warrant plus the
number of new shares issued as of the Issuance Date and
(ii) the Number of Issuable Shares shall be increased to equal the number
derived by dividing $l00,000.00 (or $100,000.00 less the price paid for any
shares purchased in a partial exercise of this Warrant, if applicable) by the
adjusted Exercise Price after application of (i) above.
If the Company at any time, or from time to time, after the date hereof shall
issue additional shares of Capital Stock not otherwise described elsewhere in
this Section at a price equal to or greater than the Exercise Price then in
effect, then, and in each such event the Number of Issuable Shares shall be
increased to equal the number derived by multiplying the number of shares which
Holder is entitled to purchase pursuant to this Warrant by a fraction, the
numerator of which shall be the total number of shares of Capital Stock issued
immediately prior to the Issuance Date plus the number of new shares issued as
of the Issuance Date and the denominator of which shall be the total number of
shares of Capital Stock issued immediately prior to the Issuance Date. If such
shares are issued at a price greater than Three Dollars (S3.00) per share, then
the Exercise Price for the additional shares which Holder is entitled to
purchase as a result of the
<PAGE>
adjustment set forth herein shall equal the issuance price of such shares. If
such shares are issued at a price equal to or less than Three Dollars ($3.00)
per share, then the Exercise Price for the additional shares which Holder is
entitled to purchase as a result of the adjustment set forth herein shall equal
the then existing Exercise Price. If, at the time a public offering is made of
the Capital Stock of the Company, the Company demonstrates to Holder that the
provisions of this subsection would have a material, adverse impact on the
Company's ability to make such public offering, then Holder agrees that it shall
negotiate in good faith with the Company to amend this subsection to provide
Holder with a similar position to that provided by this subsection while
ameliorating the impediment to the public offering.
Section III. RESERVATION OF SHARES. The Company hereby agrees that at
all times during the terms of this Warrant there shall be reserved for issuance
such number of shares of its Common Stock as shall be required to be issued upon
exercise of this Warrant.
Section IV. FRACTIONAL SHARES. This Warrant may be exercised only for a
whole number of shares of Common Stock and no fractional shares of scrip
representing fractional shares shall be issuable upon the exercise of this
Warrant.
Section V. STOCKHOLDERS' RIGHTS. Until the valid exercise of this
Warrant and payment in full as provided herein, the holder hereof shall not be
entitled to any rights of a stockholder.
Section VI. EXERCISE TIME AND PRICE. This Warrant is exercisable on or
before September 1, 1996 with respect to 66,667 shares of Common Stock at $1.50
per share (the "Exercise Price").
Section VII. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR
SHARES OF COMMON STOCK; RIGHT OF FIRST REFUSAL; RESTRICTION ON TRANSFER
(a) Compliance with Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that such
holder will not offer, sell or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended
(the "Act"). This Warrant (to the extent applicable) and all shares of Common
Stock issued upon exercise of this Warrant (unless either is registered under
the Act) shall be stamped or imprinted with the restrictive legend as appears
hereon.
<PAGE>
(b) Disposition of Warrant and Shares. Subject to subsection d
hereinbelow, with respect to any offer, sale, transfer, assignment or other
disposition of this Warrant or any shares of Common Stock acquired pursuant to
the exercise of this Warrant prior to registration of such shares, the holder
hereof and each subsequent holder of the Warrant agrees to give written notice
to the Company prior thereto, describing briefly the manner thereof, together
with the written opinion of counsel satisfactory to the Company, to the effect
that such offer, sale, transfer, assignment or other disposition may be effected
without registration or qualification (under the Act as then in effect or any
federal or state law then in effect) of this Warrant or such shares of Common
Stock and indicating whether or not under the Act certificates for this Warrant
or such shares of Common Stock to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to
ensure compliance with the Act. Each certificate representing this Warrant or
the shares of Common Stock thus transferred (except a transfer pursuant to Rule
144) shall bear a legend as to the applicable restriction on transferability in
order to ensure compliance with the Act, unless in the aforesaid opinion of
counsel satisfactory to the company, such legend is not required in order to
ensure compliance with the Act. The Company may issue stop transfer instructions
to its transfer agent in connection with the foregoing restrictions.
(c) Right of First Refusal. In the event that Holder receives bona fide
third party offer (the "Offer") to purchase this Warrant or any shares of Common
Stock acquired pursuant to the exercise of the Warrant prior to the registration
of such shares and desires to accept such offer, then Holder shall give notice
of such offer to the Company. The Company shall have the right to purchase this
Warrant or any shares of Common Stock acquired pursuant to the exercise of the
Warrant on the same terms and conditions as are set forth in the Offer. If the
Company elects to exercise its rights to purchase the Warrant or the shares of
Common Stock, it shall give notice of the same to the Holder within thirty (30)
days of the date of Holder's notice to the Company. Failure of the Company to
provide such notice within said thirty (30) days shall terminate the Company's
right of first refusal with respect to the Offer.
(d) Restriction on Transfer. Holder agrees that, unless the Company is
in default after expiration of applicable cure and grace periods under the loan
made by Holder to the Company as of the date hereof and such loan has been
accelerated by CII, it shall not have the right to sell, transfer or assign this
Warrant to a competitor of the Company. For the purposes hereof, a "competitor
of the Company" shall be any person or entity that develops, manufactures or
markets systems for the monitoring of or the locating of breaks and damages in
fiber optic and/or copper lines or any other system or systems currently or in
the future developed, manufactured or marketed by the Company.
<PAGE>
Section VIII. REPLACEMENT OF WARRANTS. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant or any subsequent Warrant and receipt of an indemnity
agreement reasonably satisfactory to the Company, the Company, at its expense,
will execute and deliver a new Warrant of like tenor.
Section IX. APPLICABLE LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Connecticut.
AUTOMATED LIGHT TECHNOLOGIES, INC.
BY:
-----------------------------
MOHD A. ASLAMI
Its President
Dated as of August 2, 1990
ATTEST:
- --------------------------
Secretary
<PAGE>
PURCHASE FORM
66,667 shares
AUTOMATED LIGHT TECHNOLOGIES
a Delaware corporation
This is to certify that the bearer is entitled to purchase, on or before
September 1, 1996 at 3:30 p.m., 66,667 shares of common stock, $.01 par value of
the above Company, at $1.50 per share, upon presentation of this purchase for m
and payment of the purchase price at the office of the Company at 176 Bolton
Road, Vernon, Connecticut subject to the provisions of the Warrant to which this
Purchase Form is attached.
The Warrant is transferable subject to the provisions of Section VII of the
Warrant. Holder agrees that, unless the Company is in default after expiration
of applicable cure and grace periods under the loan made by Holder to the
Company as of the date hereof and such loan has been accelerated by Holder, it
shall not have the right to sell, transfer or assign this Warrant to a
competitor of the Company. For the purposes hereof, a "competitor of the
Company" shall be any person or entity that develops, manufactures or markets
systems for the monitoring of or the locating of breaks and damages in fiber
optic and/or copper lines or any other system or systems currently or in the
future developed, manufactured or marketed by the Company. By accepting the
Warrant, the Holder agrees that the Company may treat any bearer of this
Purchase Form as absolute owner of the Warrant for all purposes, notwithstanding
any notice to the contrary.
The Warrant shall be void unless the subscription right therein granted is
exercised on or before 3:30 p.m. of September 1, 1996.
Corporate Seal
Attest AUTOMATED LIGHT TECHNOLOGIES, INC.
BY:
- -------------------------- ---------------------------------
Secretary MOHD A. ASLAMI
Its President
Duly Authorized
EXH10-14
Void after W-21
Right to Purchase
Shares of Common Stock
(subject to adjustment) of
Automated Light Technologies,
Incorporated
AUTOMATED LIGHT TECHNOLOGIES, INCORPORATED
COMMON STOCK PURCHASE WARRANT
Automated Light Technologies, Incorporated (the "Company"), a Delaware
corporation, hereby certified that, for value received, , or assigns, is
entitled, subject to the terms set forth below to purchase from the Company at
any time on or from time to time after July 1, 1988 and before 5:00 P.M., Boston
time, on thousand fully paid and non-assessable shares of Common Stock of the
Company, at the price per share (the "Purchase Price") of dollar ($ ). The
number and character of such shares of Common Stock and the Purchaser Price are
subject to adjustment as provided herein.
This Common Stock Purchase Warrant (the "Warrant") is
issued to One Venture Group as of and evidences the right to purchase an
aggregate of not more than shares of Common Stock of the Company, subject to
adjustment as provided herein.
As used herein the following terms, unless the context otherwise
required, have the following meanings:
(a) The term "Company" includes any corporation which shall succeed to
or assume the obligations of the Company hereunder.
(b) The term "Common Stock" includes all voting stock of any class or
classes (however designated) of the Company, authorized upon the Original Issue
Date or thereafter, the holders of which shall have the right, without
limitation as to
<PAGE>
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
(c) The "Original Issue Date" is _____________ the date as of which the
Warrants were first issued.
(d) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to section 6 or otherwise.
(e) The terms "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the Securities
Act to permit the disposition of Common Stock (or Other Securities) issued or
issuable upon the exercise of Warrants, and any post-effective amendments and
supplements filed or required to be filed to permit any such disposition.
(f) The term "Securities Act" means the Securities Act of 1933 as the
same shall be in effect at the time.
1. Registration, etc.
1.1 (a) In the event that the Company proposes, at any time
within the ten year period commencing one year from the Original Issue Date, to
file a registration statement on a general form of registration under the
Securities Act and relating to securities issued or to be issued by it, or if
the Company has filed such a registration statement and proposes to file a
post-effective amendment thereto within the ten year period described in the
first clause of this sentence, then it
<PAGE>
shall give written notice of such proposal to the record owners of the Warrants
and any shares of Common Stock Issued upon exercise thereof. If, within thirty
(30) days after the giving of such notice, the record owners of any of the
Warrants or shares Of Common Stock issued upon their exercise shall request in
writing that all or any of such Common Stock or Other Securities issue or
issuable upon exercise of such Warrants be included in such proposed
registration, the Company will, at its own expense, also register such
securities as shall have been requested in writing; provided, however, that:
(i) such owners shall deliver to the Company a statement in writing
from the beneficial owners of such securities that they bona fide intend to
sell, transfer or otherwise dispose of such securities;
(ii) the Company shall not be required to include any of such
securities if, by reason of such inclusion, the Company shall be required to
prepare and file a registration statement on a form promulgated by the
Securities and Exchange commission substantially different from that which the
Company otherwise would use;
(iii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish information
concerning such owners therein;
(iv) if any underwriter or managing agent is purchasing or arranging
for the sale of the securities then being offered by the Company under such
registration statement then such owners (A) shall agree to have the securities
being so registered sold to or by such underwriter or managing agent on terms
substantially equivalent to the terms at which the Company is selling the
securities so registered,
<PAGE>
(a) notify such owner as to the filing thereof and all
amendments thereto filed prior to the effective date of said registration
statement;
(b) notify such owners promptly after it shall have received
notice thereof, of the time when the registration statement becomes effective or
any supplement to any prospectus forming a part of the registration statement
has been filed;
(c) prepare and file any necessary amendment or supplement to
such registration statement or prospectus as may be necessary to comply with
Section 10 (a)(3) of the Securities Act or advisable in connection with the
proposed distribution of the securities by such owners;
(d) use its reasonable best efforts to qualify the shares of
Common Stock or Other Securities being so registered for sale under the
securities or blue sky laws of not more than eight states as such registered
owners may designate in writing and to register or obtain the approval of any
federal or state authority which may be required in connection with the proposed
distribution, except, in each case, in jurisdiction in which the Company must
either qualify to do business or file a general consent to service of proceed as
a condition to the qualification of such securities;
(e) notify such registered owners of any stop order suspending
the effectiveness of the registration statement and U6@ its reasonable best
effort to remove such stop order;
(f) undertake to keep said registration statement and
prospectus effective for a period of nine months after such shares of Common
Stock first become free to be sold under such registration statement;
<PAGE>
(g) furnish to such registered owners as soon as available,
copies of any such registration statement and each preliminary or final
prospectus and any supplement or amendment required to be prepared pursuant to
the foregoing provisions of this paragraph 1, all in such quantities as such
owners may from time to time reasonably request.
1.3 The record owners of the shares of Common Stock or Other
Securities being so registered agree to pay all of the underwriting discounts
and commissions, transfer taxes registration fees and their own counsel fees
with respect to the securities owned by them and being registered. The Company
agrees that the costs and expenses which it is obligated to pay in connection
with a registration statement to be filed pursuant to subsection 1.1 above
include, but are not limited to, the fees and expenses of counsel for the
Company, the fees and expenses of its accountants and all other costs and
expenses incident to the preparation, printing and filing under the Securities
Act of any such registration statement, each prospectus and all amendments and
supplements thereto, the costs incurred in connection with the qualification of
such securities for sale in not more than eight states, including fees and
disbursements of counsel for the Company, and the costs of supplying a
reasonable number of copies of the registration statement, each preliminary
prospectus, final prospectus and any supplements or amendments thereto to such
registered owners.
1.4 The Company agrees to enter into an appropriate
cross-indemnity agreement with any underwriter (as defined in the Securities
Act) for such registered owners in connection with the filing of a registration
statement pursuant to subjection 1.1 hereof.
1.5 In the event that the Company shall file any registration
statement including therein all or any part of shares of Common Stock or Other
Securities Issued or Issuable
<PAGE>
upon exercise of the Warrants, the Company and each holder of such securities
shall enter into an appropriate cross-indemnity agreement whereby each such
holder shall indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the registration statement and each person,
if any, who controls the Company within the meaning of the Securities Act
against any losses, claims, damages or liabilities (or actions in respect
thereof) arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make statement therein not misleading, if the
statement or omission was made in reliance upon and in conformity with written
information furnished or required to be furnished by such holder or such
controlling person expressly for use in such registration statement.
1.6 Notwithstanding any other provision of this section 1, the
registration rights set forth in this section i shall not be available if in the
opinion of the Company's council registration is unnecessary to allow a public
sale or transfer of the Common Stock or Other Securities in question.
2. Sale or Exercise Without Registration. If, at any time of any
exercise, transfer or surrender for exchange of a Warrant or of Common Stock,
(or Other Securities) previously issued upon the exercise of Warrants, such
Warrant or Common Stock (or Other Securities) shall not be registered under the
Securities Act the Company may require, as a condition of allowing such
exercise, transfer or exchange, that the holder or transferee of such Warrant or
Common Stock (or Other Securities), as the case may be, furnish to the Company a
satisfactory opinion of counsel to the effect that such exercise, transfer or
exchange may be made without registration under the Securities Act, and provided
further that nothing contained in this section 2 shall relieve the Company from
complying with any request for registration
<PAGE>
pursuant to section l hereof. One Venture Group as the holder of the Warrants
represents to the Company that they are acquiring the Warrants for investment
and not with a view to the distribution thereof.
3. Exercise of Warrant; Partial Exercise.
3.1 Restriction on Exercise. This Warrant may not be exercised
in full or in part on or before July 1, 1988.
3.2 Exercises in Full. Subject to the provisions hereof, this
Warrant may be exercised in full by the holder hereof by surrender of this
Warrant, with the form of subscription at the end hereof duly executed by such
holder, to the Company at its principal office in Sturbridge, Mass., accompanied
by payment, in cash or by certified or official bank check payable to the order
of the Company in the amount obtained by multiplying the number of shares of
Common Stock called for on the face of this Warrant (without giving effect to
any adjustment therein) by the Purchase Price.
3.3 Partial Exercise. Subject to the provisions hereof, this
Warrant may be exercised in part by surrender of this Warrant in the manner and
at the place provided in subsection 3.2 except that the amount payable by the
holder upon any partial exercise shall be the amount obtained by multiplying (a)
the number of shares of Common Stock (without giving effect to any adjustment
therein) designated by the holder in the subscription at the end hereof by (b)
the Purchase Price. Upon any such partial exercise, the Company at its expense
will forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or Warrants of like tenor, in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock equal (without giving effect to any adjustment therein)
to the number of such shares called for on the face of
<PAGE>
this Warrant minus the number of such shares designated by the holder in the
subscription at the end hereof.
3.4 Company to Reaffirm Obligations. The Company will, at the
time of any exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights (including, without limitation, any right to registration of the shares
Common Stock or Other Securities issued upon such exercise) to which such holder
shall continue to be entitled after such exercise in accordance with the
provisions of this warrant, that if the holder of this Warrant shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford such holder any such rights.
4. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 10 days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of full paid and non-assessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled upon such
exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled cash equal to such fraction multiplied by the then current
market value of one full share together with any other stock or other securities
and property (including cash, where applicable) to which such holder is entitled
upon such exercise pursuant to section 5 or otherwise.
5. Adjustment for Dividends in Other Stock, Property, etc.,
Reclassification, etc. In case at any time or from time to time after the
Original Issue Date the holders of Common Stock (or Other Securities) shall have
received, or (on or after the
<PAGE>
record date fixed for the determination of stockholders eligible to receive)
shall have become entitled to receive, without payment therefor
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash paid or payable (including, without limitation,
by way of dividend), except out of earned surplus of the Company, or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement.
(d) then, and in each such case the holder of this Warrant,
upon the exercise hereof as provided in section 3, shall be entitled to receive
the amount of stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this section 5) which such
holder would hold on the date of such exercise if on the Original Issue Date he
had been the holder of record of the number of shares of Common Stock called fox
on the face of this Warrant and bad thereafter, during the period from the
Original Issue Date to and including the date of such exercise, retained such
shares and all such other or additional (or less) stock and other securities and
property (including cash in the cases referred to in subdivisions (b) and (c) of
this section 5) receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by section 6 and 7 hereof.
6. Reorganization, Consolidation, Merger, etc.
6.1 General. In case the Company after the Original Issue Date
shall effect reorganization, (b) consolidate with or merge with any other
person, or (c) transfer a11 or substantially
<PAGE>
all of its properties or assets to any other person under any plan or
arrangement contemplating the dissolution of the Company within 24 months from
the date of such transfer, then, in each such case, the holder of this Warrant;
upon the exercise hereof as provided in section 3 at any time, after the
consummation of such reorganization consolidation or merger or the effective
date of such dissolution, as the case may be, shall be entitled to receive (and
the Company shall be entitled to deliver), in lieu of the Common Stock (or Other
Securities) issuable upon such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such holder had so
exercised this Warrant immediately prior thereto, all subject to further
adjustment thereafter as provided in section 5 and 7 hereof.
The Company agrees that in the event that it effects a consolidation or
merger with any other person, it shall be a condition, of such consolidation or
merger that the resulting entity agree to register all shares or other
securities under the Securities Act of 1933 so that all persons receiving shares
in the consolidation or merger shall be free to sell said shares pursuant to an
effective registration statement immediately after the consolidation or merger.
6.2 Warrant to Continue In Full Force and Effect. Upon any
reorganization, consolidation merger or transfer (and any dissolution following
any transfer) pursuant to section 6.1 this Warrant shall continue in full force
and effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable upon the exercise of this Warrant after
the consummation of such reorganization, consolidation, merger, transfer or
dissolution, as the case may be, and shall be binding upon the issuer of any
such stock or
<PAGE>
other securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the Company,
whether or not such person shall have expressly assumed the terms of this
Warrant.
7. Other Adjustment.
7.1 General. In any case to which sections 5 and 6 hereof are
not applicable, where the Company shall issue or sell shares of its Common Stock
after the Original Issue Date without consideration or for a consideration per
share less than the Purchase Price in effect pursuant to the terms of this
Warrant at the time of issuance or sale of such additional shares, except where
such shares are issued or sold pursuant to the exercise of any Warrant or option
or issued prior to the date of this warrant, then the Purchase Price in effect
hereunder shall simultaneously with such issuance or sale be reduced to a price
determined by dividing (1) an amount equal to (a) the total number of shares of
Common Stock outstanding immediately prior to such issuance or sale multiplied
by the Purchase Price in effect hereunder at the time of such issuance or sale,
plus (b) the consideration, if any, received by the Company upon such issuance
or sale by (2) the total number of shares of Common Stock outstanding
immediately after issuance or sale of such additional shares.
7.2 Convertible Securities. In case the Company shall issue or
sell any securities convertible into Common Stock of the Company ("Convertible
Securities") after the date hereof, there shall be determined the price per
share for which Common Stock is issuable upon the conversion or exchange
thereof, such determination to be made by dividing (a) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by the maximum number of shares of Common Stock of the Company issuable
<PAGE>
upon the conversion or exchange of all of such Convertible Securities.
If the price per share so determined shall be less than the applicable
Purchase Price per share, then such issue or sale shall be deemed to be an issue
or sale for cash (as of the date of issue or sale of such Convertible
Securities) of such maximum number of shares of Common Stock at the price per
share so determined, provided that, if such Convertible Securities shall by
their terms provide for an increase or increases, with the passage of time, in
the amount of additional consideration, it any, to the Company, or in the rate
of exchange, upon the conversion or exchange thereof, the adjusted purchase
price per share shall, forthwith upon any such increase becoming effective, be
readjusted to reflect the same, and provided further; that upon the expiration
of such rights of conversion or exchange of such Convertible Securities 1t any
thereof shall not have been exercised, the adjusted Purchase Price per share
shall forthwith be readjusted and thereafter be the price which it would have
been had an adjustment been made on the basis that the only shares of Common
Stock so issued or sold were issued or sold upon the conversion or exchange of
such Convertible Securities, and that they were issued or sold for the
consideration actually received by the Company upon such conversion or exchange,
plus the consideration, if any, actually! received by the Company for the issue
or sale of all of such Convertible Securities which shall have been converted or
exchanged.
7.3 Rights and Options. In case the Company shall grant any
rights or options to subscribe for, purchase or otherwise acquired Common Stock
there shall be determined the price per share for which Common Stock is issuable
upon the exercise of such rights or options, such determination to be made by
dividing (a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional
<PAGE>
consideration payable to the Company upon the exercise of such rights or
options, by (b) the maximum number of shares of Common Stock of the Company
issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the applicable
Purchase Price per share then the granting of such rights or options shall he
deemed to be an issue or sale for cash (as of the date of the granting of such
rights or options) of such maximum number of shares of Common Stock at the price
per share so determined, provided that, if such rights or options shall by their
terms provide for an increase or increases, with the passage of time, in the
amount of additional consideration payable to the Company upon the exercise
thereof, the adjusted purchase price per share shall forthwith upon any such
increase becoming effective, be readjusted to reflect the same, and provided,
further, that upon the expiration of such rights or options, if any thereof
shall not have been exercised the adjusted Purchase Price per share shall
forthwith be readjusted and thereafter be the Price which it would have been had
an adjustment been made on the basis that the only shares of Common Stock so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights or options,
whether or not exercised.
8. Further Assurances. The Company will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock upon the exercise of all Warrants
from time to time outstanding.
9. Accountant's Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common
<PAGE>
Stock (or Other Securities) issuable upon the exercise of the Warrants, the
Company at its expense will promptly cause the Company's regularly retained
auditor to compute such adjustment or readjustment in accordance with the terms
of the Warrants and prepare a certificate setting forth such adjustment or
re-adjustment and showing in detail the facts upon which such ad- justment or
readjustment is based, and the number of shares of Common Stock outstanding or
deemed to be outstanding. The Company wall forthwith mail a copy of each such
certificate to each holder of a Warrant.
10. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of the Company) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares
of stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities (other than the issue of Common Stock on the exercise of
the Warrants), then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant notice specifying (i) the date
<PAGE>
on which any such record is to be taken for the purpose of such dividend,
distribution or right, starting the amount and character of such dividend,
distribution, or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any,
as of which the holders of record of Common Stock (or Other Securities) shall be
entitled to exchange their shares of Common Stock (or Other Securities) for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant and the
persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall be mailed at least 20 days prior to the date
therein specified.
11. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of the Warrants, a11 shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of the Warrants.
12. Listing on Securities Exchanges; Registration. If the Company at
any time shall list any Common Stock on any national securities exchange and
shall register such Common Stock under the Securities Exchange Act of 1934 (as
then in effect, or any similar statute then in effect), the Company will, at its
expense, simultaneously list on such exchange, upon official notice of issuance
upon the exercise of the Warrants, and maintain such listing of, all shares of
Common Stock from time to time issuable upon the exercise of the Warrants and
the Company will so list on any national securities exchange, will so
<PAGE>
register and will maintain such listing of, any Other Securities it and at the
time that any securities of like class or similar type shall be listed on such
national securities exchange by the Company.
13. Exchange of Warrants. Subject to the provisions of paragraph 2
hereof, upon surrender for exchange of any Warrant, properly endorsed, to the
Company, the Company at its own expense will issue and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder or any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant or Warrants so surrendered.
14. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of Any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company at its expense will execute and deliver in lieu
thereof, a new warrant of like tenor.
15. Warrant Agent. The Company may, by written notice to each holder of
a Warrant, appoint an agent having an office in Boston, Massachusetts, for the
purpose of issuing Common Stock (or Other Securities) upon the exercise of the
Warrants pursuant to section 3, exchanging Warrants pursuant to section 14, and
replacing Warrants pursuant to section 15, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
<PAGE>
16. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
17. Restrictions on Transfer and Assignability. This Warrant is
non-assignable and non-transferable without the prior written consent of the
Company, and in the event of such consent, shall continue to be subject to the
provisions of section 2 of this Warrant,
(a) subject to the provisions hereof, title to this
Warrant may be transferred by endorsement (by the holder hereof executing the
form of assignment at the end hereof).
(b) until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, not-withstanding any notice to the contrary.
(c) Notwithstanding any provisions to the contrary,
this warrant shall be assignable and transferable without the consent of the
Company at the earlier of (1) May 26, 1991 or (2) the effective date of a public
offering. In such event the Warrant shall continue to be subject to the
provisions of section 2 of this Warrant.
18. Notices, etc. All notices and other communications from the Company
to the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until an address is so furnished, to
and at the address of the last holder of this Warrant who has so furnished on
address to the Company.
<PAGE>
19. Financial Reporting.
(a) Annual Reports. The Company agrees to deliver to the
Holder of the warrant, as soon as practicable after the end of each fiscal year
and in any event with 120 days thereafter, a consolidated balance sheet of the
Company as at the end of such fiscal year, a consolidated statement of
operations, and a consolidated statement of sources and applications of funds of
the Company for such year, prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and certified by independent public accountant selected by the Company.
(b) Quarterly Reports. The Company agrees to deliver to the
Holder of the Warrant as soon as practicable after the end of each of the first
three quarterly fiscal periods in each fiscal year and in any event within 60
days thereafter, a consolidated balance sheet of the Company as at the end of
such period, a consolidated statement of operations and a consolidated statement
of sources and applications of funds of the Company for such period in each case
prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, all in reasonable detail and
certified, subject to changes resulting from audit adjustments, by the principal
financial or accounting officer of the Company.
(c) Inspection. The Company agrees to permit any authorized
representative of any Holder of the Warrant to visit the Company to discuss its
affairs and finances with its officers, all upon reasonable notice to the
Company, at such reasonable time and as often as may be reasonably requested.
(d) Investors Receiving Reports and Rights. The Company shall
deliver the reports or give the rights specified in Paragraphs 19(a), 19(b) and
l9(c) to each Holder of the Warrant until the earlier of: (i) the closing date
of the Company's first underwritten public offering pursuant to an effective
registration statement filed under the Act; or (ii) as to such
<PAGE>
Holder of the Warrant, the date on which this warrant expires at which time the
Company's obligation to deliver such reports or give such rights shall
terminate.
20. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant is being delivered in the State of Massachusetts and
shall be construed and enforced in accordance with and governed by the laws of
such State. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.
21. Extended Expiration. The right to exercise this Warrant shall
expire at 5:00 P.M., Boston time, on provided, however, that if the holders of
Warrant issued hereunder have, in accordance with the terms hereof, exercise
their rights pursuant to subsection 1.1 hereof and registration statement under
subsection 1.1 has not become effective prior to the expiration date of the
right to exercise this Warrant, then the right to exercise Warrant shall be
extended and shall expire 30 days after the effective date of such registration
statement.
Dated: _______________________
AUTOMATED LIGHT TECHNOLOGIES, INC.
By:______________________________
President
[Corporate Seal]
Attest:
- --------------------
Secretary (warrants.ov2)
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: AUTOMATED LIGHT TECHNOLOGIES, INCORPORATED
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, shares of Voting Stock of Automated Light Technologies,
Incorporated, and herewith makes payment of $ therefore, and requests that the
certificates for such shares be issued in the name of, and delivered to, , those
address is .
Dated:_____________
----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
----------------------------------
Address
- ----------
* Insert here the number of shares called for on the face of the Warrant (or, in
the case of a partial exercise, the portion thereof as to which the Warrant is
being exercised), in either case without making any adjustment for additional
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of the Warrant, may be deliverable upon
exercise.
FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns transfers
unto the right represented by the within Warrant to purchase the right
represented by the within Warrant
<PAGE>
to purchase shares of Voting Common Stock of Automated Light Technologies,
Incorporated to which the within Warrant relates, and appoints Attorney to
transfer such right on the books of Automated Light Technologies, Incorporated
with full power of substitution in the premises. The Warrant being transferred
hereby is one of an aggregate of Common Stock Purchase Warrants issued by
Automated Light Technologies, Incorporated to as of , .
Dated: ________________
----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
----------------------------------
Address
- ----------
Signature guaranteed by a Bank or Trust Company having its principal office in
Boston, Massachusetts or by a Member Firm of the New York or American Stock
Exchange.
EXH10-15
w-
Void after Right to Purchase
Shares of Common Stock
(subject to adjustment) of
FiberCore, Inc.
FIBERCORE, INC.
COMMON STOCK PURCHASE WARRANT
FiberCore, Inc. (the "Company"), a Nevada corporation, hereby certified
that, for value received, , or assigns, is entitled, subject to the terms set
forth below, to purchase from the Company at any time on or from time to time
after and before 5:00 P.M., Boston time, ( ) fully paid and non-assessable
shares of Common Stock of the Company, at the price per share (the "Purchase
Price") of and dollars. The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein.
This Common Stock Purchase Warrant (the "Warrant") is issued to as of
evidences the right to purchase an aggregate of not more than shares of Common
Stock of the Company, subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
required, have the following meanings:
(a) The term "Company" includes any corporation which shall succeed to
or assume the obligations of the Company hereunder.
(b) The term "Common Stock" includes all voting stock of any class or
classes (however designated) of the Company, authorized upon the Original Issue
Date or thereafter, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
(c) The "Original Issue Date" is __________the date as of which the
Warrants were first issued.
(d) The term "Other securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in
<PAGE>
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to section 6 or otherwise.
(e) The terms registered and registration refer to a registration
effected by filing a registration statement in compliance with the Securities
Act, to permit the disposition of Common Stock (or Other Securities) issued or
issuable upon the exercise of Warrants, and any post-effective amendments and
supplements filed or required to be filed to permit any such disposition.
(f) The term "Securities Act" means the Securities Act of 1933 as the
same shall be in effect at the time.
1. Sale or Exercise Without Registration. If, at any time of any
exercise, transfer or surrender for exchange of a Warrant or of Common Stock,
(or Other Securities) previously issued upon the exercise of Warrants, such
Warrant or Common Stock (or Other Securities) shall not be registered under the
Securities Act, the Company may require, as a condition of allowing such
exercise, transfer or exchange, that the holder or transferee of such Warrant or
Common Stock (or Other Securities), as the case may be, furnish to the Company a
satisfactory opinion of counsel to the effect that such exercise, transfer or
exchange may be made without registration under the Securities Act. as the
holder of the Warrants represents to the Company that they are acquiring the
Warrants for investment and not with a view to the distribution thereof.
2. Exercise of Warrant; Partial Exercise.
2.1 Exercises in Full. Subject to the provisions hereof, this
Warrant may be exercised in full by the holder hereof by surrender of this
Warrant, with the form of subscription at the end hereof duly executed by such
holder, to the Company at its principal office, accompanied by payment, in cash
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying the number of shares of Common Stock called
for on the face of this Warrant (without giving effect to any adjustment
therein) by the Purchase Price.
2.2 Partial Exercise. Subject to the provisions hereof, this
Warrant may be exercised in part by surrender of this Warrant in the manner and
at the place provided in subsection 2.1 except that the amount payable by the
holder upon any partial exercise shall be the amount obtained by multiplying (a)
the number of shares of Common Stock (without giving effect to any adjustment
therein) designated by the holder in the subscription at the end hereof by (b)
the Purchase Price. Upon any such partial exercise, the Company at its expense
will forthwith issue and deliver to or upon the order of the holder
<PAGE>
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant
minus the number of such shares designated by the holder in the subscription at
the end hereof.
2.3 Company to Reaffirm Obligations. The Company will, at the
of any exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant, provided that if the holder of
this Warrant shall fail to make any such request, such failure shall not affect
the continuing obligation of the Company to afford such holder any such rights.
3. Delivery of Stock Certificates etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 10 days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued m the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of full paid and non-assessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled upon such
exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current market value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such holder
is entitled upon such exercise pursuant to section 4 or otherwise.
4. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time after the
Original Issue Date the holders of Common Stock (or Other Securities) shall have
received, or (on or after the record date fixed for the determination of
stockholders eligible to receive) shall have become entitled to receive, without
payment therefor
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash paid or payable (including, without limitation,
by way of dividend), except out of earned surplus of the Company, or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of
<PAGE>
shares or similar corporate rearrangement.
(d) then, and in each such case the holder of this Warrant,
upon the exercise hereof as provided in section 2, shall be entitled to receive
the amount of stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this section 4) which such
holder would hold on the date of such exercise if on the Original Issue Date he
had been the holder of record of the number of shares of Common Stock called for
on the face of this Warrant and had thereafter, during the period from the
Original Issue Date to and including the date of such exercise, retained such
shares and all such other or additional (or less) stock and other securities and
property (including cash in the cases referred to in subdivisions (b) and (c) of
this section 4) receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by section 6 and 7 hereof.
5. Reorganization. Consolidation. Merger. etc.
5.1 General. In case the Company after the Original Issue Date
shall (a) effect a reorganization, (b) consolidate with or merge with or into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company within 24 months from the date of such transfer,
then, in each such case, the holder of this Warrant, upon the exercise hereof as
provided in section 2 at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall be entitled to receive (and the Company shall be entitled to
deliver), in lieu of the Common Stock (or Other Securities) issuable upon such
exercise prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if such holder had so exercised this Warrant immediately prior
thereto, all subject to further adjustment thereafter as provided in section 4
and 6 hereof
5.2 Warrant to Continue in Full Force and Effect. Upon any
reorganization, consolidation, merger or transfer (and any dissolution following
any transfer) pursuant to section 5.1, this Warrant shall continue in full force
and effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable upon the exercise of this Warrant after
the consummation of such reorganization, consolidation, merger, transfer or
dissolution, as the case may be, and shall be binding upon the issuer of any
such stock or other securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties
<PAGE>
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant.
6. Further Assurances. The Company will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock upon the exercise of all Warrants
from time to time outstanding.
7. Accountants' Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of the Warrants, the Company at its expense will
promptly cause the Company's regularly retained auditor to compute such
adjustment or readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based, and the
number of shares of Common Stock outstanding or deemed to be outstanding. The
Company will forthwith mail a copy of each such certificate to each holder of a
Warrant.
8. Notices of Record Date, etc. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of the Company) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares
of stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities (other than the issue of Common Stock on the exercise of
the Warrants), then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, starting the amount and character of such dividend, distribution or
right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
<PAGE>
liquidation or winding-up is to take place, and the time, if any, as of which
the holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up, and (iii) the amount and character of any stock or other securities,
or rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom
such proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed at
least 20 days prior to the date therein specified.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of the Warrants.
10. Exchange of Warrants. Subject to the provisions of paragraph 1
hereof, upon surrender for exchange of any Warrant, properly endorsed, to the
Company, the Company at its own expense will issue and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder or any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant or Warrants so surrendered.
11. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company at its expense will execute and deliver in lieu
thereof, a new Warrant of like tenor.
12. Warrant Agent. The Company may, by written notice to each holder of
a Warrant, appoint an agent having an office in Boston, Massachusetts, for the
purpose of issuing Common Stock (or Other Securities) upon the exercise of the
Warrants pursuant to section 2, exchanging Warrants pursuant to section 10, and
replacing Warrants pursuant to section 11, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or
<PAGE>
compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Restrictions on Transfer and Assignability. This Warrant is
nonassignable and non-transferable without the prior written consent of the
Company, and in the event of such consent, shall continue to be subject to the
provisions of Section 1 of this Warrant.
(a) subject to the provisions hereof, title to this Warrant
may be transferred by endorsement (by the holder hereof executing the form of
assignment at the end hereof).
(b) until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
15. Notices. etc. All notices and other communications from the Company
to the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder, or, until an address is so furnished, to
and at the address of the last holder of this Warrant who has so furnished an
address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant is being delivered in the State of Massachusetts and
shall be construed and enforced in accordance with and governed by the laws of
such State. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.
Dated:
FIBERCORE, INC.
BY: __________________________________
Mohd A. Aslami, President
[Corporate Seal]
Attest:
- --------------------------
Secretary
<PAGE>
FORM OF EXERCISE
(To be signed only upon exercise of Warrant)
To: FiberCore, Inc.
60 Industrial Park Rd. West
Tolland, CT 06084
The undersigned, the holder of the within Warrant, hereby
revocably elects to exercise the purchase right represented by such Warrant for,
and to purchase thereunder,
shares of Voting Stock of FiberCore, Inc., and herewith makes payment
of $ therefore, and requests that the certificates for such shares be issued in
the name of, and delivered to, , whose address is ______________________________
________________________________________________________________________________
________________________________________________________________________________
______________________________________________________________________________.
Dated:_______________________
-------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
-------------------------------
Address
- -------------
* Insert here the number of shares called for on the face of the Warrant (or, in
the case of a partial exercise, the portion thereof as to which the Warrant is
being exercised), in either caw without making any adjustment for additional
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of the Warrant may be deliverable upon
exercise.
FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns transfers
unto the right represented by the within Warrant to purchase of Voting Common
Stock
<PAGE>
of FiberCore, Inc. to which the within Warrants relates, and appoints Attorney
to transfer such right on the books of FiberCore, Inc. with full power of
substitution in the premises. The Warrant being transferred hereby is one of an
aggregate of Common Stock Purchase Warrants issued by FiberCore, Inc. to as of ,
.
Dated:_______________________
-------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
-------------------------------
Address
- -------------
Signature guaranteed by a Bank or Trust Company having its principal office in
Boston, Massachusetts or by a Member Firm of the New York or American
Stock Exchange.
EXH10-16
ASSIGNMENT OF PATENT
THIS ASSIGNMENT made November 8,1993, by GREGORY PERRY, of 6888 Vicar
Road, Doraville, GA 30360, ("Assignor"), to FIBERCORE, INC. ("Assignee"), a
Nevada corporation in the process of organization whose principal place of
business is 60 Industrial Park Road West, Tolland, Connecticut, 060084, in
accordance with an agreement executed by the Assignor and Dr. Mohd Aslami,
representing the Assignee, dated September 15, 1993, attached hereto as Exhibit
A, as the parties thereto may amend said Agreement from time to time.
WITNESSETH
WHEREAS letters patent of the United States relating to a method for
producing a single mode fiber preform (the "Invention") have been issued to
Assignor, which letters patent is numbered 4,596,589 and dated June 24, 1986,
and
WHEREAS the Assignor is the sole owner of the patent and of all rights
thereunder, the same have never been assigned or licensed to any person, and
WHEREAS the Assignee desires to acquire the entire interest of Assignor
in the patent, and in consideration thereof will contemporaneously herewith
issue common shares of its capital stock; to the Assignor, and
NOW, THEREFORE, in consideration of the premises and the sum of $1.00,
receipt of which is acknowledged, and other good and valuable consideration,
Assignor hereby assigns and transfers to Assignee, its successors and assigns,
all his right, title and interest in the Invention and the letters patent issued
therefor, and to future improvements thereof, to be held to the full end of the
term for which such letters patent or any reissues, renewals, extensions thereof
are or may be granted, as fully and entirely as the same would have been held by
Gregory Perry had this assignment and sale not been made.
<PAGE>
Assignor does hereby represent and warrant that Assignor is the sole
owner of the Invention and the letters patent issued thereof, that no interest
of any kind whatsoever in the Invention or the letters patent has been conveyed
to any person, whether by license, assignment or transfer. Assignor further
represents and warrants that neither the Invention nor the letters patent
therefor have been encumbered or in any way granted to, or taken as security by,
any person.
Assignor does hereby agree to indemnify Assignee against any and all
liability or loss arising from or in connection with the branch of any
representation or warranty hereunder.
Assignor agrees to execute all instruments and to perform all acts
which may be necessary to carry this assignment into full effect
IN WITNESS WHEREOF, Assignor has signed and sealed this instrument.
_________________________________
Gregory Perry
<PAGE>
State of Georgia)
)
County of Fulton)
Before me personally appeared Gregory Perry and acknowledged the
foregoing instrument to be his free act and deed, November , 1993.
______________________________________
Notary Public - Notary Public
Fulton County, Georgia
My commission expires: May 13, 1995
EXH10-17
STANDARD FORM COMMERCIAL LEASE
1. PARTIES
LESSOR, which expression shall include COBRA REALTY TRUST, its heirs,
successors, and assigns where the context so admits, does hereby lease to
FIBERCORE, INC., MOHD A. ASLAMI AND CHARLES DELUCA, LESSEE, which expression
shall include their successors, executors, administrators, and assigns where the
context so admits, and the LESSEE hereby leases the following described
premises:
2. PREMISES
Twenty Thousand (20,000) square feet, entire Building NO. 01, Sturbridge, MA and
parking adjacent thereto owned by Lessor, Cobra Realty Trust in the Sturbridge
Industrial Park together with the right to use in common with others entitled
thereto, the road necessary for access to said leased premises and including 2 +
acres as shown on the attached plan called "Exhibit A", Lot 1.
3. TERM
The term of this lease shall be for Three (3) years commencing on February 1,
1994 and ending on January 31, 1997.
4. RENT
The LESSEE shall pay to the LESSOR rent at the rate of Forty Thousand
($40,000.00) per year for the first year, payable in advance in monthly
installments of Three Thousand Three Hundred Thirty-three Dollars and
Thirty-three Cents ($3,333.33). The Lessee shall pay to the Lessor rent at the
rate of Eighty-five Thousand Dollars ($85,000.00) per year for the second year,
<PAGE>
payable in advance monthly installments of Seven Thousand Eighty-three Dollars
($7,083.00). The Lessee shall pay to the Lessor rent at the rate of Ninety
Thousand Dollars ($90,000.00) per year for the third year, payable in advance
monthly installments of Seven Thousand Five Hundred Dollars ($7s500.00).
The LESSER shall have the option to extend this lease for two
successive three year periods after the original expiration of this lease
(January 31, 1997) by giving six (6) months notice in writing before the end of
the lease (as extended by each option) of intention to do so. The option period
shall be upon the same terms and conditions as herein set forth except that the
base rate for each year shall be based on the rent for the previous year, plus
the additional rent based on the C.P.I. as set forth in the next paragraph. All
the rent payable shall be absolutely triple net to Lessor and the Lessee shall
be responsible for all costs connected with the building including but not
limited to taxes, insurance including rent loss and repairs except that for the
first year Lessee shall not be responsible for taxes.
The Lessee shall pay the first and last month's rent simultaneously
with the signing hereof, S3,333.33 plus $1,500.00.
5. OPTION PERIOD RENT
The amount of Annual Rent to be paid by Tenant to Landlord during each lease
Year of the First Option Term and each year of the subsequent option period
shall be determined on an annual basis, commencing on the First Lease Year of
the Option Term as follows: The Annual Rent for the first Lease Year of the
Option Term
<PAGE>
shall be Ninety Thousand Dollars ($90,000.00) plus a sum which shall be
determined by multiplying the current rent set forth above by a fraction, the
numerator of which shall be the Price Index (as hereinafter defined in next
paragraph) for the first month of such Lease Year and the denominator of which
shall be the Base Price Index,; provided, however, in no event shall the Annual
Rent be less than the Annual Rent for the immediately preceding Lease Year. The
Annual Rent for the second Lease Year of the Option Term shall be determined by
multiplying the Annual Rent for the preceding Lease Year by a fraction, the
numerator of which shall be the Price Index for the first month of Lease Year
and the denominator of which shall be the Base Price Index.; provided, however,
in no event shall the Annual Rent be less than the Annual Rent for the
immediately preceding Lease Year.
The foregoing computation can be illustrated by the following example:
On the first day of the First Option Term the Annual Rent for the first
Lease Year of the Option Terms, as adjusted shall be determined as follows:
$90,000.00 X CPI for December 31, 1997 = Rent for first year CPI for
December 31, 1996 of First Option Term
On the first anniversary of the commencement of the First Option Term the Annual
Rent for the second Lease Year of the Option Terms, as adjusted, shall be
determined as follows:
Rent for
first Lease X CPI for , 1998 = Rent for
Year of Option CPI for , 1997 second Lease
Year of Option
(from above)
<PAGE>
The "Price Index" shall mean the Consumer Price Index for All Urban Consumers
(CPI-U) (Revised), Boston, Massachusetts, A11 Items (1982-1984-100) published by
the Bureau of Labor Statistics of the United States Department of Labor and the
"Base Price Index" shall be: for the Option Term, the price index for the month
of December, 1996. In the event the Price Index Ceases to use the 1996-1997
average of 100 as the basis of calculation, or if a substantial change is made
in the terms or number of items contained in the Price Index, then the Price
Index shall be adjusted to the figure that would have been arrived at had the
manner of computing the Price Index in effect at the date of this lease not been
changed. Each subsequent year the same calculations shall be mate.
6. OPTION TO PURCHASE
The Lessee shall have the option to purchase the leased property
including 2 + acres as shown on Exhibit "A" under the following terms:
A. If the option to purchase is exercised in the first year, the purchase
price shall be $1,200,000.00.
B. If the option to purchase is exercised in the second year, the
purchase price shall be $1,300,000.00;
C. If the option to purchase is exercised in the third year, the purchase
price shall be $1,450,000.00.
D. Lessee shall has sixty (60) days to negotiate an option agreement
covering 8 + acres shown on tot II on the attached Exhibit "A".
<PAGE>
7. UTILITIES
The LESSEE shall pay, as they become due, all bills for electricity and other
utilities (whether they are used for furnishing heat or other purposes) that are
furnished to the leased premises. LESSOR shall have no obligation to provide
utilities or equipment other than the utilities and equipment within the
premises as of the commencement date of this lease. In the event LESSEE requires
additional utilities or equipment the installation and maintenance thereof shall
be the LESSEE's sole obligation, provided that such installation shall be
subject to the written consent of the LESSOR not to be unreasonably withheld.
8. USE OF LEASED PREMISES
The LESSEE shall use the leased premises only for the purpose of storage,
manufacture, assembly, marketing, and development of fiber optic, cable
monitoring system and other related equipment, and other lawful purposes not
inconsistent therewith.
9. COMPLIANCE WITH LAWS
The LESSEE acknowledges that no trade or occupation shall be conducted in the
leased premises or use made thereof which will be unlawful, improper, noisy or
offensive, or contrary to any law or any municipal by-law or ordinance in force
in the city or town in which the premises are situated.
10. FIRE INSURANCE
The LESSEE shall not permit any use of the leased premises which will make
voidable any insurance on the property of which the leased premises are a part
or on the contents of said property or which shall be contrary to any law or
regulation from time to
<PAGE>
time established b)t the New England Fire Insurance Rating Association or any
similar body succeeding to its powers . The LESSEE shall on demand reimburse the
LESSOR all extra insurance premiums caused by the LESSEE's use of the premises.
11. MAINTENANCE
A. LESSEE'S OBLIGATIONS
Except for structural and roof repairs and maintenance, the LESSEE agrees to
Maintain the leased premises in good condition, damage by reasonable wear and
tear, fire and other casualty only excepted, and whenever necessary to replace
plate glass and other glass therein, acknowledging that the leased premises are
now in good order and the glass whole. The LESSEE shall not permit the leased
premises to be overloaded, damaged, stripped or defaced, nor suffer any waste.
LESSEE shall obtain written consent of LESSOR before erecting any sign on the
premises, such consent not to be unreasonably withheld.
B. LESSOR'S OBLIGATIONS
The LESSOR agrees to maintain the roof and structure of the building of
which the leased premises are a part in the same condition as it is at the
commencement of the term or as it may be put in during the term of this lease,
reasonable wear and tear, damage by fire and other casualty only excepted,
unless such maintenance is required because of the LESSEE or those for whose
conduct the LESSEE is legally responsible.
12. ALTERATIONS - ADDITIONS
The LESSEE shall not make alterations or additions to the leased premises,
unless the LESSOR consents thereto in writing which
<PAGE>
allowed alterations shall be at the LESSEE's expense and shall be of quality at
least equal to the present construction. LESSEE shall not permit any mechanics'
liens, or similar liens to remain upon the leases premises for labor and
material furnished to LESSEE in connection with work of any character performed
at the direction of LESSEE and shall cause any such lien to be released of
record forthwith without cost to LESSOR. The LESSEE will have the right to
remove any alterations, fixtures or equipment, provided however, that the LESSEE
shall repair any damage caused by such removal and provided that LESSEE posts a
cash bond with THE consent shall not be unreasonably withheld or delayed . A11
such LESSOR sufficient to pay for any damage caused by the removal.
13. SUBLEASING
The LESSEE shall not sublet the whole or any part of the lease premises without
LESSOR ' s prior written consent not unreasonably withheld, Subsidiaries and
affiliated companies are excluded from prior written consent requirement .
notwithstanding such consent, LESSEE shall remain liable to LESSOR for the
payment of all rent and for the full performance of the covenants and conditions
of this lease.
14. SUBORDINATION
This lease shall be subject and subordinate to any and all mortgages, deeds of
trust and other instruments in the nature of a mortgage, now or at any time
hereafter, a lien or liens on the property of which the lease premises are a
part and the LESSEE shall, when requested, promptly execute and deliver such
written
<PAGE>
instruments as shall be necessary to show the subordination of this lease to
said mortgages, deeds of trust or other such instruments in the nature of a
mortgage. The LESSEE shall subordinate to any subsequent mortgages if said
mortgagee acknowledges the rights of the LESSEE under this lease
15. LESSOR'S ACCESS
The LESSOR or agents of the LESSOR may, at reasonable times and upon reasonable
notice, enter to view the leased premises and may remove placards and signs not
approved and affixed as herein provided, and make repairs and alterations as
LESSOR should elect to do and may show the leased premises to others, and at any
time within three (3) months before the expiration of the term, may affix to any
suitable part of the leased premises a notice for letting or selling the leased
premises or property of which the leased premises are a part and keep the same
so affixed without hindrance or molestation. The LESSOR shall cause as little
disruption to the conduct of LESSEE's business as reasonably possible.
16. INDEMNIFICATION AND LIABILITY
The LESSEE shall save the LESSOR harmless from all loss and damage occasioned by
the use or escape of water or by the bursting of pipes, as well as from any
claim or damage resulting from neglect in not removing snow and ice from the
roof of the building or from the sidewalls bordering upon the premises so
leased, or by any nuisance made or suffered on the leased premises, unless such
loss is caused by the neglect of the
<PAGE>
LESSOR. The removal of snow and ice from the sidewalks bordering upon the leased
premises shall be Lessee responsibility.
17. LESSEE'S LIABILITY INSURANCE
The LESSEE shall maintain with respect to the leased premises and the property
of which the leased premises are a part comprehensive public liability insurance
in the amount of $500,000/$1,000,000 with property damage insurance in limits of
$100,000 in responsible companies qualified to do business in Massachusetts and
in good standing therein insuring the LESSOR as well as LESSEE against injury to
persons or damage to property as provided. The LESSEE shall deposit with the
LESSOR certificates for such insurance at or prior to the commencement of the
term, and thereafter within thirty l30) days prior to the expiration of any such
policies. All such insurance certificates shall provide that such policies shall
not be canceled without at least ten (10) days prior written notice to each
assured named therein.
18. FIRE CASUALTY -- EMINENT DOMAIN
Should a substantial portion of the leased premises. or of the property of which
they are a part, be substantially damaged by fire or other casualty, or be taken
by eminent domain, the LESSOR may elect to terminate this lease. When such fire,
casualty, or taking renders the leased premises substantially unsuitable for
their intended use, a just and proportionate abatement of rent shall be made,
and the LESSEE may elect to terminate this lease if:
(a) The LESSOR fails to give written notice within fifteen (15) days of
intention to restore leased premises, or
<PAGE>
(b) The LESSOR fails to restore the leased premises to a condition
substantially suitable for their intended use within forty-five (45)
days of said fire, casualty or taking.
The LESSOR reserves, and the LESSEE grants to the LESSOR, all rights which the
LESSEE may have for damages or injury to the leased premises for any taking by
eminent domain except for damage to the LESSEE's fixtures, property, equipment
and loss of profit .
19. DEFAULT AND BANKRUPTCY
In the event that:
(a) The LESSEE shall default in the payment of any installment of rent or
other sum herein specified and such default shall continue for ten
(10) days after written notice thereof: or
(b) The LESSEE shall default in the observance or performance of any other
of the LESSEE's covenants, agreements, or obligations hereunder and
such default shall not be corrected within thirty (30) days after
written notice thereof: or
(c) The LESSEE shall be declared bankrupt or insolvent according to law,
or, if any assignment shall be made of LESSEE's property for the
benefit of creditors,
then the LESSOR shall have the right thereafter, while such default continues,
to re-enter and take complete possession of the leased premises, to declare the
term of this lease ended, and
<PAGE>
remove the LESSEE's effects, without prejudice to any remedies which might be
otherwise used for arrears of rent or other default. The LESSEE shall indemnify
the LESSOR against all loss of rent and other payments which the LESSOR may
incur by reason of such termination during the residue of the term. If the
LESSEE shall default, after reasonable notice thereof, in the observance or
performance of any conditions or covenants on LESSEE's part to be observed or
performed under or by virtue of any of the provisions in any article of this
lease, the LESSOR, without being under any obligation to do so and without
thereby waiving such default, may remedy such default for the account and at the
expense of the LESSEE. If the LESSOR makes any expenditures or incurs any
obligations for the payment of money in connection therewith, including but not
limited to, reasonable attorney's fees in instituting, prosecuting or defending
any action or proceeding, such sums paid or obligations insured, with interest
at the rate of 18 percent per annum and costs, shall be paid to the LESSOR by
the LESSEE as additional rent. The LESSOR shall use best efforts to relet the
promises.
20. NOTICE
Any notice from the LESSOR to the LESSEE relating to the leased premises or to
the occupancy thereof, shall be deemed duly served, if mailed to the LESSEE at
leased premises, registered or certified mail, return receipt requested, postage
prepaid, addressed to the LESSEE. Any notice from the LESSEE to the LESSOR
relating to the leased premises or to the occupancy thereof,
<PAGE>
shall be deemed duly served, if mailed to the LESSOR by registered or certified
mail, return receipt requested, postage prepaid, addressed to the LESSOR at such
address as the LESSOR may from time to time advise in writing . All rent notices
shall be paid and sent to the LESSOR at Cobra Realty Trust, P.O. Box 2917,
Worcester, MA 01613.
21. SURRENDER
The LESSEE shall at the expiration or other termination of this lease, remove
all LESSEE's goods, equipment and effects from the leased premises, (including,
without hereby limiting the generality of the foregoing, all signs and lettering
affixed or painted by the LESSEE, either inside or outside the leased premises).
LESSEE shall deliver to the LESSOR the leased premises and all keys, locks
thereto, and other fixtures connected herewith and all alterations and additions
made to or upon the leased premises, in good condition, damage by fire or other
casualty only excepted. In the event Of the LESSEE's failure to remove any of
LESSEE's property from the premises, LESSOR is hereby authorized, without
liability to LESSEE for loss or damage thereto, and at the sole risk to LESSEE,
to remove and store any of the property at LESSEE ' s expense, or to retain same
under LESSOR' s control or to sell at public or private sale, without notice any
or all of the property not so removed and to apply the net proceeds of such sale
to the payment of any sum due hereunder, or to destroy such property.
22. OTHER PROVISIONS
A. It is also understood and agreed that at such time as
<PAGE>
FIBERCORE, Inc. is listed on Nasdaq or becomes a public company, the LESSEE
shall be FIBERCORE, Inc., and any future liability of Aslami and DeLuca shall
terminate as of that date, but they shall remain liable for prior activities or
payments. In addition, Aslami and DeLuca may, after the expiration of the first
year of the lease satisfy their personal obligation by payment of six (6) months
rent in advance.
B. The parties agree that until January 31, 1995 Coherence General
corp. has the right to store the lasers presently on the premises at no cost but
at its own risk with reasonable access at reasonable times to remove the
equipment or to exhibit same for sale or other purposes.
<PAGE>
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals this
31st day of January, 1994.
- -------------------------- ------------------------------
LESSEE, FIBERCORE, INC. LESSOR - COBRA REALTY TRUST
- --------------------------
LESSEE, MOHD A. ASLAMI
- --------------------------
LESSEE, CHARLES DELUCA
<PAGE>
PLAN INSERT
DIAGRAM
EXH10-18
7 June, 1994
Mr. Walter Nadrag
SICO, Jena GmbH
D-7724 Jena, Postfach 78
GERMANY
Dear Walter:
Re: Agreement between SICO and FiberCore, Inc.
This represents a legally binding contract and agreement between FiberCore and
SICO to manufacture optical fibers and optical fiber preforms in SICO's existing
facility in Jena, Germany, and to market the products.
Attachment 1 defines the terms of this agreement.
Both parties recognize that they will reveal confidential information to the
other party and agree that all such proprietary information will not be
disclosed to third parties without express written permission.
Understood and agreed to by:
For SICO GmbH For FiberCore, Inc.
- ------------------------------ --------------------------------
Walter Nadrag Date Mohd Aslami Date
President & Chairman
<PAGE>
ATTACHMENT 1 - Term of the Agreement
1. FiberCore will organize a 100% German subsidiary FiberCore GmbH. This new
company will become FiberCore's European Common Market base.
2. FiberCore GmbH will take over operational control of SICO Preform and fiber
operation, including manufacturing, sales, marketing, quality control,
billing and collections.
3. FiberCore Inc. will provide technology to upgrade existing multi-mode fiber
production.
4. FiberCore Inc. will provide product and process technology to add single
mode fiber production.
5. FiberCore GmbH will provide the necessary investment to upgrade the
existing equipment shown in Exhibit B, so as to increase total production
and improve the product quality, and increase sales subject to market
demands, and cost competitiveness. The minimum investment guaranteed by
FiberCore, Inc. shall be DM 2,000,000. The nature, timing, and any other
considerations with respect to such upgrades shall be determined by
FiberCore GmbH's board of directors.
6. FiberCore GmbH will lease factory and office space as shown on Exhibit A,
from SICO for six(6) years at a fixed monthly rental, as provided for in
item #8 below. The lease term shall commence on July , 1994. The monthly
rental shall include all utility costs, such as air conditioning, heating,
water, lighting, etc., for preform and fiber draw rooms, property taxes,
insurance, maintenance, and other related operating expenses for all leased
space.
In addition, FiberCore GmbH shall be granted renewal options (for periods
of 1,3, or 5 years) for an aggregate period of twenty five (25) years.
Within 120 days prior to the termination of the initial lease term, and any
subsequent lease terms, FiberCore GmbH shall notify SICO of its intention
to exercise the 1, 3, or 5 year renewal option. In the event that FiberCore
GmbH elects to renew the lease, the annual rental during the renewal
period(s) shall be adjusted by the excess of actual annual utility expenses
paid (by FiberCore GmbH directly to SICO) over the $207,000 ($179,000 and
28,000) annual base charge for such expenses, as shown in Exhibit C (3),
provided however, that such annual percentage increase shall not exceed the
annual percentage increase in the inflation rate, as customarily measured
for that region of Germany. The other items listed on Exhibit C (3) remain
fixed for any subsequent renewal period.
7. FiberCore GmbH will lease from SICO all existing equipment relating to
fiber and preform manufacturing, as shown in Exhibit B for a period of six
(6) years, at a fixed rate as provided for in item #8, below, commencing on
July , 1 994. At the end of the six (6) year lease period, FiberCore GmbH
shall make a lump-sum payment equal to the then book value of the existing
equipment shown in Exhibit B, in lieu of future lease payment.
<PAGE>
The fixed rate shall include all costs associated with utilities, such as
air conditioning, heating, water, lighting, and clean room utilities,
taxes, maintenance, and insurance.
For purposes of this agreement, the existing equipment shown in Exhibit B
shall be deemed to have a useful life of six (6) years from the date of the
lease and, accordingly, said equipment should be depreciated over a period
not to exceed six (6) years.
8. The payment for items 6 and 7 above shall be DM 584,000 per year, paid in
equal monthly payments of DM 48.675.
9. FiberCore GmbH will contract with SICO for personnel including factory
labor at SICO's direct costs. FiberCore GmbH will guarantee employing the
services of at least 20 people at salaries and benefits as shown on Exhibit
C, for the first 6 months of this Agreement. During the second six months
the number of employees shall increase to at least 25. After this period,
the minimum number of employment shall be at least 30. FiberCore GmbH shall
have the option of selecting the personnel from the list shown on Exhibit
C.
To the extent that SICO satisfies its personnel obligations with respect to
its government commitment under the program, FiberCore GmbH may elect to
reduce its requirement ID contract for personnel from SICO, during the six
(6) years covered under this provision. This requirement shall expire after
the first six (6) year term.
10. FiberCore GmbH will transfer to SICO or SICO's owners 605,000 shares of
FiberCore, Inc. (USA), currently valued at US $4 per share. Such transfer
of shares shall be tied to the transfer of manufacturing equipment to
FiberCore GmbH as indicated under item 7
11. Mr. Walter Nadrag will be offered directorship on the board of FiberCore
GmbH for the term of this agreement.
12. This agreement is subject to FiberCore, Inc. approval of the Board of
Directors.
13. In the event of default by FiberCore GmbH, SICO shall retain title to the
equipment as listed in Exhibit B. Furthermore, SICO shall have the option
to purchase any additional equipment acquired by FiberCore GmbH at fair
market value. In the event SICO, or its' assignee chooses to maintain
preform and/or fiber manufacturing, SICO must enter into an agreement with
FiberCore to pay a royalty fee of five percent (5%).
14. In the event of default by SICO, FiberCore GmbH shall have the option to
fulfill SICO's contractual agreement with the Government and obtain title
to all assets on SICO's behalf.
15. All parties to this Agreement acknowledge and agree that other (sub)
contracts, such as rental and equipment leases, security agreements, and
other related agreements will be executed and delivered in connection to
and in respect of this Agreement (collectively, the "transaction
Agreements".
<PAGE>
16. FiberCore will have the exclusive right to use all trade names, patents and
proprietary know how that has been developed or owned by SICO with] respect
to fiber optics.
17. SICO and Shareholders jointly and severally represent, warrant and
convenient to and with FiberCore GmbH and FiberCore. Inc. as follows:
See Attachment A
18. FiberCore GmbH and FiberCore, Inc. represent, warrant and covenant to SICO
and its Shareholders as follows:
See Attachment B
19. Financials
<PAGE>
ATTACHMENT A
Representation and Warranties:
(i) SICO and of its related entities, if any, duly organized and existing
and, if applicable, in good standing under the laws of its jurisdiction
of organization, and has the full power and authority to own its
property and carry on its business as now being conducted.
(ii) SICO has full power and authority to enter into, execute and deliver
this Agreement and any other agreements executed and delivered in
connection herewith (collectively, the "Transaction Agreements") and to
incur the obligations provided for herein and therein, all of which
have been duly authorized by all proper and necessary action. No
consent or approval is required as a condition to the validity or
performance of any of the Transaction Agreements, and the performance
of SICO of its obligations thereunder will not violate (1 ) any law,
ordinance or rule applicable to SICO or its Shareholders, (ii) the
articles of incorporation, by-laws, partnership agreement or
certificate of partnership, as applicable, of SICO or (iii) any
agreement by which the Customer is bound or by which any of its assets
are affected.
(iii) All authorizations, consents, approvals, registrations, exemptions and
licenses with or from governmental authorities which are necessary for
entering into, execution and delivery of the Transaction Agreements and
the performance by SICO of its obligations thereunder have been
effected or obtained and are in full force and effect
(iv) This Agreement constitutes, and the other Transaction Agreements, when
executed and delivered for value received, will constitute, the valid
and legally binding obligations of SICO and Shareholders enforceable in
accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(v) There are no legal proceedings, law suits, or investigations pending
or, so far as the officers or Shareholders, as the case may be of SICO
know, threatened before any court or arbitrator or before or by any
governmental authority which, in any one case or in the aggregate, if
determined adversely to the interests of SICO or its related entities,
if any, would have a material adverse effect on (a) the business,
properties, conditions (financial or otherwise) or operations, present
or prospective, of SICO or its related entities if any, or (b) the
Transaction (s) contemplated by this Agreement.
SICO is not aware of infringing on any third party patents or has it
been notified by any such third party.
(vi) There is no statute, regulation, rule, order or judgment, and no
provision of any mortgage, indenture, contract or agreement binding on
SICO or affecting its properties which would prohibit, conflict with or
in any way prevent the execution, delivery, or carrying out of the
terms of any of the Transaction Agreements.
<PAGE>
(vii) SICO and each of its related entities, if any, has filed or caused to
be filed all tax returns which to the knowledge of SICO are required to
be filed and has paid all taxes shown to be due and payable on said
returns or on any assessment made against it or any of its property and
all other taxes, assessments, fees, liabilities or other charges
imposed on it or any of its property by any governmental authority,
except for any taxes, assessments, fees, liabilities or other charges
which are being contested in good faith and for which reserves which
are adequate under generally accepted accounting principles have been
established.
(viii) SICO holds full right, title and interest in and to the equipment and
other property describe in this Agreement, free and clear of any claim,
lien, security interest, or other similar charge, except as others
provided for in this agreement to FiberCore. GmbH.
(ix) Shareholders covenant that during the initial six (6) year term of this
Agreement that they will not (a) sell, transfer, gift, or in any manner
whatsoever, directly or indirectly, dispose of their shares in SICO,
and (b) cause SICO to sell, dispose, transfer, or in any manner
whatsoever, including by way of merger, consolidation, or other
corporate transaction, directly or indirectly, dispose of substantially
all the assets or property of SICO, including specifically the assets
and property of SICO which are the subject of this Agreement.
<PAGE>
ATTACHMENT B
Representation and Warranties of FiberCore, Inc.
(I) FiberCore, Inc. is a corporation validly existing and in good standing
under the laws of the State of Nevada.
(ii) FiberCore, Inc. has full corporate power and authority to make,
execute, deliver and perform this Agreement and to execute, deliver and
perform the other instruments required to be delivered.
(iii) The execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action on the part of FiberCore,
Inc., and this Agreement when executed and delivered, will constitute
the legal, valid and binding obligations of FiberCore, Inc.,
enforceable against it in accordance with their respective terms
Representation and Warranties of FiberCore GmbH.
(i) Organization and Good Standing FiberCore GmbH is a corporation validly
existing and in good standing under the laws of Germany.
(ii) FiberCore GmbH has full corporate power and authority to make, execute,
deliver and perform this Agreement and to execute, deliver and perform
the other instruments required to be delivered.
(iii) The execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action on the part of FiberCore
GmbH, and this Agreement when executed and delivered will constitute
the legal, valid and binding obligations of FiberCore GmbH, enforceable
against it in accordance with their respective terms.
<PAGE>
BQL Burgauer Quarzglasschmelze
und Lichtwellenleiterwerk GmbH
Bisherige Arbeiten zur Preformentwicklung
1979-1981 GI-MM-Preform 50/125
Kernglassystem GeO2-P2O5-SiO2
Arbeitswellenlange 0,85 (mu)m
1984-1986 GI-MM-Preform 50/125
Arbeitswellenlange 1,3 (mu)m
1985-1986 Strahlungsharte GI-MM-Preform 50/125
Kernglassystem GeO2- SiO2
Arbeitswellenlange 1,3, (mu)m
1987-1989 Standard-SM-Preform 9/125
Profiltyp: depressed cladding
Kernglassystem GeO2-SiO2
Claddingglassystem P2O5-F-SiO2
1990 DS-SM-Preform
Profiltyp:triangular core
triple clad, depressed inner cladding
Arbeitswellenlange 1,55(mu)m
1991 HNA-GI-MM-Preform 62,5/125
Arbeitswellenlange 0,85 / 1,3 (mu)m
1992 HNA large core GI-Preform 100/140
Arbeitswellenlange 0,85 / 1,3 (mu)m
<PAGE>
SECURITY OWNERSHIP CONTRACT
between
1) Jena, etc. represented by its Managing Director Walter Nadrag,
2) FiberCore, etc. represented by its President Dr. Mohd A. Aslami and Gregory
A. Perry.
In view of the already sealed but still to be certified, contract agreements
regarding the formation of FiberCore GmbH, Germany, signatory 1.) will give
signatory, 2.) for receipt of six hundred five thousand shares, current market
value of S4 per/sh., equipment listed in the appendix, property of Jena
Quarzschmelze GmbH, as security.
The security will be maintained until payment for 605,000 shares of FiberCore,
Inc. has been made. Signatory 1.) declares that all afore mentioned equipment is
free of any lien against it by any third party.
EXH10-19
Purchase agreement
between
Sico Jena GmbH Quarzschmelze,
Goschwitzer Str. 20, 07745 Jena
represented by its President,
Mr. Walter Nadrag
- on the one hand -
and
FiberCore Jena GmbH,
represented by Mohd Aslami,
President of FiberCore, Inc.
Goschwitzer Str. 20, 07745 Jena
- on the one hand -
WHEREFORE Sico Jena GmbH ("Sico") declares that it holds unrestricted ownership
rights in the equipment and other assets described in this contract. This
production equipment is not subject to any pledges, liens, collateral rights or
any other similar encumbrances whatsoever.
1. THEREFORE, Sico agrees to sell and to transfer to FiberCore the production
equipment specified in the Schedule hereto at a price of
DM 3,775,200
(three million seven hundred seventy five thousand
and two hundred German marks) plus 15% VAT.
The purchase price shall be paid as follows:
1) DM 3,775,200 paid in 24 equal quarterly installments of DM 157,300 plus 15%
VAT (if applicable) of DM 23,595. The first payment is due on October 31, 1995
if FiberCore Jena GmbH or FiberCore, Inc. USA closes on its current financing:
If financing did not close by October, then two payments shall be made by
December 31, 1995.
<PAGE>
2. Regardless of the payment of the purchase price, the Purchaser agrees to
assume the following obligations:
a) The Purchaser undertakes to retain the equipment specified in the Schedule
hereto in the Jena factory until year 2001 at the earliest.
Any infringement of this obligation shall cause this Purchase agreement to be
rescinded with the result that the ownership rights in the equipment purchased
shall revert to the seller.
b) The provisions contained in 2 a) above shall not apply to new installations
fitted by the Purchaser or the seller in the factory. The Purchaser shall be
entitled to remove equipment specified in the schedule provided that it is
returned or replaced by equivalent equipment within a reasonable period of time.
3. If Sico fails to comply with any of its obligations under its Contract with
the State of Thuringia or Treuhandanstalt, FiberCore Jena GmbH shall have an
option to assume Sico's contractual obligations against the State of Thuringia
and/or THA.
4. Furthermore, the parties agree that FiberCore Jena GmbH shall be entitled to
use all brand names as well as patents and expertise developed or owned by Sico
(with respect to optical fibers). If any of these rights are used, a fee plus
expense, the amount of which shall be subject to a separate agreement, shall be
payable to Sico Jena GmbH. These fees are payable to the authors of patents and
filing fees for maintaining the validity of patents. It is estimated that
approximate payment under this obligation would be DM 38,000 per year. This
amount may go up or down based on actual production subject to the appropriate
patents.
5. Sico Jena GmbH shall transfer to the Purchaser all staff already employed at
FiberCore Jena GmbH as soon as possible but not later than 30 days after the
signing of this agreement. All rights and obligations under existing contracts
of employment with Sico Jena GmbH shall be transferred to the Purchaser.
Responsibility for lump-sum settlements due such persons being transferred or
leaving the company shall be assumed by the Purchaser, provided however, that
the Purchaser has the right not to transfer any individual who wishes not to be
transferred, in which case FiberCore shall have the right to replace such
person.
Signed in Jena on this 19th day of August 1995.
Sico Jena GmbH Quarzschmelze ___________________________
Walter Nadrag Mohd Aslami
President FiberCore Jena GmbH
____________________________ President of FiberCore, Inc.
<PAGE>
PURCHASE AGREEMENT
Subject to the Purchase Agreement of August 19, 1995, Mr. Walter Nadrag agrees
to return all the shares of FiberCore, Inc. USA common stock that was
transferred to Mr. Walter Nadrag or Sico toward the purchase of Sico's assets at
the same time or immediately after the first two quarterly installments of DM
157,300 are made. FiberCore, Inc. USA is hereby authorized by Mr. Walter Nadrag
to cancel the shares after payment of the first two installments.
In addition, if FiberCore was able to prepay the balance of the purchase price
prior to the end of the installment period, then the equipment will no longer be
used as security for the payments.
Signed: ______________________
Walter Nadrag
Date: August 19, 1995
EXH10-20
Cooperation Agreement by and Between:
Sico Jena GmbH Quarzschmelze ("Sico"), Goeschwitzer Strasse 20, 07745 Jena,
Germany and FiberCore Inc. ("FCI"), 174 Charlton Road, P.O. Box 206, Sturbridge,
MA 01566 USA.
Whereas, Sico or an affiliate is a stockholder in FCI and Sico's principal owner
Mr. Walter Nadrag was the Managing Director of FCI's subsidiary FiberCore Jena
GmbH ("FCI"), the parties have agreed that it is necessary to define and agree
on the terms of a Cooperation Agreement between the parties.
Therefore, FCI and Sico have agreed to the following:
1 - As an addendum to the August 1995 Agreement between the parties, FCI
has agreed to (a) register Sico's (or affiliate) shares of FCI common
stock (605,000 shares as of the date hereof) through a Registration
Statement which is due to be filed with the U.S. Securities and
Exchange Commission ("SEC") in the near future; (b) Sico or the
affiliate will establish an Escrow Account and deposit its FCI share in
such account; (c) after the effective date of the Registration
Statement, and in accordance with all applicable laws, rules and
regulations, the escrow Agent will sell such shares from time to time,
and the proceeds thereof shall be deposited in the Escrow Account; (d)
after paying a reasonable broker's commission for such sales of shares,
if any, the Escrow Agent will use the proceeds of the sale to
mandatorily prepay the purchase price of machinery and equipment from
FCJ to Sico that is currently scheduled to be paid over 6 years in
quarterly installments, all paid during 1996 or as soon as practical
thereafter based on the market conditions; (f) the parties shall use a
Net Present Value ("NPV") to determine the prepayment amount at the
time such prepayments are made, and agree in advance (shall be
determined in the detailed agreements mentioned under item 3 below) on
the discount factor used to the calculation of the NPV; (g) to the
extent that the shares are sold for more than the prepayment amount for
the machinery and equipment, the excess proceeds will remain in the
Escrow Account which will be an interest bearing account; (h) Escrow
Agent will invest such extra principal amount plus interest in
appropriate machinery and equipment (the parties shall agree to the
type of equipment needed and include it as part of the detailed
agreement under item 3 below) and will enter into a sale and lease back
of such machinery and equipment with FCI for the purpose of Sico
manufacturing Wet Synthetic Silica ("WSS") or Dry Synthetic Silica
("DSS") and draw fiber optic quality tubes from such WSS or DSS to be
used and/or marketed by FCJ, FCI or an agreed upon affiliate(s); (I)
the terms of such lease back shall be over a 6 year period, paid
monthly and the payment shall be determined using the same interest
rate as the discount factor used in the NPV calculation above, and (j)
in the event that extra funds remain in the escrow account, it shall be
applied toward prepayment of rental payment calculated in the same
manner as NPV for equipment.
<PAGE>
2 - Proceed in good faith with drafting, negotiating and executing a
detailed agreement which shall provide for the items enumerated herein,
and shall contain representations, condition, covenants and the like
typical for the transactions discussed herein.
3 - This is considered a binding agreement on the parties under the laws of
the Federal Republic of Germany, and supersedes the addendum to the
August 95 Agreement between FCI & FCJ related to the Purchase Agreement
as of December 14, 1995.
Also, please do not hesitate to contact Mr. Siddig in the meantime to start on
drafting any further details as required.
Agreed by FCI:_____________________________ Date: December 19, 1995
Mohd Aslami
Agreed by Sico:_____________________________ Date: December 16, 1995
Walter Nadrag
Agreement concerning the lease of commercial Premises EXH10-21
The following Lease is hereby entered into by and between
Sico Jena GmbH Quarzschemelze
Goshchwitzer Str. 20
07445 Jena
- -the Lessor-
and
FiberCore Jena GmbH
Goschwitzer Str. 20
07445 Jena
- -the Lessee-
#1. Premises to be leased
a. The premises located in Production Hall Building 42
(see Schedule 1 Plan of Premises)
in
Goschwitzer Str. 20
Shall be leased for the operation of a
factory for manufacturing optical fibers
(type of business or commercial activity).
The following Premises shall also be leased:
100 square meters of outside space (open areas, garages)
Both parties acknowledge that the total area of the Leased Premises is
2,621,000 square meters. This area shall form the basis of any calculation for
increases in rent, the settlement of ancillary costs etc., regardless of whether
actual measures result in any deviation.
2. The following may also be use (parking spaces, etc.): 40 parking spaces
outside Building 42 for an annual rental of DM 4,500.00
3. The main keys (gate, building entry etc.) shall be release to the
Lessee immediately upon its taking occupancy of the Premises.
<PAGE>
#2. Duration and termination of Lease
1. The lease shall come into effect on 1 September 1995
The Lease shall expire on June 30, 2000.
The lease term prolongs automatically for another 6 months unless
FiberCore Jena GmbH elects not to renew the contract six months prior
to contract expiration. The tenant, has the right to demand lease
extension of 1 to 25 years (Option) 3 months prior to the first lease
expiration and the right to prolong the newly agreed terms again and
repeatedly, until the maximum term of 25 years has been used up.
2. Any amendments to the provisions set out the second paragraph of (1)
above shall be in writing only and communicated to the other party by
no later than on the final working day prior to the commencement of the
period of notice.
3. The Lessor shall be entitled to terminate the Lease with immediate
effect and without first giving notice provided that this is warranted
by a material reason. Such a material reason shall be deemed to be the
Lessee's failure to comply with its contractual obligations (e.g.
arrears of more than three monthly rentals in spite of having received
a reminder). Any reminders that may be necessary shall be sent to
Nicolai A. Siddig, Attorney at Law, Thichallee 32, 14195 Berlin, and
Dr. Mohd Aslami, 174 Charlton Road, P.O. Box 206, Sturbridge, MA, USA
01566.
4. Upon expiry of the Lease, #568 of the German Civil Code (implicit
renewal) shall not apply to either Party. All agreements to continue or
renew the Lease after expiry shall be in writing only.
#3. Rental and ancillary costs
1. The rental shall equal per month (see Schedule 5) DM 44,674.00
(forty-four thousand six hundred and seventy-four)
15% V.A.T. DM 6,701.00
Total DM 51,376.00
2. Any operating costs not specified in this Lease shall be deemed to be
include in the rental.
#4. Payment of rental and heating costs
1. The rental and ancillary costs referred to in #3 (1) above shall be due
monthly in advance and shall be remitted to the Lessor by no later than
the third working day of the month by credit transfer to Account No. 25
836 3100 at Commerzbank Jena (BLZ 820 40 00)
<PAGE>
quoting the rental debtor number 20153. Payment shall be deemed to have
been remitted on time only provide that is received by the deadline in
question, i.e. it shall not be sufficient for payment to be merely
dispatched by this date.
2. The advance payment covering heating cost (see #5) shall be settled
with the Lessee once a year effective as of December 31, 1995. Any
shortfall shall be paid or excess payment credited in the quarter
following the cut-off date for settlement.
#5. Joint heating and hot water supplies
1. The Lessors undertakes to provide central heating whenever this is
warranted by outside temperatures, and in any case, between October 1
and April 30. Hot water supplies shall be available at all time with
the exception of brief interruptions.
2. The Lessee undertakes to pay to pro-rata operating and maintenance
costs of the heating facilities for the parts of the equipment which it
owns.
3. The operating costs shall be apportioned by the Lessor in accordance
with the statutory regulations for settling such costs, i.e. on the
basis of the usable or converted space and using a formula taking
account of heat consumption. Where heat measuring devices and/or hot
water, the Lessee shall directly bear all operating, maintenance and
cleaning costs provided that it has installed such heaters or boilers
itself. They shall be serviced and cleaned at least once a year, proof
of which shall be made available to the Lessor on request.
#6. Use of lifts
1. The Lessee is entitled to use the lifts adjacent to the lease Premises.
2. The Lessee shall not be entitled to insist on the uninterrupted
availability of the lifts in the event of any disruptions. The Lessee
undertakes to comply with all points of the regulations governing the
use of lifts. Any repairs to the lifts must be performed as quickly as
possible.
#7. State of Premises
The Lessee undertakes to keep the Premises clean. All contamination of the
surroundings, the building and the external areas must be avoided. The lessee
shall treat the Premises carefully and maintain and return them in an orderly
state of repair.
#8. Offsetting of accounts, retention of payments
The Lessee shall be entitled to offset rentals against counter-claims or
exercise a right of retention in respect thereof if it informs the lessor in
writing of its intention to do so at least on month prior to the rental in
question becoming due for payment.
<PAGE>
#9. Use of Premises, subletting
1. The Lessee may only use the Premises for the commercial purposes
described in #1 hereto. Any changes to the purpose for which the
premises are used shall require the Lessors written approval, which
approval shall not be unreasonably withheld.
2. The Premises may only be sublet to or used by third parties with the
Lessor's written approval, which approval shall not be unreasonably
withheld.
#10. Advertising
1. The Lessee shall be entitled to affix a sign of an appropriate size to
the area set aside by the Lessor for this purpose, i.e. the advertising
holder at Gate 69. If a joint sign holder is available or constructed,
the Lessee undertakes to use it and to assume a proportionate share of
the costs.
2. Other fitting used for advertising or sales purposed may only be
affixed to the external walls or the windows of the building (company
sign, logos, slogans, showcases, vending machines, etc.) with the
Lessor's express written permission.
3. The Lessee shall be liable for all damage arising in connection with
these fittings.
4. The Lessee shall be solely responsible for complying with technical and
official regulations concerning the manner in which the fitting are
affixed and maintained and for taking all such necessary measures.
5. The Lessee's advertising fitting already in existence may be kept.
#11. Repairs and structural modifications performed by the Lessor
1. The Lessor shall be entitled to perform any such repairs or structural
modification without the Lessee's approval as may be necessary to
preserve the building or the Premises, to ward off any dangers or to
remedy damage. This shall also apply to work which is not necessary but
appropriate, e.g. modernization of the building and the Premises. The
Lessee undertakes to ensure that the rooms concerned are accessible and
to refrain from impending or delaying work. Changes for the extensions
as well as for Preform and the fiber production facilities shall be
permitted (pursuant to Sketch 10 as attached).
2. The Lessor shall inform the Lessee of such structural modification in
good time and ensure that the structural modifications do not
unreasonably interfere with the Lessee's business operations.
<PAGE>
#12. Structural modifications performed by the Lessee
1. Structural modifications performed by the Lessee, particularly
conversion, additions, installations and the fitting of grilles to
windows, shall require the Lessor's written approval. If the Lessor
grants its approval, the Lessee shall be responsible for gaining the
necessary permits and shall bear all expenses involved. Changes for the
extensions as well as for Preform and the fiber production facilities
shall be permitted (pursuant to Sketch 10 as attached).
2. The Lessee shall be entitled to remove any fittings which it has added
to the Premises. However, the Lessor shall be entitled to request that,
upon the expiry of the Lease, such fittings by left on the Premises
provided that the Lessor pays a sum of money equaling the market value
for the fittings in question. The Lessor and Lessee shall come to any
agreement on such matters prior to the Premises being vacated. If the
Lessor does not acquire the fitting installed by the Lessee, the latter
shall return the Premises to their previous state and perform all the
necessary work for this purpose prior to the expiry of the Lease.
3. The Lessee shall be liable for all damage arising in connection with
any construction work which it performs.
#13. Repairs and Maintenance
1. The Lessee shall be liable towards the Lessor for any damage arising as
a result of the former's culpable failure to observe its duty of car.
Similarly, it shall be vicariously liable for damage culpably caused by
its associated, staff, subtenants, visitors, suppliers, craftsmen etc.
2. The Lessee undertakes to keep the Premises free of vermin at its own
expense. The Lessee shall only be able to claim that the Premises were
infested with vermin prior to the commencement of the lease if its
submits a declaration to this effect by a pest control expert
immediately after taking occupancy of the Premises.
3. The Lessee shall immediately remedy all damage for which it is
responsible. If it fails to comply with this duty within a reasonable
period of time after receiving a written warning, the Lessor shall be
entitled to perform the necessary work at the Lessee's expense. In the
event of imminent danger or if the Lessee's whereabouts are unknown,
the Lessor shall be entitled to dispense with issuing a written warning
and setting a deadline.
#14. Security
The Lessee shall be responsible for the security of the leased Premises.
<PAGE>
#15. Lessors right to enter the Premises
1. The Lessor and/or its nominee shall be entitled to enter the Premises
during normal office hours for the purposes of examining their state or
for any other important reason. In the event of imminent danger, entry
shall be permissible at any time of the day or night.
2. If the Lessor plans to sell the property, it and/or nominee shall be
entitled to enter the Premises during normal office hours with
potential buyers, - with the exception of any of the Lessee's
competitors. If either party has given notice of its intention to
terminate the Lease, the Lessor and/or its nominee shall be entitled to
enter the Premises during normal office hours with potential buyers. If
either party has given notice of its intention to terminate the Lease,
the Lessor and/or its nominee shall be entitled to enter the Premises
during normal office hours together with potential new lessee.
#16. Termination of the Lease
Upon the termination of the Lease, the Lessee shall release the Premises in a
state ready for immediate occupancy and hand over to the Lessor all keys with
which it was provided.
#17. Liability in the event of any disruptions in utility supplies
Electricity
The Lessor shall only be liable for any disruptions or irregularities in
electricity supplies to the extent that the utility supplying the electricity
(Stadtwerke Jena GmbH) is liable towards the Lessor (see Ordinance on the
General Conditions for the Supply of Electricity to Special-Rate Customers
(AVBEltV) of June 21, 1979.
District Heating
The Lessor shall only be liable for any disruptions or irregularities in
supplies of district heating to the extent that the utility supplying the
district heat (Stadtwerke Jena GmbH) is liable towards the Lessor (see Ordinance
on the general Conditions for the Supply of District Heating to Special-Rate
Customers (AVB Fernwarme) of June 20, 1980).
#18. Change in corporate status, sale of operations
The Lessee shall inform the Lessor without delay of any changes to the corporate
status of its company or any modifications to its entry in the companies
register, business registration or any matters of importance for the Lease.
#19. Miscellaneous provisions
Any amendments or additions to the Lease shall be in writing only. This shall
also apply to any amendments or additions to the provision.
<PAGE>
If any of the provisions in the Lease are ineffective either in part or in full,
this shall have no effect on the validity of the remaining provisions. In this
case, the parties undertake to replace the ineffective provisions with one that
comes as legally close as possible to the original intent of the Lease. If any
provisions relating to the performance of contractual obligation or to deadlines
are ineffective, they shall be replaced by such provisions as are provided for
by statute.
In all other cases, the relevant statutory provisions shall apply.
Garbage and industrial waste shall be disposed of by Sico Jena GmbH and the
Lessee charged separately for this service except where it disposes of garbage
and industrial waste itself.
The Lessee shall be responsible for ensuring compliance with regulations
governing occupational safety and fire protection on it Premises.
The Lessee shall be responsible for complying with all statutory regulation in
the area of environmental protection.
The Lessee shall be liable for any damage incurred by the Lessor as a result of
the former's failure to comply with any of the aforementioned obligations.
Additional provisions:
Signed in on this day of Signed in on this day of
19th August 1995 19th August 1995
Sico Jena GmbH Quartzchmelze ______________________________
Nadrag Marach Mohd Aslami
- - Managing Directors - President of FiberCore, Inc.
(Lessor)
_________________________ ______________________________
(Lessee)
Additions to Lease:
The Parties to the Lease
<PAGE>
Anlage 1
Raum - Nr.: qm
- --------------------------------------------------
100 T 1-28 56.10
1-29 18.20
2-23 110.30
4-14 39.00
4-15 40.90
4-16 35.30
4-17 37.20
4-18 37.20
4-19 20.00
4-20 57.80
4-21 135.60
4-22 394.30
4-23 8.00
4-24 6.80
4-25 5.00
4-26.1 6.90
4-26.2 11.80
4-27 52.80
4-28 40.80
4-29 79.80
4-30 207.70
4-33 5.90
4-34 7.20
4-35 6.60
4-36 7.10
4-37 35.00
4-38 36.10
4-39 27.50
Summe: 100T 1,526.90
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Raum - Nr.: qm
1-36 199.50
2-31 55.80
2-28 14.10
3-19 37.30
3-20 19.00
3-21 23.00
3-21.1 34.40
3-25 177.70
3-35 24.90
4-08 48.40
4-09 14.70 AuBenflache 102.70
4-31 66.60 AuBenflache/Ziehturm 80.00
4-32 55.10 Summe: 182.70
-----------------------------------
4-40 52.90
4-41 81.20
4-42 55.80
Summe: Normal 960.40
Gesamtaumme
vermietete Flache: 2,670.00
</TABLE>
<PAGE>
Anlace 3
Nicht im Mietzins enthaltene Betriebskosten. welche monatlich an die FIBERCORE
Jena GmbH gesondert weiterverrechnet warden.
Elektroenergie
*Tag*Nacht-Tarif
Fernwarme
*LTA
*Heizung
Wasser
*Kaltwasser
*Warmwasser
*Abwasser
*Filtratwasser
Gasa
*Wasserstoff
*Sauerstoff
*Stickstoff
Luft
*Druckluft
Chemiekalien
*Natronlauge
*Salzsaure
Fur die Edelgase ist FIBERCORE direkter Partner zum
zum Lieferanten. Alles was sonst moglich ist. sollte direkt beim Hersteller
bezogne werdern.
EXH10-22
AGREEMENT
Sico Jena GmbH Quarzschmelze ("Sico"), Goezechwitzer Strasse 20, 07745
Jena, Germany, FiberCore, Inc. ("CFI"), 174 Charlton Road, P.O. Box 206,
Sturbridge, Massachusetts 01566, USA, and FiberCore Jena GmbH ("FCJ") hereby
agree as follows:
1. The prior agreements (including but not limited to agreements
entered into on or as of August 19, 1995 and December l4, l395) between (i) Sico
(and/or Walter Nadrag) and CFI, (ii) Sico (and/or Walter Nadrag) and FCJ and
(iii) Sico (or Walter Nadrag) , FCJ, and CFI with respect to the purchase by FCJ
or CFI of certain equipment previously owned by Sico, are hereby superseded to
provide that the sale of such equipment shall be exclusively in consideration
for the issuance by FCI to Sico or its designee of 605,000 shares ("Shares")
(before adjustments for any stock splits) of common stock of CFI. The sale of
the equipment conveyed to CFI all right, title and interest therein subject only
to the restrictions included in Sico's original purchase thereof, none of which
restrictions shall materially interfere with FCI's or FCJ's intended use of the
equipment or the fair value thereof. Sico hereby confirms the prior receipt of a
certificate(s) representing the Shares which were issued in the name of its
designee and majority stockholder, Walter Nadrag.
2. CFI undertakes to register the resale of the Shares by Sico or its
designee pursuant to the Securities Act of 1933, as amended, at the earliest
date practicable.
3. The demands set forth in letters dated January 23 and 24, 1996 from
Sico to FCJ are hereby withdrawn and no past or future installment payments are
due, with respect to the equipment.
4. Counsel to Sico and CFI will promptly prepare such other
documentation as shall reasonably be required to effect the foregoing
agreements.
Sico, FCI and FCJ have executed this Agreement by their duly authorized
officers on January 25, 1996 .
SICO JENA GMBH QUARZSCHMELZE
By:_________________________________
Walter Nadrag
FIBERCORE, INC.
By:_________________________________
Mohd A. Aslami
FIBERCORE JENA GMBH
By:_________________________________
Mohd A. Aslami
AGREEMENT
Sico Jena GmbH Quarzschmelze ("Sico"), Goezechwitzer Strasse 20, 07745
Jena, Germany, FiberCore, Inc. ("CFI"), 174 Charlton Road, P.O. Box 206,
Sturbridge, Massachusetts 01566, USA, and FiberCore Jena GmbH ("FCJ") hereby
agree as follows:
1. The prior agreements (including but not limited to agreements
entered into on or as of August 19, 1995 and December l4, l395) between (i) Sico
(and/or Walter Nadrag) and CFI, (ii) Sico (and/or Walter Nadrag) and FCJ and
(iii) Sico (or Walter Nadrag) , FCJ, and CFI with respect to the purchase by FCJ
or CFI of certain equipment previously owned by Sico, are hereby superseded to
provide that the sale of such equipment shall be exclusively in consideration
for the issuance by FCI to Sico or its designee of 605,000 shares ("Shares")
(before adjustments for any stock splits) of common stock of CFI. The sale of
the equipment conveyed to CFI all right, title and interest therein subject only
to the restrictions included in Sico's original purchase thereof, none of which
restrictions shall materially interfere with FCI's or FCJ's intended use of the
equipment or the fair value thereof. Sico hereby confirms the prior receipt
o(pound) a certificate(s) representing the Shares which were issued in the name
of its designee and majority stockholder, Walter Nadrag.
2. CFI undertakes to register the resale of the Shares by Sico or its
designee pursuant to the Securities Act of 1933, as amended, at the earliest
date practicable.
3. The demands set forth in letters dated January 23 and 24, 1996 from
Sico to FCJ are hereby withdrawn and no past or future installment payments are
due, with respect to the equipment.
4. Counsel to Sico and CFI will promptly prepare such other
documentation as shall reasonably be required to effect the foregoing
agreements.
Sico, FCI and FCJ have executed this Agreement by their duly authorized
officers on January 25, 1996 .
SICO JENA GMBH QUARZSCHMELZE
By:_________________________________
Walter Nadrag
FIBERCORE, INC.
By:_________________________________
Mohd A. Aslami
FIBERCORE JENA GMBH
By:_________________________________
Mohd A. Aslami
EXH10-23
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of this 11th day of January, 1996 between TECHMAN
INTERNATIONAL CORPORATION, INC. ("the Purchaser") and FIBERCORE, INC. ("the
Company") a Nevada Corporation.
WHEREAS the Purchaser and the Company executed a Term Sheet dated
January 3, 1996 for purchase and sale of 200,000 shares of the Company's common
stock; and
WHEREAS pursuant to the Term Sheet the Purchaser and the Company are
required to document such purchase and sale;
NOW THEREFOR in consideration of the premises and the mutual covenants
and agreements herein contained the parties agree as follows:
1. Offer
1.1 The Purchaser hereby agrees to purchase 200,000 shares of the Company's
common stock at the purchase price of $5.00 per share subject to the conditions
hereinafter set forth;
1.2 Upon execution and delivery of this Agreement by both parties the Purchaser
will pay to the Company the sum of $100,000 (which amount has been previously
paid) and execute and deliver to the Company a secured promissory note in the
amount of $900,000 in the form of Exhibit A attached hereto.
1.3 Upon acceptance of the offer and in addition to the delivery of the 200,000
shares of the Company to the Purchaser, the Company shall deliver to Purchaser
150,000 warrants, granting the Purchaser the right to purchase 150,000 common
shares of the Company for a purchase price of $6.00 per share exercisable in
whole or in part at any time within a 2 year period.
1.4 Upon the execution by all of the partners of Fiber Optic Industries Limited
("FOI") of all of the documents required to complete the formation of FOI, the
Company will issue 42,500 shares of its common stock to the Purchaser.
1.5 Upon the execution of an exclusive supply agreement between the Company and
FOI for the supply of preforms, the Company will issue to the Purchaser 42,500
shares of its common stock.
2. Acceptance
2.1 The Company agrees to sell to the Purchaser 200,000 Shares at the
subscription price of $5.00 per Share subject to the terms and conditions of
this Agreement, to deliver the 150,000 warrants referred to in clause 1.3, and
to deliver the shares referred to in clauses 1.4 and 1.5 upon the occurrence of
the events described therein.
<PAGE>
3 Delivery of Shares and Warrants
3.1 Upon payment of the purchase price for the 200,000 shares, the Company shall
deliver to the Purchaser one or more stock certificates registered in the name
of the Purchaser, and shall deliver the warrants registered in Purchaser's name.
4. Representations and Warranties of the Company
4.l The Company hereby represents and warrants to, and covenants with the
Purchaser as follows:
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws of the state of
Nevada and is in good standing under such laws. The Company is not in violation
of its Certificate of Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation of its properties
and assets, and to carry on its business as presently conducted or now proposed
to be conducted.
(b) Corporate Action. The Company has all the necessary corporate power
and has taken the corporate action required to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company for the authorization, execution, delivery, and performance
of this Agreement by the Company, the authorization, sale, issuance, and
delivery of the Shares and the performance of the Company's obligations
hereunder has been taken. This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms. The issuance of the shares does not
require any further corporate action, will not be subject to preemptive rights
or other preferential rights in any present stockholders of the Company and will
not conflict with any provisions of any agreement to which the Company is a
party or by which it is bound.
(c) Capitalization, Status of Capital Stock. The Company has a total
authorized capitalization consisting of 20,000,000 shares of Common Stock, $.01
par value. Schedule A attached hereto lists outstanding shares, options and
warrants as of January 3, 1996.
(d) Government Approvals. No authorization, consent, approval, license,
exemption, from or filing of registration with any court of governmental
department, commission, board, bureau, agency or instrumentality, domestic, or
foreign, is or will be necessary for the execution and delivery by the Company
of this Agreement, except for certain filing under state securities laws the
offer and sale of the shares will be exempt from the registration requirements
of applicable federal and state securities laws.
(e) Compliance with Other Instruments. Neither the execution, issuance
and delivery of this Agreement or the shares, nor the consummation by the
Company of any transaction contemplated hereby or thereby, constitutes or
results in or will constitute or result in a default or violation of any term or
provision of the charter and By-laws of the Company, as amended and in
<PAGE>
effect, and the terms and provisions of the mortgages, indentures, leases,
agreements, and other instruments and of all judgments, decrease, governmental
orders, statutes rules, or regulation by which the Company or its properties are
bound.
(f) Financial Statements. The audited financial statements for the
period ending December 31, 1994 previously supplied to an officer of the
Purchaser and the related statements of shareholders equity and cash flows and
notes thereto, all of which are accompanied by the related audit opinion of the
Company's independent certified public accountants, Mottle, McGrath & Company
have been prepared in accordance with generally accepted accounting principals
applied on a consistent basis throughout the period covered by such statements
and present fairly the Company's financial condition and results of operations
and statements of cash flows as of the dates indicated.
5. Purchaser Representations
5.1 In connection with this subscription, the Purchaser hereby makes the
following acknowledgment and representations:
(a) The execution of this Agreement has been duly authorized by all
necessary action on the part of the Purchaser, has been duly executed and
delivered, and constitutes a valid, legal, binding, and enforceable agreement of
the Purchaser;
(b) The Purchaser is acquiring the Shares for it own account, for
investment, and not with a view to any "distribution" thereof within the meaning
of the Securities Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Shares have not been
registered under the Act, it cannot dispose of any of the Shares unless such
Shares are subsequently registered under the Act or exemptions from such
registration are available. The Purchaser acknowledges, and understand that, it
has no right to require the Company to register the Shares. The Purchaser
further understands that the Company may, as a condition to the transfer of any
of the Shares, require that the request for transfer be accompanied by an
opinion of counsel, in form and substance satisfactory to the Company, to the
effect that the proposed transfer does not result in a violation of the Act,
unless such transfer is covered by an effective registration statement under the
Act. The Purchaser understands that each certificate representing the shares
will bear the following legend or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933. These securities
have been acquired for investment and not with a view to
distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the
Securities Act of 1933, or an opinion of counsel satisfactory
to the corporation that registration is not required under
such Act.
<PAGE>
(d) The Purchaser understands the offering is being made pursuant to
the exemption from registration with the Securities and Exchange Commission (the
"Commission") afforded by
Section 4 (2) of the Act and/or Regulation D adopted by the Commission relating
to transactions by an issuer not involving any public offering, and similar
federal, state, and foreign laws or policies. Consequently, the memorandum and
related offering materials have not been subject to review and comment by the
staff of the commission or by any state or foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to ask questions of
and receive answers from the Company concerning the terms and conditions of its
investment, and to obtain any additional information of the same kind that is
specified in Part I of a Registration Statement on Form SB-2 under the Act, or
that obtained. The Purchaser or its purchaser representative has examined the
information furnished by the Company and, through discussions and examination of
such materials as the Purchaser has requested, has obtained sufficient
information upon which to make an investment decision. The Purchaser is familiar
with the type of investment which the shares constitute, and has reviewed the
merit and risks of this investment to the extent deemed advisable by the
Purchaser. The Purchaser has such knowledge and experience in financial and
business affairs that it is capable of evaluation the merits and risks of
investing in the shares, and acknowledges that it is able to bear the economic
risks of this investment. Further, the Purchaser understands all matters in this
Agreements.
(f) The investment in the Company by the Purchaser does not constitute
a principal portion of the Purchaser's total assets and the Purchaser is able to
afford a complete loss of the investment contemplated herein.
6. Covenants of the Company
6.1 Annual Reports. The Company agrees to use its best efforts to deliver to the
Purchaser, as soon as practicable after the end of each fiscal year and in any
event within 120 days thereafter, a consolidated balance sheet of the Company as
at the end of such fiscal year, a consolidated Statement of Cash Flow of the
Company for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants selected by the Company.
6.2 Quarterly Reports. The Company agrees to use its best efforts to deliver to
the Purchaser as soon as practicable after the end of each of the first three
quarterly fiscal periods in each fiscal year and in any event within 60 days
thereafter, a consolidated balance sheet of the Company as at the end of such
period, a consolidated statement of operations and a consolidated statement of
Cash Flow of the Company for such period, in each case prepared in accordance
with generally accepted accounting principles consistently applied and setting
forth in comparative form the figures for the corresponding periods of the
previous fiscal year, all in reasonable detail and certified; subject to changes
resulting from audit adjustments, by the principal financial or accounting
officer of the Company.
<PAGE>
6.3 Inspection. The Company agrees to permit any authorized representative of
the Purchaser to visit the Company to discuss its affairs and finances with its
officers, all upon reasonable notice to the Company, at such reasonable times
and as often as may be reasonably requested.
6.4 Purchaser's Right to Receive Reports. The Company shall deliver the reports
or give the rights specified in Paragraph 6.1, 6.2, and 6.3 to the Purchaser
until the earlier of: (i) the closing date of the Company's first underwritten
public offering pursuant to an effective registration statement filed under the
Act; or (ii) until the Purchaser no longer holds any shares.
7. No Waiver
7.1 Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser, the Purchaser does not thereby or in
any other manner waive any rights granted to it under federal and state
securities laws.
8. Survival of Representation Warranties and Agreements
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations, and warranties made by the Company
and the Purchaser herein shall survive the execution of this Agreement, the
delivery to the Purchaser of the shares being purchased and the payment
therefor.
9. Transferability
9.1 The Purchaser agrees not to transfer or assign this Agreement, or any of its
interest herein and further agrees that any assignment or transfer of the shares
shall be made only in accordance with applicable securities laws and that an
appropriate legend with respect there to may be placed by the Company on any
certificate evidencing such Shares.
10. Miscellaneous
10.1 Notices. All notices or other communications given or made hereunder shall
be in writing and shall be delivered to the Purchaser at:
Techman International Corporation, Inc.
240 Sturbridge Road
Charlton City, MA 01508
and to the Company at:
174 Charlton Road
P.O. Box 206
Sturbridge, MA 01566
<PAGE>
10.2 Governing Law. This Agreement shall be construed in accordance with the
governed by the laws of the Commonwealth of Massachusetts without giving effect
to the conflict of laws.
10.3 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by all parties.
10.4 Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and by the Purchaser.
10.5 Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
10.6 Severability. In case any provision contained in this Agreement should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
10.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts, have been signed by each party hereto and delivered to
the other party.
10.8 Pronouns. All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons, firm or
other entity may require in the context thereof.
IN WITNESS WHEREOF that parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
TECHMAN INTERNATIONAL CORPORATION, INC.
By:___/s/___________________________
Title: Chairman/CEO
FIBERCORE, INC.
By:___/s/___________________________
Mohd A. Aslami
Title: Chairman/CEO
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$900,000 Sturbridge, MA
January 11, 1996
FOR VALUE RECEIVED, Techman International Corporation, Inc., a
Massachusetts corporation ("Payor") hereby unconditionally promises to pay to
the order of FiberCore, Inc., a Nevada corporation ("Payee") at its address at
174 Charlton Rd, Sturbridge, MA, 01566, the principal sum of Nine Hundred
Thousand Dollars ($900,000) as follows:
Payment Due Date Principal Amount
---------------- ----------------
March 31, 1996 $100,000
April 30, 1996 $100,000
May 31,1996 $100,000
June 30, 1996 $100,000
July 31, 1996 $100,000
August 31, 1996 $100,000
September 30, 1996 $100,000
October 31, 1996 $100,000
November 30, 1996 $100,000
Interest shall accrue and be paid on the unpaid principal amount of this
promissory note at the London Interbank Offered Rate (LIBOR) for six month
deposits as quoted in The Wall Street Journal on the business day immediately
preceding each Payment Due Date. Accrued interest shall be paid on each Payment
Due Date.
This Promissory Note is secured by a collateral assignment of all of
Payor's right, title and interest in 285,000 shares of Payee's common stock and
150,000 warrants to purchase 150,000 shares of Payee's common stock, as further
described in a Share Purchase Agreement, of even date) between Payor and Payee.
Payor will execute such documents and take all action necessary or advisable, as
requested by Payee, to perfect Payee's security interest in the shares of common
stock and warrants and otherwise to carry out the interest and purposes of this
collateral assignment.
This Promissory Note may be prepaid in whole or in part at any time or
from time to time without penalty or premium, together with interest accrued on
the amount so prepaid.
The principal amount of this Promissory Note and interest accrued
thereon shall become immediately due and payable, without presentation, protest,
notice or further demand, all of which are expressly waived, in the event of the
default in any payment of interest or principal when due or in the event of the
filing by or against the Payor of a petition in bankruptcy or reorganization or
insolvency.
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to
be duly executed and delivered as of the date set forth above.
Techman International Corporation, Inc.
By:___/s/_________________________
Title: Chairman/CEO
EXH10-24
THIS AGREEMENT made as of
the 13th day of April, 1995.
BETWEEN:
FIBERCORE INCORPORATED
a body corporate duly incorporated
under the laws of the State of Nevada
in the United States of America Alberta
(hereinafter called the Vendor)
OF THE FIRST PART
-and-
MIDDLE EAST SPECIALIZED CABLES CO
a body corporate duly incorporated
under the laws of the Kingdom of Saudi Arabia
(hereinafter called the Purchaser)
OF THE SECOND PART
-and-
SHAWMUT BANK N.A.
Of the City of Boston,
in the Commonwealth of Massachusetts
(hereinafter called the Escrow Agent)
OF THE THIRD PART
ESCROW AGREEMENT
WHEREAS by Agreement dated the 13th day of April, 1995 the Purchaser
agreed to purchase 200,000 shares of FIBERCORE INCORPORATED hereinafter called
"the Purchase Agreement", the Shares and "the Vendor" respectively for the sum
of $1,000,000.00 in two blocks of 100,000 shares;
AND WHEREAS the Purchaser and its Saudi Arabian partners have agreed to
enter into a joint Venture in the Middle East with the Purchaser and others and
to enter a contract for the exclusive supply of products produced by the vendor
for sale and distribution in the Middle East;
AND WHEREAS the Vendor, in consideration of the Purchaser and its
partners entering into the agreement for the exclusive purchase of the products
produced by the Vendor for sale and distribution in the Middle East (the
"Exclusive Supply Agreement") has agreed to deliver
<PAGE>
150,000 additional shares of the Vendor and 150,000 warrants to purchase shares
of the Vendors all as more specifically set forth in the Purchase Agreement;
AND WHEREAS the Purchaser has advised the Vendor that its nominees are
those persons or corporations listed in Schedule "A" attached to this Agreement
and the percentage of shares to which each is entitled under the Share Purchase
Agreement is set forth after each of their names and it has been agreed by the
parties that all shares to be delivered to the Purchaser pursuant to the terms
of this Agreement shall be delivered to these nominees in those percentages.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements contained herein the parties hereto do agree as
follows:
1. The Vendor shall deliver to the Escrow Agent and the Escrow
Agent shall receive the following documents which shall be
held by the Escrow Agent in escrow subject to the terms and
conditions of this Agreement:
a) Share certificate(s) for 85,000 shares of the capital
stock of the Vendor in the name of the Purchaser or
its nominees;
b) 150,000 Share Warrants granting the Purchaser or its
nominees the right to purchase 150,000 shares of the
capital stock of the Vendor for $6.00 per share any
time within 2 years of the date of the Purchase
Agreement.
c) Share certificate(s) for 65,000 shares of the capital
stock of the Vendor in name of the Purchaser or its
nominees;
which documents are hereinafter called "the escrow documents"
2. The Escrow Agent shall hold the escrow documents in escrow
undelivered and:
a) shall deliver the 85,000 shares and the 150,000
warrants described in paragraphs 1(a) and l(b) to the
Purchaser's nominees fifteen (15) days after receipt
by the Escrow Agent of a copy of the Exclusive Supply
Agreement signed by MEFC which may be either an
original or one which has been confirmed as a true
copy of the original by a Notary Public;
b) shall deliver to the Purchaser's nominees the 65,000
shares referred in clause 1(c) fifteen (15) days
after receiving a Notice of Exercise of the Warrants
which contains a confirmation by both the Purchaser
and the Vendor that the warrants referred to in
clause l(c) have been exercised and the consideration
for the shares has been received by the Vendor;
c) shall deliver to the Purchaser's nominees a portion
of the 65,000 shares referred to in clause 1(c)
fifteen (15) days after receiving a Notice of
<PAGE>
Partial Exercise of the Warrants containing a
confirmation by both the Purchaser and the Vendor
that a specified number of warrants has been
exercised and the consideration for those shares has
been received by the Vendor. The portion of the
65,000 shares which shall be delivered by the Escrow
Agent shall be determined by multiplying the number
of warrants which have been exercise, as shown by the
Notice, by a factor of .4333 (43.33%). The result
shall be rounded down to a whole number and that
shall be the number of shares to be delivered to the
Purchaser's nominees. When the cumulative total of
the warrants exercised, as shown by the Notices of
Partial Exercise of Warrants, reaches 150,000 the
Escrow Agent shall deliver any additional shares
which may remain in escrow to the Purchaser's
nominees.
d) In the event that the conditions precedent to the
delivery of the shares and warrants referred to in
clause 2(a) shall not have been satisfied prior to
the 13th day of April, 1996, then upon the Vendor
delivering a Declaration by the President or Chief
Executive Officer of the Vendor duly sworn and
notarized stating that:
(i) the agreement for exclusive supply of
products by the purchaser to the Joint
venture company Middle East FiberCore has
not been executed by MEFC.
(ii) Proof of delivery of a 60 day written Notice
to the Purchaser specifying that, the
Exclusive Supply Agreement not having been
executed the Vendor intends to take
redelivery of the escrow documents
shall deliver the escrow documents to Vendor unless then prohibited by
an Order of a Court of competent jurisdiction or unless the purchaser
shall before then have delivered to the Escrow Agent the Exclusive
Supply Agreement duly executed by MEFC.
e) In the event that all of the warrants have not been
exercised by the 13th day of April, 1997 and there
remains any portion of the shares held pursuant to
clause l(c) then the Escrow Agent, unless and except
as otherwise directed by the Vendor, shall deliver
the remaining shares to the Vendor,
3. Any notice to be given under this Agreement shall be duly and
properly given delivered to the Vendor or the Purchaser at the
addresses following their names:
a) To the Purchaser: c/o Derek M. Bridges LL.B.
Barrister and Solicitor
3527 18th Street S.W.
Calgary, Alberta, T3C 2V8
Tel: (403) 243-8360
Fax: (403) 243-1886
<PAGE>
b) To the Vendor: FiberCore Incorporated
174 Charlton Rd.
P.O. Box 206
Sturbridge, MA 01566
Tel: (508) 347-7744
Fax: (508) 347-2778
c) To the Escrow Agent: Paul G. Grenier
Shawmut Bank N.A.
Corporate Trust Department
3101 1 Federal Street
Boston, Ma 02211
Tel: (617) 292-4267
Fax: (617) 292-4289
or such other address as the Purchaser, the Vendor the escrow agent may
from time to time designate by notice in writing to the other.
4. The Escrow Agent shall have no responsibility in respect of
loss of the escrow documents except his duty to exercise such
care in the safekeeping thereof as he would exercise as if the
escrow documents were his property.
5. This agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent hereto and
no implied duties or obligations shall be read into this
agreement against the Escrow Agent. The Escrow Agent may act
in reliance upon any instrument or signature believed to be
genuine and may assume that any person purporting to give any
writing, notice or instructions pursuant to the provisions
hereof has been duly authorized to do so. The Escrow Agent may
act relative hereto upon advice of counsel in reference to any
mater connected herewith and shall be fully protected in any
action taken in good faith in accordance with such advice. The
Escrow Agent shall not be required to defend any legal
proceedings which may be instituted against it in respect of
the subject mater of these instructions unless requested in
writing to do so by the undersigned parties and indemnified to
its satisfaction against the cost and expenses of such
defense. The Purchase and the Vendor each severally and
jointly covenant and agree to indemnify the Escrow Agent for,
and to hold it harmless against, any loss, liability or
expense incurred by it and arising out of or in connection
with the administration of this agreement, including the costs
and expenses of defending itself against any claim of
liability hereunder, in each case in the absence of bad faith,
gross negligence or willful malfeasance on the part of the
Escrow Agent.
6. In the event that the Escrow Agent shall die or resign during
the term of this Agreement and the Purchase Agreement, then
the Vendor is required to appoint another escrow agent and to
notify the Purchaser thereof; the Vendor shall then be
<PAGE>
required to obtain from the other escrow agent a declaration binding him to the
terms of this Agreement.
7. This Agreement shall not be revoked, assigned or modified as
to any of its terms and conditions except by consent in
writing signed by all of the parties hereto and consented to
by the Escrow Agent.
8. This Agreement shall be binding upon the successors and
assigns of each of the parties hereto.
9. The Vendor shall pay to the Escrow Agent as consideration for
its services hereunder the fees set forth on Schedule I
hereto, at the times and in the manner set forth herein;
10. This Agreement shall be construed in accordance with the
internal laws of the Commonwealth of Massachusetts without
regard to principles of conflict of laws.
11 . This Agreement shall not be assigned by any party without
the consent of the other parties. The obligations created
hereby shall be binding upon the successors and permitted
assigns of all parties hereto.
12. The duties of the Escrow Agent hereunder shall terminate upon the
latest occur of the return of the escrow documents to the Vendor pursuant to
Section 4(c) and the delivery of all remaining shares to the Purchaser to
Section 4(b) or to the Vendor pursuant to section 4(d).
IN WITNESS WHEREOF the parties hereto have hereunto affixed their hand and seals
this ______ day of _____________________________ ,A.D., 1995.
FIBERCORE INCORPORATED
per: ___/s/___________________________
MIDDLE EAST SPECIALIZED CABLES CO.
per: _________________________________
SHAWMUT BANK N.A.
per: _________________________________
<PAGE>
SCHEDULE A
MUNAB INVESTMENTS LIMITED - 88%
MANSOUR ABDUL AZIZ MOHAMED KAKI - 12%
EXH10-25
THIS AGREEMENT made this 13th day of April, 1995.
BETWEEN:
FIBERCORE INCORPORATED
a body corporate duly incorporated
under the laws of the State of Nevada,
one of the United States of America
(hereinafter called the Vendor)
OF THE FIRST PART
-and-
MIDDLE EAST SPECIALIZED CABLES CO.
a body corporate duly incorporated
under the laws of the Kingdom of Saudi Arabia
(hereinafter called the Purchaser)
OF THE SECOND PART
-and-
SHAWMUT BANK, N.A.
of the City of Boston,
in the State of Massachusetts
(hereinafter called the Escrow Agent)
OF THE THIRD PART
ESCROW AMENDING AGREEMENT
WHEREAS by an Escrow dated the 13th day of April, 1995 between the
parties hereto the Escrow Agent agreed to hold and deliver certain shares and
warrants of the Vendor as required by the provisions of a Share Purchase
Agreement dated April 13, 1995 between the Purchaser and the Vendor;
AND WHEREAS by reason of the merger of the Vendor with Venturecap Inc.,
a Nevada corporation in July of 1995 and an increase in the authorized share
capital of the merged Company, the Purchaser and the Vendor have amended the
Share Purchase Agreement of April 13th 1995 by an agreement dated the 15th day
of September 1995;
AND WHEREAS it is incumbent upon the parties hereto to amend the Escrow
Agreement to reflect the changes in the Share Purchase Agreement:
<PAGE>
NOW THEREFORE THIS AGREEMENT: WITNESSETH that in consideration of the
mutual covenants and agreements contained herein the parties hereto do agree as
follows:
l. That the Escrow Agreement dated April 13th 1995 between the parties is
hereby amended as follows:
by deleting Sections 1 and 2 of the said agreement and substituting the
following:
1. The Vendor shall deliver to the Escrow Agent and the Escrow
Agent shall receive the following documents which shall be
held by the Escrow Agent in escrow subject to conditions of
this Agreement:
(a) Share certificate(s) for 312,061 shares of the
capital stock of the Vendor in the in the name of the
purchaser or its nominees;
(b) 550,696 Share Warrants granting the Purchaser or its
nominees the right to purchase 550,696 shares of the
capital stock of the Vendor for $1.63429 per share
any time within 2 years of the date of the Agreement;
(c) Share certificate(s) for 238,635 shares of the
capital stock of the Vendor in name of the Purchaser
or its which documents are hereinafter called "the
escrow documents".
2. The Escrow agent shall hold the escrow documents in escrow
undelivered and:
(a) shall deliver the 312,061 shares and the 550,696
warrants described in the amended paragraphs l(a) and
l(b) of the Amended Share Purchase Agreement fifteen
(15) days after receipt by the Escrow Agent of a
notarially certified copy of the Agreement for
exclusive supply of products by the Purchaser to the
joint venture company Middle East Fiber Cable (MEFC)
executed by the MEFC (the "Exclusive Supply
Agreement");
(b) shall deliver to the Purchaser the 238,635 shares
referred to in clause l(c) of the Amended Share
Purchase Agreement fifteen (15) days after receiving
a Notice of Exercise of the Warrants, specifying that
the warrants referred to in clause l(c) have been
exercised and confirmed by both the Purchaser and the
Vendor. In the event of a partial exercise of the
warrants fifteen (15) days after receiving a Notice
of Partial Exercise of the Warrants which has been
confirmed by the Purchaser and the Vendor the Escrow
Agent shall deliver the number of shares specified in
it;
2. In all other respects the terms and conditions of the Escrow Agreement of
April 13th, 1995 are confirmed and ratified and shall remain binding upon the
heirs, executors, administrators and assigns of each of the parties hereto.
<PAGE>
IN WITNESS WHEREOF the parties hereto have hereto affixed their hands
and seals this 15th day of September l995.
FIBERCORE INCORPORATED
per: ___/s/___________________
MIDDLE EAST SPECIALIZED CABLES CO.
per: __/s/____________________
SHAWMUT BANK N.A.
per: __/s/____________________
EXH10-26
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of this 13th day of April, 1995 between MIDDLE
EAST SPECIALIZED CABLES CO. ("the Purchaser") and FIBERCORE, INCORPORATED ("the
Company") a Nevada Corporation.
WHEREAS the Purchaser with others entered into a Joint Venture
Agreement Term Sheet dated March 14th, 1995 (the "JV Term Sheet") for the
formation of Middle East Fiber Cables Co. ("MEFC") in the Kingdom of Saudi
Arabia to engage in the manufacture and sale of fiber optic cable products and
to sell and distribute such products throughout the Middle East, Africa and
Turkey; and
WHEREAS pursuant to the JV Term Sheet MEF is required to confirm the
purchase of shares of the Company's common stock (the "Shares") and the
Purchaser and MEF desire that the Purchaser acquire such Shares pursuant to the
terms and conditions of this agreement;
NOW THEREFORE in consideration of the premises and the mutual covenants
and agreements herein contained the parties agree as follows:
1. Offer.
1.1 The Purchaser hereby agrees to subscribe for and purchase 200,000 shares of
the Company at the purchase price of $5.00 per share in two blocks of 100,000
shares subject to the conditions hereinafter set forth;
1.2 Upon execution and delivery of this agreement by both parties the Purchaser
will pay to the Company the sum of $500,000 against delivery of the first block
of 100,000 shares of the Company subject to the terms and conditions of this
offer (the "first closing").
1.3 Upon acceptance of the offer and in addition to the delivery of the 100,000
shares of FiberCore to the Purchaser, the Company shall:
a) deliver into escrow 85,000 shares of FiberCore in
consideration of the Purchaser and its partners agreeing to
enter into a contract for the exclusive supply of FiberCore
products to the MEFC Joint Venture. The escrowed shares are to
be released to the Purchaser upon the completion and execution
of the product supply contract between the Company and MEFC.
b) deliver into escrow 150,000 warrants, granting the Purchaser
the right to purchase 150,000 common shares of FiberCore for a
purchase price of $6.00 per share exercisable in whole or in
part at any time within a 2 year period. The escrowed warrants
to be delivered as further consideration for the purchaser and
its partners agreeing to enter into the contract for the
exclusive supply of FiberCore products to the MEFC Joint
Venture. The warrants are to be delivered to the Purchaser
immediately following execution of the product supply
agreement by the MEFC Joint Venture.
<PAGE>
c) deliver into escrow 65,000 shares of FiberCore to be released
to the purchaser immediately upon the Purchaser exercising its
rights to purchase shares pursuant to the terms of the
warrants referred to in clause 1.3 (b).
1.4 The offer for the second block of shares is conditional upon the parties
hereto reaching an agreement as to the terms of a joint venture company, Middle
East Fiber Cables Co. ("MEFC") to be formed in the Kingdom of Saudi Arabia to
engage in the manufacture and sale of fiber optic products and to sell and
distribute such products throughout the Middle East, Africa and Turkey.
1.5 Upon execution by all of the partners of MEFC of all of the documents
required to complete the formation MEFC and to define the respective interests,
obligation and restrictions on each of the joint venture partners including the
exclusive product supply agreement with the Company, Purchaser will pay to the
Company the further sum of $500,000 against delivery of the second block of
100,000 shares subject to the terms and conditions of this offer (the "second
closing") and the Vendor shall cause to be delivered to the Purchaser:
a) the 85,000 shares of the Company referred to in clause 1.3
(a);
b) the 150,000 warrants referred to in clause 1.3 (b);
c) confirmation by the escrow agent that the 65,000 shares of the
Company are being held for release to the purchaser pending
exercise of the warrants referred to in clause 1.3 (b).
2. Acceptance.
2.1 The Company agrees to sell to the Purchaser 200,000 Shares at the
subscription price of $5.00 per Share in two blocks of 100,000 Shares each
subject to the terms and conditions of this offer and to deliver the 150,000
shares of the Company and the 150,000 warrants referred to in clause 1.3 (a) (b)
and (c) to an escrow agent approved by the purchaser. The Company further agrees
that upon receipt of the purchase price of the second block of 100,000 shares
the entire amount of the said purchase price ($500,000.00) for the said block of
shares shall be invested in MEFC as a capital contribution to the joint venture
by Company or its wholly owned subsidiary and the company or its subsidiary
shall acquire a 20% interest in MEFC upon payment of the said funds.
3. Delivery of Shares and Warrants.
3.1 At the first closing upon payment of the purchase price for the first block
of 100,000 shares, the Company shall deliver to the Purchaser one or more stock
certificates registered in the name of the Purchaser, an executed escrow
agreement and a confirmation from the escrow agent that the shares and the
warrants referred to in clause 1.3 have been delivered to the escrow agent for
release pursuant to the terms of this Agreement. Within two business days prior
to the first closing, the Purchaser shall notify the Company in writing of the
names in which all shares and warrants are to be registered.
<PAGE>
3.2 At the second closing and upon payment of the purchase price for the second
block of Shares, the Company shall deliver to the Purchaser one or more stock
certificates registered in the name of the Purchaser or in such name or names as
may be designated by the Purchaser and delivery of the shares referred to in
clause 1.3 (a) and the warrants referred to in clause 1.3 (b) registered in the
name of the Purchaser or in such name or names as may be designated by the
Purchaser.
4. Representations and Warranties of the Company.
4.l The Company hereby represents and warrants to, and covenants with the
Purchaser as follows:
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws of the state of
Nevada and is in good standing under such laws. The Company is not in violation
of its Certificate of Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation of its properties
and assets, and to carry on its business as presently conducted or now proposed
to be conducted. The Company is duly qualified as a foreign corporation in each
jurisdiction in which ownership of its property or the nature of its business
requires such qualification and where the failure to be so qualified would be
material to the Company.
(b) Corporate Action. The Company has all the necessary corporate power
and has taken the corporate action required to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company, its Director and Stockholders necessary for the
authorization, execution, delivery, and performance of this Agreement by the
Company, the authorization, sale, issuance, and delivery of the Shares and the
performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company enforceable in accordance
with its terms. The issuance of the securities does not require any further
corporate action, will not be subject to preemptive rights or other preferential
rights in any present stockholders of the Company and will not conflict with any
provisions of any agreement to which the Company is a party or by which it is
bound.
(c) Capitalization, Status of Capital Stock. The Company has a total
authorized capitalization consisting of 20,000,000 shares of Common Stock, $.01
par value, of which 6,594,264 shares are issued and outstanding. All outstanding
shares of Common Stock have been duly and validly authorized and issued, are
fully paid and nonassessable and were not issued in violation of or subject to
any preemptive or other similar rights to subscribe for or purchase any
securities. The Shares, when issued and delivered in accordance with the terms
hereof will be duly authorized, validly issued, fully-paid and non-assessable.
The Company will reserve 400,000 shares of its common stock for issuance under a
Stock Option Plan. All issued and
<PAGE>
outstanding warrants options or other agreements to acquire shares of the
Company are set forth in Schedules "A" and "B" hereof and these shares, when
issued and delivered in accordance with the terms of the warrants, options or
other agreements will be duly authorized, validly issued, fully paid and
non-assessable. AMP Incorporated is lending $5,000,000 to the Company and has
the right to convert the loan into common stock pursuant to the term sheet
attached hereto as Schedule "B" subject to the approval of the Board of
Directors of the both companies. Except as provided or described in this Stock
Purchase Agreement, there is no other option, warrant, conversion privilege, or
other contractual rights presently outstanding to purchase or otherwise acquire
any authorized but unissued shares of the company's capital stock or other
securities of the Company.
(d) Disclosure. To the Company's knowledge and belief, neither this
Agreement, the Private Placement Memorandum dated October 12th, 1994 (the
"Memorandum") as supplemented by this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchaser by or on
behalf of the Company in connection with the transaction contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no material fact within the special knowledge of any of the
executive officers of the Company which has not been disclosed herein or in
writing by them to the Purchaser and which materially adversely affects the
business, properties, assets or condition of the Company.
(e) Government Approvals. No authorization, consent, approval, license,
exemption, from or filing of registration with any court of governmental
department, commission, board, bureau, agency or instrumentality, domestic, or
foreign, is or will be necessary for the execution and delivery by the Company
of this Agreement, for the offer, issue, sale and delivery of the shares, or for
the performance by the Company of its obligations under this Agreement, except
for certain filing under state securities laws, the offer and sale of the shares
will be exempt from the registration requirements of applicable federal and
state securities laws.
(f) Litigation. There is no material litigation or governmental
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company affecting any of its properties or assets, or
against any officer, key employee or the Company, nor, to the knowledge of the
Company, has there occurred any event or does there exist any condition on the
basis of which any litigation, proceeding or investigation might properly be
instituted. The Company is not in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency applicable to it. There are no actions or proceedings pending
or threatened or any basis therefore known to the Company which might result,
either in any case or in the aggregate, in any material adverse change in the
business, operations, affairs or condition of the Company or in any of its
properties or assets, or which might call into question the ability of the
Company to consummate the transactions contemplated by this Agreement.
(g) Compliance with Other Instruments. Neither the execution, issuance
and delivery of this Agreement or the shares, nor the consummation by the
Company of any transaction
<PAGE>
contemplated hereby or thereby, constitutes or results in or will constitute or
result in a default or violation of any term or provision of the charter and
By-laws of the Company, as amended and in effect, and the terms and provisions
of the mortgages, indentures, leases, agreements, and other instruments and of
all judgments, decrees, governmental orders, statutes rules, or regulations by
which the Company or its properties are bound.
(h) Taxes. The Company has prepared and timely filed all federal, state
and other tax return required by law to be filed by it, has paid or made
provisions for the payment of all taxes known to be due and all additional
assessments, and adequate provision has been made for all current taxes and
other charges to which the Company is subject.
(i) Indebtedness. Except for the accrued expenses of this offering,
patent reviews and filing, or expenses incurred in the ordinary course of
business since December 31, 1994, the Company has no outstanding indebtedness
and it is not in default of any contract or agreement of the Company.
(j) Financial Statements. The audited financial statements for the
period ending December 31, 1993 attached to the Memorandum and the related
statements of shareholders equity and cash flows and notes thereto, all of which
are accompanied by the related audit opinion of the Company's independent
certified public accountants, Mottle, McGrath & Company and unaudited Balance
Sheet, Income Statement, Cash Flow and Administrative Expenses for period ending
December 31st, 1994 have been prepared in accordance with generally accepted
accounting principals applied on a consistent basis throughout the period
covered by such statements and present fairly the Company's financial condition
and results of operations and statements of cash flows as of the dates
indicated. Except as otherwise disclosed herein, since December 31st, 1994 there
has not been:
(i) any change in the assets, liabilities, financial
condition, or operations of the Company from that
reflected in the Financial Statements except changes
in the ordinary course of business which have not
been, either in any individual case or in the
aggregate, materially adverse;
(ii) any change, except in the ordinary course of
business, in the contingent obligations of the
Company, whether by way of guaranty, endorsement,
indemnity, warranty, or otherwise;
(iii) any damage, destruction, or loss, whether or note
covered by insurance, materially and adversely
affecting the properties or business of the Company;
(iv) any declaration or payment of any dividend or other
distribution of the assets of the Company;
(v) any labor organization activity; or
<PAGE>
(vi) to the best of the Company's knowledge, any other
event or condition of any character which has
materially and adversely affected the Company's
assets, liabilities, financial condition, or
operations.
(k) Patents and Other Intangible Rights. The Company owns, or is
licensed to use, rights to all patents, trade names, service marks, trademarks,
copyrights, and other intellectual property necessary to carry on its business
as currently conducted or proposed to be conducted as described in the
Memorandum, with any such licensed rights being adequate both in scope and
duration for such purposes. Except as may be disclosed in the Memorandum, to the
best of its knowledge the Company is not infringing upon or otherwise acting
adversely to any right or claimed right of any person under or with respect to
any patents, patent rights, trademarks, service marks, copyrights, trade names,
or any other third-party rights except for such infringement or other adverse
action which would not, individually or in the aggregate, have a material
adverse effect on the financial condition or business of the Company.
5. Purchaser Representations
5.1 In connection with this subscription, the Purchaser hereby makes the
following acknowledgment and representations:
(a) The execution of this Share Purchase Agreement has been duly
authorized by all necessary action on the part of the Purchaser, has been duly
executed and delivered, and constitutes a valid, legal, binding, and enforceable
agreement of the Purchaser;
(b) The Purchaser is acquiring the Shares for it own account, for
investment, and not with a view to any "distribution" thereof within the meaning
of the Securities Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Shares have not been
registered under the Act, it cannot dispose of any of the Shares unless such
Shares are subsequently registered under the Act or exemptions from such
registration are available. The Purchaser acknowledges, and understand that, it
has no right to require the Company to register the Shares. The Purchaser
further understands that the Company may, as a condition to the transfer of any
of the Shares, require that the request for transfer be accompanied by an
opinion of counsel, in form and substance satisfactory to the Company, to the
effect that the proposed transfer does not result in a violation of the Act,
unless such transfer is covered by an effective registration statement under the
Act. The Purchaser understands that each certificate representing the Securities
will bear the following legend or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933. These securities
have been acquired for investment and not with a view to
distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the
Securities Act of 1933, or an opinion of counsel satisfactory
to the corporation that registration is not required under
such Act.
(d) The Purchaser understands the offering is being made pursuant to
the exemption from registration with the Securities and Exchange Commission (the
"Commission") afforded by Section 4 (2) of the Act and/or Regulation D adopted
by the Commission relating to transactions by an issuer not involving any public
offering, and similar federal, state, and foreign laws or policies.
Consequently, the memorandum and related offering materials have not been
subject to review and comment by the staff of the commission or by any state or
foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to ask questions of
and receive answers from the Company concerning the terms and conditions of its
investment, and to obtain any additional information of the same kind that is
specified in Part I of a Registration Statement on Form SB-2 under the Act, or
that is necessary to verify the accuracy of the other information obtained. The
Purchaser or its purchaser representative has examined the Memorandum and other
information furnished by the Company and, through discussions and examination of
such materials as the Purchaser has requested, has obtained sufficient
information upon which to make an investment decision. The Purchaser is familiar
with the type of investment which the shares constitute, and has reviewed the
merit and risks of this investment to the extent deemed advisable by the
Purchaser. The Purchaser has such knowledge and experience in financial and
business affairs that it is capable of evaluation the merits and risks of
investing in the shares, and acknowledges that it is able to bear the economic
risks of this investment. Further, the Purchaser understands all matters in this
Agreements.
(f) The investment in the Company by the Purchaser does not constitute
a principal portion of the Purchaser's total assets and the Purchaser is able to
afford a complete loss of the investment contemplated herein.
6. Covenants of the Company
6.1 Annual Reports. The Company agrees to use its best efforts to deliver to the
Purchaser, as soon as practicable after the end of each fiscal year and in any
event within 120 days thereafter, a consolidated balance sheet of the Company as
at the end of such fiscal year, a consolidated Statement of Cash Flow of the
Company for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants selected by the Company.
6.2 Quarterly Reports. The Company agrees to deliver to the Purchaser as soon as
practicable after the end of each of the first three quarterly fiscal periods in
each fiscal year and in any event within 60 days thereafter, a consolidated
balance sheet of the Company as at the end of such period, a consolidated
statement of operations and a consolidated statement of Cash Flow of the Company
for such period, in each case prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year, all in
reasonable detail and certified, subject to changes resulting from audit
adjustments, by the principal financial or accounting officer of the Company.
6.3 Inspection. The Company agrees to permit any authorized representative of
the Purchaser to visit the Company to discuss its affairs and finances with its
officers, all upon reasonable notice to the Company, at such reasonable times
and as often as may be reasonably requested.
6.4 Purchaser's Right to Receive Reports. The Company shall deliver the reports
or give the rights specified in Paragraph 6.1, 6.2, and 6.3 to the Purchaser
until the earlier of: (i) the closing date of the Company's first underwritten
public offering pursuant to an effective registration statement filed under the
Act; or (ii) until the Purchaser no longer holds any shares.
7. No Waiver
7.1 Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser, the Purchaser does not thereby or in
any other manner waive any rights granted to it under federal and state
securities laws.
8. Survival of Representation Warranties and Agreements
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations, and warranties made by the Company
and the Purchaser herein shall survive the execution of this Agreement, the
delivery to the Purchaser of the shares being purchased and the payment
therefor.
9. Conditions to Obligations of Purchaser
The obligation of the Purchaser to purchase the Shares on the dates of
the first closing and the second closing is subject to the fulfillment on or
prior to each such closing of the following conditions, any or all of which may
be waived at the option of the Purchaser:
9.1 Representations and Warranties Correct. The representations and warranties
made by the Company in Section 4 hereof shall be true and correct in all
material respects on the date of the first closing and the second closing with
the same force and affect as if they had been made on and as of the said dates.
9.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the date of the first
closing and second closing shall have been performed or complied with in all
material respects.
9.3 Opinion of Company's Counsel. The Purchaser shall have received from
Cadwalader, Wickersham & Taft, counsel to the Company, an opinion addressed to
it, dated the date of each closing substantially to the effect that:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nevada, and has all
requisite corporate power and authority to own its properties and conduct its
business;
(b) The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $0.01 per value per share;
(c) The certificates evidencing the Shares to be delivered hereunder
are in due and proper form under Nevada law, and when duly authorized and
delivered to the Purchaser or upon the Purchaser's order against payment of the
agreed consideration therefor in accordance with the provision of this
Agreement, the Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, will not have been issued in violation of
or subject to any preemptive rights or, to such counsel's knowledge, in
violation of any other rights to subscribe for or purchase securities;
(d) Assuming compliance by the Company and by the Purchaser with this
Agreement, the offer, sale and issuance of the Shares in conformity with the
terms of the Agreement will not require registration under the U.S. Securities
Act of 1933 as amended;
(e) The Company has the requisite corporate power and authority to
enter into this Agreement and to sell and deliver the Shares to be sold by it;
this Agreement has been duly and validly authorized by all necessary corporate
action by the Company, has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of the Company,
enforceable in accordance with its terms;
(f) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not violate any
statute, rule or regulation, or, to such counsel's knowledge, any judgment,
decree or order of any court or governmental body having jurisdiction over the
Company or any of its property;
9.4 No Order Pending. There shall not then be in affect any order enjoining or
restraining the transactions contemplated by this Agreement.
9.5 No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Shares.
9.6 Certificate Regarding Corporate Authority. The Company shall have delivered
to the Purchaser the resolutions of the company's Board of Directors authorizing
the execution and performance of this Agreement, in each case certified to be a
true and correct copy by the Secretary of the Company, together with the
certification that each resolution and actions have not been modified or amended
and remain in full force and effect.
<PAGE>
9.7 Compliance Certificate. The Company shall have delivered to the Purchaser a
certificate executed on behalf of the Company by the Chairman of the Board and
Chief Executive Officer and Chief Financial Officer of the Company on each
closing date certifying to the fulfillment of the conditions specified in
Sections 9.1 and 9.2.
10. Conditions to Obligations of the Company.
The Company's obligation to sell and issue the shares at each Closing
is subject to the fulfillment on or prior to such closing of the following
conditions, any or all of which may be waived at the option of the Company:
10.1 Representations and Warranties Correct. The representations and warranties
made by the Purchaser in Section 5 hereof shall be true and correct in all
material respects on the date of such closing with the same force and affect as
if they had been made on and as of that date.
10.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchaser on or prior to the date of such
closing shall have been performed or complied with in all material respects.
10.3 No Order Pending. There shall not then be in affect any order enjoining or
restraining the transactions contemplated by this Agreement.
10.4 No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Shares.
11. Transferability
11.1 The Purchaser agrees not to transfer or assign this Share Purchase
Agreement, or any of its interest herein, and further agrees that any assignment
or transfer of the shares shall be made only in accordance with applicable
securities laws and that an appropriate legend with respect there to may be
placed by the Company on any certificate evidencing such Shares.
12. Miscellaneous
12.1 Notices. All notices or other communications given or made hereunder shall
be in writing and shall be delivered to the Purchaser at:
Middle East Specialized Cables Co.,
P.O. Box 60536
Riyadh 11555, Saudi Arabia
or sent by facsimile transmission to #966-1-493-5818
<PAGE>
and to the Company at:
174 Charlton Road
P.O. Box 206
Sturbridge, MA 01566
or sent by facsimile transmission to (508) 347-2778
12.2 Governing Law. This Share Purchase Agreement shall be construed in
accordance with the governed by the laws of the Commonwealth of Massachusetts
without giving effect to the conflict of laws.
12.3 Entire Agreement. This Share Purchase Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by all parties.
12.4 Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and by the Purchaser.
12.5 Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
12.6 Severability. In case any provision contained in this Agreement should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
12.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts, have been signed by each party hereto and delivered to
the other party.
12.8 Pronouns. All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons, firm or
other entity may require in the context thereof.
<PAGE>
IN WITNESS WHEREOF that parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
MIDDLE EAST SPECIALIZED CABLES CO.
per:___/s/___________________________
FIBERCORE, INC.
per:___/s/___________________________
Witness: ___/s/_______________________
Charles DeLuca
EXH10-27
SHARE PURCHASE AMENDING AGREEMENT
THIS AGREEMENT made this 15th day of September between MIDDLE EAST
SPECIALIZED CABLES CO. ("the Purchaser") and FIBERCORE INCORPORATED ("the
Company") a Nevada Corporation.
WHEREAS the Purchaser entered into a Share Purchase Agreement of the
13th day of April 1995 for the purchase 200,000 shares of the Company upon
certain terms and conditions as more particularly set forth in the said
agreement;
AND WHEREAS the Company amalgamated with Venturecap, Inc. pursuant to
the terms of an agreement and plan of reorganization dated the 18th day of July
1995;
WHEREAS pursuant to terms of the amalgamation agreement and plan of
reorganization the authorized share capital of Venturecap Inc. at the time of
the merger would be increased to 100,000,000 Common shares and 10,000,000 shares
of preferred stock with a par value of $.001 per share and the shares of the
shareholders of FiberCore Incorporated would be converted to shares of
Venturecap Inc. on an exchange ratio of 3.6713070 of Venturecap Inc. for each
share of FiberCore Incorporated held;
AND WHEREAS the shares of the Company which the Purchaser agreed to
purchase pursuant to the April 13th Agreement have not yet been issued and it is
desirable to clarify and define the number or shares and warrants which will now
be issued to the Purchaser as a result of the merger and alteration in
authorized share capital of the merged company.
NOW THEREFORE in consideration of the premises and the mutual covenants
and agreements herein contained the parties agree as follows:
1. SECTION 1 of the Agreement of April 13th 1995 between the parties is hereby
amended by deleting Sections 1 "Offer", Section 2 "Acceptance" and Section 3
"Delivery of Shares and Warrants" and substituting the following new Sections 1,
2 and 3 therefor:
Offer
1.1 The Purchaser hereby agrees to subscribe for and purchase
734,262 shares of the Company at the purchase price of
$1.36191 in two blocks of 367,131 and shares subject to the
conditions hereinafter set forth.
1.2 Upon execution and delivery of this agreement by both parties
the Purchaser will pay to the Company the sum of $500,000
against delivery of the first block of 367,131 shares of the
Company subject to the terms and conditions of this offer (the
"first closing").
<PAGE>
1.3 Upon acceptance of the offer and in addition to the delivery
of the 367,131 shares of FiberCore to the Purchaser, the
Company shall:
a) deliver into escrow 312,061 shares of the FiberCore
in consideration of the Purchaser and its partners
agreeing to enter into a contact for the exclusive
supply of FiberCore products to the MEFC Joint
Venture. The escrowed shares are to be released to
the Purchaser upon the completion and execution of
the product supply contract between the Company and
MEFC;
b) deliver into the escrow 550,696 warrants, granting
the Purchaser the right to purchase 550,696 common
shares of FiberCore Incorporated for a purchase price
of $1.63429 per share exercisable in whole or in part
at any time within a 2 year period. The escrowed
warrants are to be delivered as further consideration
for the Purchaser and its partners agreeing to enter
into the contract for the exclusive supply of
FiberCore products to the MEFC Joint Venture. The
warrants are to be delivered to the Purchaser
immediately following execution of the product supply
agreement by the MEFC Joint Venture;
c) deliver into escrow 238,635 shares of FiberCore to be
released to the Purchaser immediately upon the
Purchaser exercising its rights to purchase shares
pursuant to the terms of the warrants referred to in
clause 1.3 (b).
1.4 The offer for the second block of shares is conditional upon
the parties hereto reaching an agreement as to the terms of a
joint venture company, Middle East Fiber Cables Co. ("MEFC")
to be formed in the Kingdom of Saudi Arabia to engage in the
manufacture and sale of fiber optic products and to sell and
distribute such products throughout the Middle East, Africa
and Turkey.
1.5 Upon execution by all of the partners of MEFC of all of the
documents required to complete the formation MEFC and to
define the respective interest, obligation and restrictions on
each of the joint venture partners including the exclusive
product supply agreement with the Company, the Purchaser will
pay to the Company the further sum of $500,000 against
delivery of the second block of 367,131 Shares subject to the
terms and conditions of this offer (the "second closing") and
the Vendor shall cause to be delivered to the Purchaser:
a) the 312,061 shares of the Company referred to in
clause 1.3 (a);
b) the 550,696 warrants referred to in clause 1.3 (b);
c) confirmation by the escrow agent that the 238,635
shares of the Company are being held for release to
the purchaser pending exercise of the warrants
referred to in clause 1.3 (b).
<PAGE>
Acceptance
2.1 The Company agrees to sell to the Purchaser 734,264 Shares at
the subscription price of $1.36191 per Share in two blocks of
367,132 Shares each subject to the terms and conditions of
this offer and to deliver the 312,061 shares of the Company
referred to in clause 1.3(a), the 550,696 warrants referred to
in clause 1.3(b) and the 238,635 shares referred to in clause
1.3(c) to the Escrow Agent approved by the Purchaser. The
company further agrees that upon receipt of the purchase price
for the second block of 367,131 Shares, the entire amount of
the said purchase price ($500,000.00) for the said block of
shares shall be invested in MEFC as a capital contribution to
the joint venture by Company of its wholly owned subsidiary
and the Company or its subsidiary shall acquire a 15% interest
in MEFC upon payment of the said funds.
Delivery of Shares and Warrants
3.1 At the first closing upon payment of the purchase price for
the first block of 357,131 shares, the Company shall deliver
to the Purchaser one or more stock certificates registered in
the name of the Purchaser, an executed escrow agreement and a
confirmation from the Escrow Agent that the shares and the
warrants referred to in clause 1.3 have been delivered to the
escrow agent for release pursuant to the terms of this
Agreement. Within two business days prior to the first
closing, the Purchaser shall notify the Company in writing of
the names in which all shares and warrants are to be
registered.
3.2 At the second closing and upon the payment of the purchase
price for the second block for Shares, the Company shall
deliver to the Purchaser one or more stock certificates
registered in the name of the Purchaser or in such name or
names as may be designated by the Purchaser and delivery of
the shares referred to in clause 1.3(a) and the warrants
referred to in clause 1.3(b) registered in the name of the
Purchaser or in such name or names as may be designated by the
Purchaser.
2. All other terms, warranties and representations contained in the agreement of
April 13th, 1995 between the parties (other than the representation as to the
authorized capital of the company which has been increase to 100,000,000 Common
shares and 10,000,000 shares of preferred stock with a par value of $.001 per
share) are hereby confirmed and remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF that parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
MIDDLE EAST SPECIALIZED CABLES CO.
per:___/s/______________________________
FIBERCORE, INC.
per:___/s/______________________________
EXH10-28
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this "Agreement") is entered into
effective as of this 17th day of April, 1995, by and between FiberCore
Incorporated, a Nevada corporation (hereinafter the "Corporation") and AMP
INCORPORATED, a Pennsylvania corporation (hereinafter the "Purchaser").
RECITALS
A. The Corporation desires to raise money by the sale of a debenture
convertible into shares of Common Stock of the Corporation (the
"Debenture") to the Purchaser.
B. The Purchaser desires to purchase the Debenture from the Corporation and
the Corporation desires to issue and sell the Debenture to the Purchaser on
the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, In consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereto
hereby agree as follows:
1. Authorization and Sale of Debenture.
a. Authorization. The Corporation will authorize on or before
the Closing (as defined below) the issuance of a convertible debenture in the
principal amount of $5,000,000 convertible into the Corporation's Common Stock
in the form attached hereto as Exhibit A (the "Debenture") and the sale of the
Debenture to the Purchaser.
b. Sale of Convertible Debenture. Subject to the terms and
conditions hereof, the Corporation will issue and sell to the Purchaser, and the
Purchaser will purchase from the Corporation at the "Closing" (as defined below)
the Debenture.
2. Issuance and Payment.
a. Closing.
i) Subject to the terms and conditions hereof, the
closing of the purchase and sale of the Debenture (the "Closing") shall be held
(via facsimile transmittal and wire transfer) on April 17, 1995 at the offices
of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York, at 10:00
a.m., local time, or at such other time and place upon which the Corporation and
the Purchaser shall agree (the date of the Closing is hereinafter referred to as
the "Closing Date").
<PAGE>
b. Purchaser's Closing Conditions. The obligation to the
Purchaser to purchase the Debenture is subject to the satisfaction on or prior
to the Closing of the following conditions:
i) The Corporation shall have duly performed and
complied with each of the terms, agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing, and
the Corporation shall have delivered a certificate, executed by the President or
Vice President of the Corporation, to such effect;
ii) Each of the representations and warranties of the
Corporation contained herein or in any other documents delivered at or prior to
the Closing shall be true and accurate on and as of the Closing with the same
effect as though made on and as of such date and the Corporation shall have
delivered a certificate of the Corporation executed by its President or any Vice
President to such effect;
iii) All instruments and documents required to carry
out this Agreement or incidental thereto, shall be reasonable satisfactory to
the Purchaser, and the Purchaser shall have been furnished with certified copies
of all corporate actions and proceeding taken by the Corporation to authorize
the execution, delivery and performance of all relevant documents to be executed
and delivered by the Corporation;
iv) No action, suit, proceeding or investigation by
or before any court, administrative agency or other governmental authority shall
have been instituted or threatened to restrain, prohibit or invalidate the
transactions contemplated by this Agreement;
c. Corporation's Closing Conditions. The obligation of the
Corporation to participate in the Closing is subject to the satisfaction on or
prior to the Closing of the following conditions:
i) The Purchaser shall have duly performed and
complied with in all material respects each of the terms, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing and the Purchaser shall have delivered a certificate
of the Purchaser executed by a duly authorized officer of the Purchaser to such
effect;
ii) Each of the representations and warranties of the
Purchaser contained herein and in any other documents delivered at or prior to
each Closing shall be true and accurate on and as of the Closing with the same
effect as though made on and as of such date and the Purchaser shall have
delivered a certificate, executed by the Purchaser or a duly authorized officer
of the Purchaser to such effect;
iii) All instruments and documents required to carry
out this Agreement or incidental thereto, shall be reasonably satisfactory to
the Corporation and the Corporation shall have been furnished with certified
copies of all corporate actions and
<PAGE>
proceedings taken by the Purchaser to authorize the execution, delivery and
performance of all relevant documents to be executed and delivered by the
Purchaser; and
iv) No action, suit, proceeding or investigation by
or before any court, administrative agency or other governmental authority shall
have been instituted or threatened to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
d. Closing Sale. At the Closing, the Purchaser shall deliver
to the Corporation the purchase price for its Convertible Debenture in cash, by
certified check , or bank wire transfer and upon receipt thereof the Corporation
will deliver to the Purchase a duly executed Convertible Debenture.
3. Corporation's Representations and Warranties. Except as set forth in
Exhibit C attached hereto, the Corporation hereby represents and warrants
effective as of the Closing as follows:
a. Corporate Organization and Standing. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Corporation has the requisite corporate power to
carry on its business as presently conducted and as proposed or contemplated to
be conducted in the future and to enter into and carry out the provisions of
this Agreement and the transactions contemplated hereby. The Corporation is
presently qualified to do business as a foreign corporation in any jurisdiction
where the failure to be so qualified would have a material adverse affect on the
Company's business.
b. Subsidiaries. The Corporation has no subsidiaries, other
than FiberCore Glassfibre Jena GmbH, and does not otherwise own or control,
directly or indirectly, any equity interest in any corporation, association or
business, other than FiberCore Glassfibre Jena GmbH.
c. Corporate Capitalization.
i) The Corporation's authorized capital stock
consists only of 20,000,000 shares of Common Stock. The Corporation has not more
than 6,594,264 shares of Common Stock outstanding. The Corporation has issued
warrants, rights or options to purchase or acquire not more than 400,000 shares
of Common Stock and will reserve not more than 400,000 shares of Common Stock
for issuance under a stock option plan. There are no other shares of Common
Stock that are subject to purchase or acquisition from the Corporation pursuant
to any rights, options, warrants, convertible securities (other than the
Debentures) or agreements. All issued and outstanding shares of capital stock
are duly authorized, validly issued, fully paid and nonassessable. No person or
entity has any preemptive right to acquire any unissued shares of the
corporation.
ii) As of the date hereof, the Corporation does not
have any declared and unpaid dividends (whether payable in cash, securities or
other consideration).
<PAGE>
d. Authorization. All corporate action on the part of the
Corporation, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Corporation, the
authorization, sale, issuance, and delivery of the Debenture, the capital stock
issuable upon conversion of the Debenture (the "Conversion Shares") and the
performance of all of the Corporation's obligations hereunder has been taken or
will be taken prior to the Closing. This Agreement, and when executed and
delivered by the Corporation, the Debenture, shall continue valid and binding
obligations of the Corporation, enforceable in accordance with their respective
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Conversion Shares have been
duly and validly reserved and, when issued in compliance with the provisions of
the Debenture, will be validly issued, fully paid and nonassessable; and the
Debenture and the Conversion Shares will be free of any liens or encumbrance;
provided, however, that the Debenture and the Conversion Shares may be subject
to restrictions on transfer under state and/or federal securities laws.
e. Litigation. There are no actions, proceedings or
investigations pending or, to the Corporation's best knowledge, threatened
against or affecting the Corporation which, either individually or in the
aggregate, might result in any material adverse change in the business,
prospects, condition, affairs or operations of the Corporation or in any of its
properties or assets, or in any material impairment of the right or ability of
the Corporation to carry on its business as proposed to be conducted, or which
questions the validity of this Agreement or any action taken or to be taken in
connection herewith.
f. Governmental Consents. No consent, approval, order,
authorization or registration, qualification, designation, license, declaration
or filing with any Federal or State governmental authority is required on the
part of the Corporation in connection with the consummation of the transactions
contemplated herein, except those that have been obtained or made.
g. Title to Properties and Assets; Liens, etc. The Corporation
has good and marketable title to is properties and assets and good title so its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, or charge, other than (I) those resulting from taxes which have not
yet become delinquent, (ii) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the
operation of the corporation, and (iii) those that have otherwise arisen in the
ordinary course of business.
h. Patents and Trademarks. To the best of its knowledge, the
Corporation has sufficient trade names, copyrights, trade secrets, information,
proprietary title and ownership of all patents, trademarks, service marks,
rights and processes necessary for its business as now conducted, without any
conflict with or infringement of the rights of others. There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Corporation bound by or a party to any options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses,
<PAGE>
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. The Corporation is not aware that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Corporation
or that would conflict with the Corporation's business as proposed to be
conducted.
i. Compliance with Other Instruments. The Corporation is not
in violation of any term of its Articles or Bylaws, any mortgage, indenture,
contract, agreement, instrument, judgment, decree, order or, to its knowledge,
any statute, rule or regulation applicable to the Corporation which violation
would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of the Corporation. The execution,
delivery, and performance of, and compliance with, this Agreement and the
issuance and sale of the Debenture pursuant hereto and of the Conversion Shares
pursuant to the Debenture, will not result in any such material violation, or be
in conflict with or constitute a default under any such term, or result in the
creation of any mortgage, pledge, lien, encumbrance, or charge upon any of the
properties or assets of the Corporation. To the Corporation's knowledge, all
material instruments, licenses, contracts, leases or other agreements
(collectively "Contracts") to which the Corporation is a party are valid and
binding and in full force and effect in all material respects and the
Corporation has not been notified by any party thereto of any such party's
intention or desire to terminate or modify in any material respect any of such
Contracts, or of any claim or threat that the Corporation has breached any of
such Contracts.
j. Compliance with Laws. The Corporation is not in violation
of any applicable statute, rule, regulation, order or restriction of any
domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business of the ownership of its properties which
violation would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Corporation. To
the best of its knowledge, no governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are require to be filed in connection with the execution and
delivery of this Agreement, and the issuance of the Debenture or the Conversion
Shares, except as such has been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, as will be filed in
a timely manner.
4. Purchaser's Representations and Warranties. The Purchaser represents
and warrants to the Corporation that:
a. Investment. The Purchaser is acquiring the Debenture and
any Conversion Shares (hereinafter collectively the "Securities") for investment
for its own account, and not with a view to, or for resale in connection with,
any distribution thereof, and it has no present intention of selling or
distributing any such Securities. The Purchaser understands that the Securities
have not been registered under the Securities Act by reason of a specific
exception from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment as expressed
herein.
<PAGE>
b. Rule 144. the Purchaser acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. The Purchaser is aware
of the provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement under certain
circumstances.
c. No Public Market. The Purchaser understands that no public
market now exists for any securities issued by the Corporation and that it is
uncertain whether a public market will ever exist for any such securities.
d. Access to Data. The Purchaser has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information necessary or appropriate for
deciding whether or not to purchase the Securities. The Purchaser acknowledges
that no representations or warranties have been made by the Corporation or any
agent thereof except as set forth in this Agreement.
e. Investment Experience. The Purchaser is an "accredited
Purchaser" as that term is defined in Regulation D promulgated by the Securities
and Exchange commission.
f. Previous Investments. The Purchaser is a purchaser in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment contemplated
herein.
g. Risks. The Purchaser understands that an investment in the
Corporation involves a high degree of risk and is suitable only for investors
who can afford a loss of their entire investment and who have no need for
liquidity from their investment.
h. Governmental Consents. To the Purchaser's knowledge, no
consent, approval, order, authorization or registration, qualification,
designation, license, declaration or filing with any governmental authority is
required on the part of the Purchaser in connection with the consummation of the
transactions contemplated herein.
5. Restrictive Legends. Each certificate or other written documentation
representing any of the Securities which the Purchaser is purchasing or may
purchase hereunder any other securities issued upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event (unless no
longer required in the opinion of the counsel for the Corporation) shall be
stamped or otherwise imprinted with legends substantially in the following form
where applicable:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAW, AND
<PAGE>
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, OR THE HOLDER TO THE CORPORATION AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
AND THE QUALIFICATION REQUIREMENTS UNDER STATE LAW."
The Corporation shall be entitled to enter stop transfer notices on its
stock books with respect to the Securities.
6. Registration Rights. Purchaser is hereby granted the same rights to
registration of the Conversion shares under the Securities Act of 1933 and any
applicable state securities laws as has heretofore been granted to any
shareholder of the Corporation.
7. Collateral. Payment of unpaid principal sum and accrued interest
under the Debenture shall be secured by a first perfected security interest as
provided in the Collateral Assignment, Patent Mortgage and Security Agreement
attached hereto as Exhibit B (the "Interim Collateral") until such time as
Purchaser is granted a first perfected security interest in and to all of the
Intended Collateral as described in Exhibit D hereto. Promptly upon the pledge
by the Corporation of the Intended Collateral in the manner set forth in Exhibit
D hereto, the Purchaser shall release all of its right, title and interest in
the Interim Collateral and shall execute and deliver to the Corporation any and
all instruments as may be requested by the Corporation for the purpose of
effecting a release of all of the Purchaser's right, title and interest in and
to the Interim Collateral.
8. Miscellaneous.
a. Survival. The representations, warranties, covenants and
agreements made herein shall survive the Closing.
b. Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, and assigns the parties hereto.
c. Entire Agreement. This Agreement and the Exhibits attached
hereto and the other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between and among the parties with regard to
the subject matter hereof and thereof.
d. Notice. Any notice, payment, report or other communication
required or permitted to be given by one part to any other party by this
Agreement shall be in writing and shall be deemed received (i) at the time
served personally on the other party; (ii) two business days after being sent by
express, registered or certified first class mail, postage prepaid, addressed to
the other party or parties at its or their address or addresses as indicated
next to their
<PAGE>
signatures below, or to such other address as any addressee shall have
theretofore furnished to the other parties by like notice; (iii) one day after
being delivered to a recognized commercial courier for next day delivery to the
other party at the address described in clause (ii); or (iv) one day after being
sent by facsimile with the original sent by first class mail to the address
described in clause (ii).
e. Finder's and Broker's Fees. Each party hereto represents
and warrants that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, and hereby agrees to indemnify and
to hold the other harmless from any liability for any finder's or broker's fee
to any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which such indemnifying
person, or any of its employees or representatives, are responsible.
f. Titles and Subtitles. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.
g. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
h. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without regard to principals of conflicts of laws.
i. Use of Proceeds. The Corporation may use the proceeds of
this financing for general working capital purposes and for the purchase of
equipment.
j. Financial Statements. The Corporation shall deliver from
time to time to the Purchaser, as promptly as practicable after the date of
preparation thereof, copies of its monthly and quarterly unaudited financial
statements prepared in accordance with generally accepted accounting principles,
and within 4 months following the end of each fiscal year, copies of its annual
audited balance sheet, income statement and statement of cash flows and the
report thereon rendered by the Corporation's independent accountants.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year herinabove first written.
AMP INCORPORATED
470 Friendship Road, Mail Stop 176-034
Harrisburg, PA 17111
Attention: Corporate Development
By: _____________________________
(signature)
Print Name:_______________________
Title:____________________________
FiberCore Incorporated
174 Charlton Road
Sturbridge, MA 01566
By: ___/S/_______________________
(signature)
Print Name: Mohd Aslami
Title: President
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year herinabove first written.
AMP INCORPORATED
470 Friendship Road, Mail Stop 176-034
Harrisburg, PA 17111
Attention: Corporate Development
By: ____/s/_______________________
(signature)
Print Name: James E. Marley
Title: Chairman of the Board
FiberCore Incorporated
174 Charlton Road
Sturbridge, MA 01566
By: _____________________________
(signature)
Print Name: Mohd Aslami
Title: President
<PAGE>
INDEX OF EXHIBITS
Exhibit A Debenture
Exhibit B Collateral Assignment, Patent Mortgage and Security Agreement
Exhibit C Exceptions to Corporation's Warranties
Exhibit D Intended Collateral
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EXHIBIT A
THIS DEBENTURE AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING THIS DEBENTURE
AND/OR SUCH SECURITIES, OR THE HOLDER FURNISHES AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
AND THE QUALIFICATION REQUIREMENTS UNDER STATE LAW.
FIBERCORE INCORPORATED
Convertible Debenture
$5,000,000.00 April 17, 1995
1. Obligation. FOR VALUE RECEIVED, FiberCore Incorporated, a Nevada
corporation (the "Corporation"), hereby promises to pay to AMP INCORPORATED (the
"Holder"), on April 17, 2005 the principal sum of Five Million Dollars
($5,000,000.00), together with interest on such principal sum from the date
hereof until payment in full of the principal computed as set forth below.
Interest shall be due at maturity and shall be computed by adding simple
interest at the Applicable Rate for each Interest Period. The first Interest
Period shall commence on the date hereof and end on June 30, 1995. Each
successive Interest Period shall commence on the first day of the calendar
quarter (i.e., January 1, April 1, July 1, and October 1) and end on the last
day of such calendar quarter; provided however, the final Interest Period shall
end on the date of payment in full of the principal sum hereof. The Applicable
Rate for each Interest Period shall be determined by adding 1% to the London
Interbank Offered Rate (LIBOR) for three month deposits as quoted in The Wall
Street Journal dated the business day immediately preceding the commencement of
such Interest Period.
2. Prepayment. Upon not less than 30 days prior written notice to the
Holder, the Corporation may prepay this Debenture at any time and from time to
time, in whole or in part without penalty by payment of the principal sum to be
prepaid together with interest on such sum to the date of such prepayment. The
Corporation shall be required to prepay the entire principal sum and accrued
interest of this Debenture upon not less than thirty day's notice from the
Holder demanding such prepayment, which notice may be given only after the right
of conversion of this Debenture terminates pursuant to the fifth sentence of
Section 3 hereof.
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3. Conversion. All outstanding principal and accrued interest on this
Debenture is convertible, at the option of the Holder, at any time into fully
paid and nonassessable shares of the Corporation's Common Stock at the
conversion rate (the "Conversion Rate") of $4.25 per share for the five year
period from the date hereof, thereafter at the price per share paid by a third
party investor in the private sale of shares of Common Stock by the Corporation
immediately preceding any such conversion. Any such conversion shall be in the
minimum amount of $1,000,000 and integral multiples of $250,000; provided,
however, the final conversion may be for all of the remaining principal and
accrued interest. Any partial conversion of this Debenture shall be deemed a
conversion of the principal sum hereof until the entire principal amount is
converted. Thereafter, any conversion shall be of accrued interest. If the
Corporation is the issuer of securities to be sold by it under an effective
registration statement pursuant to the Securities Act of 1933, as amended, the
Corporation will provide no less than ten days prior notice thereof to the
Holder and all conversion rights hereunder will terminate upon the closing of
the sale by the Corporation of the securities covered by said registration
statement unless the Holder shall have converted this Debenture before said
date. In the event the Common Stock is split, subdivided or combined, the
Conversion Rate thereafter in effect shall be appropriately adjusted by the
Corporation to provide the Holder with the number of shares of Common Stock upon
conversion such Holder would have received on such split, subdivision or
combination if it had converted this Debenture immediately prior thereto. In the
event the Common Stock is reclassified or the Corporation merges or combines
with another entity in a transaction in which the holders of Common Stock
receive securities or other consideration in respect of such Common Stock, the
Holder shall be entitled after such event to convert this Debenture into the
kind and type of securities it would have received had the Holder converted this
Debenture immediately prior to such event.
4. Surrender and Cancellation of Debenture. Upon written notice of a
conversion by the Holder together with delivery of this Debenture to the
Corporation or its transfer agent, the applicable amount of outstanding
principal and accrued interest on this Debenture shall be converted. The
Corporation shall not be obligated to issue certificates evidencing the shares
of the securities issuable upon such conversion unless this Debenture is either
delivered to the Corporation or its transfer agent, or the Holder notifies the
Corporation or its transfer agent that this Debenture has been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection with this Debenture.
The Corporation shall, as soon as practicable after such delivery, or such
agreement and indemnification, issue and deliver at such office to the Holder of
this Debenture, a certificate for the securities to which the Holder shall be
entitled. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of closing of the transaction causing
conversion or the date of receipt of written notice by the Corporation from the
Holder causing conversion. The person entitled to receive the securities
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such securities on such date.
5. Collateral. This Debenture is issued to the Holder pursuant to a
Convertible Debenture Purchase Agreement dated the date hereof (the "Purchase
Agreement"). Pursuant to the Purchase Agreement, this Debenture is secured by
certain collateral.
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6. Debenture Confers No Rights As Shareholder. The Holder shall not
have any rights as a shareholder of the Corporation with regard to the shares
issuable hereunder prior to actual conversion hereunder.
7. Waivers. The Corporation hereby waives presentment, demand for
performance, notice of non-performance, protest, notice of protest and notice of
dishonor. No delay on the part of Holder in exercising any right hereunder shall
operate as a waiver of such right or any other right.
8. Assignment. The Holder shall not assign this Debenture without the
prior written consent of the Corporation which consent shall not be withheld
except for valid business reasons.
9. Applicable Law. This Debenture shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts applicable to
contracts between Massachusetts residents entered into and to be performed
entirely within the State of Massachusetts.
FiberCore Incorporated
By:_______________________
President
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EXHIBIT B
COLLATERAL ASSIGNMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT
THIS COLLATERAL ASSIGNMENT, PATENT MORTGAGE AND SECURITY AGREEMENT is
made as of the 17th day of April 1995, by and between FiberCore Incorporated, a
Nevada corporation ("Assignor"), and AMP Incorporated a Pennsylvania corporation
("Assignee").
A. Assignee is willing to purchase a convertible debenture (the
"Convertible Debenture"), from the Assignor pursuant to a Convertible Debenture
Purchase Agreement dated the date hereof (the "Purchase Agreement") and Assignor
desires to sell the Convertible Debenture to the Assignee. The Convertible
Debenture is or will be secured in part pursuant to the terms of the Purchase
Agreement.
B. In order to induce Assignee to purchase the Convertible Debenture,
Assignor has agreed to assign certain intangible property to Assignee for
purposes of securing the obligations of Assignor to Assignee under the
Convertible Debenture.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Assignment, Patent Mortgage and Grant of Security Interest. As
collateral security for the prompt and complete payment and performance of all
of Assignor's indebtedness, obligations and liabilities to Assignee under the
convertible Debenture, Assignor hereby assigns, transfers, conveys and grants a
security interest and mortgage to Assignee, as security, but not as an ownership
interest in and to Assignor's entire right, title and interest in, to and under
the following (all of which shall collectively be called the "Collateral"):
(a) All patents, patent application and like protections
including, without limitation, improvements, divisions, continuations,
renewals, reissues, extensions and continuous-in-part of the same,
including without limitation the patents and patent applications set
forth on Exhibit A attached hereto (collectively, the "Patents");
(b) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the
right, but not the obligation, to sue for and collect such damages for
said use or infringement of the intellectual property rights
identified above;
(c) All licenses or other rights to use any of the Patents and
all license fees and royalties arising from such use to the extent
permitted by such license or rights; and
(d) All amendments, extensions, renewals and extensions of any of
the Patents: and
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(e) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL, BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE PURCHASE AGREEMENT.
2. Authorization and Request. Assignor authorizes and requests that the
Commissioner of Patents and Trademarks record this conditional assignment.
3. Covenants and Warranties. Assignor represents, warrants, covenants
and agrees as follows:
(a) Assignor is now the sole owner of the Collateral, except
for non-exclusive licenses granted by Assignor to its customers in the ordinary
course of business.
(b) Performance of this Assignment does not conflict with or
result in a breach of any agreement to which Assignor is bound and this
Assignment constitutes an assignment.
(c) During the term of this Agreement, Assignor will not
transfer or otherwise encumber any interest in the Collateral, except for
non-exclusive licenses granted by Assignor in the ordinary course of business
set forth in this Assignment.
(d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Patents has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Patents violates the rights of any third part.
(e) Assignor shall promptly advise Assignee of any material
adverse change in the composition of the Collateral, including but not limited
to any subsequent ownership right of the Assignor in or to any Patent not
specified in this Assignment.
(f) Assignor shall (I) protect, defend and maintain the
validity and enforceability of the patents (ii) use its best efforts to detect
infringements of the Patents and promptly advise Assignee in writing of material
infringements detected and (iii) not allow any Patents to be abandoned,
forfeited or dedicated to the public without the written consent of Assignee,
which shall not be unreasonable withheld unless Assignor determines that
reasonable business practices suggest that abandonment is appropriate.
(g) This assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights in
such after acquired Collateral, in favor of Assignee a valid and perfected first
priority security interest in the collateral in the
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United States securing the payment and performance of the obligations evidenced
by the Debenture upon making the filings referred to in Section 3(h) below.
(h) To its knowledge, except for, and upon, the filing with
the United States Patent and Trademark Office necessary to perfect the security
interests and assignment created hereunder and except as has been already made
or obtained, no authorization, approval or other action by, and no notice to or
filing with, any U.S. governmental authority of U.S. regulatory body is required
either (I) for the grant by Assignor of the security interest granted hereby or
for the execution, delivery or performance of this Assignment by Assignor in the
United States, or (ii) for the perfection in the United States or the exercise
by Assignee of its right and remedies thereunder.
(i) All information heretofore, herein or hereafter supplied
to Assignee by or on behalf of Assignor with respect to the Collateral is
accurate and complete in all material respects.
(j) Assignor shall not enter into any agreement that would
materially impair or conflict with Assignor's obligations hereunder without
Assignee's prior written consent, which consent shall not be unreasonable
withheld. Assignor shall not permit the inclusion in any material contract to
which its become a party of any provisions that could or might in any way
prevent the creation of a security interest in Assignor's rights and interest in
any property included within the definition of the collateral acquired under
such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.
(k) Upon the Assignor obtaining actual knowledge thereof,
Assignor will promptly notify Assignee in writing of any event that materially
adversely affects the value of any material Collateral, the ability of Assignor
to dispose of any material Collateral of the rights and remedies of Assignee in
relation thereto, including the levy of any legal process against any of the
Collateral.
4. Assignee's Rights. Assignee shall have the right, but not the
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this Section 4.
5. Inspection Rights. Assignor hereby grants to Assignee and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Assignor, and any of Assignor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Assignor and as often as may be
reasonably requested, but not more than one (1) in every twelve (12) months;
provided, however, nothing herein shall entitle Assignee success to Assignor's
trade secrets and other proprietary information.
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6. Further Assurances; Attorney in Fact.
(a) On a continuing basis, Assignor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States patent and Trademarks Office and take all such action as may
be reasonable be deemed necessary or advisable, or as requested by Assignee, to
perfect Assignee's security interest in the Patents and otherwise to entry out
this intent and purposes of this Collateral Assignment, or for assuring and
confirming to Assignee the grant or perfection of a security interest in all
Collateral.
(b) Assignor hereby irrevocably appoints Assignee as
Assignor's attorney-in-fact, with full authority in the place and stead of
Assignor and in the name of Assignor, Assignee or otherwise, from time to time
in Assignee's discretion, upon Assignor's failure or inability to do so, so to
take any action and to execute any instrument which Assignee may deem necessary
or advisable to accomplish the purpose of this Collateral Assignment, including:
(i) To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature
to such modification by amending Exhibit A hereof, as appropriate, to
include reference to any right, title or interest in any Patents
acquired by Assignor after the execution hereof or to delete any
reference to any right, title or interest in any Patents in which
Assignor no longer has or claims any right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
constitute an Event or Default under the Assignment.
(a) The Assignor fails to pay, within ten (10) days after
notice thereof from the Assignee, any amounts due under the Convertible
Debenture at maturity or upon mandatory prepayment;
(b) Assignor commits any material breach of any warranty or
agreement made by Assignor in this Assignment and fails to cure such
breach within 30 days after notice thereof from the Assignee; or
(c) The Assignor shall (i) commence any proceeding seeking
relief under any bankruptcy, insolvency, reorganization or similar law
or seeking the appointment of a receiver, trustee, custodial or other
similar official for it or a substantial portion of its assets, (ii)
make a general assignment for the benefit of creditors, (iii) become
the subject
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of any proceeding referred to in clauses (i) or (ii) above which results
in the entry of an order for relief or any such appointment or which
proceeding remains undismissed for 60 days.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Assignee shall have the right to exercise all the remedies of a secured
party under the Massachusetts Uniform Commercial Code, including without
limitation the right to require Assignor to assemble the Collateral and any
tangible property in which Assignee has a security interest and to make it
available to Assignees at a place designated by Assignee. Assignee shall have a
nonexclusive, royalty free license to use the Patents to the extent reasonably
necessary to permit Assignee to exercise its rights and remedies upon the
occurrence of an Event of Default. Assignor will pay any expenses (including
reasonable attorney's fees) incurred by Assignee in connection with the exercise
of any of Assignee's rights hereunder, including without limitation any expense
incurred in disposing of the Collateral. All of Assignee's rights and remedies
with respect to the Collateral shall be cumulative.
9. Indemnity. Assignor agrees to defend, indemnify and hold harmless
Assignee and its officers, employees, and agents against; (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Assignee during the
continuance of an Event of Default as a result of or in any-way arising out of
the exercise by the Assignor of its rights and remedies whether under this
Assignment or otherwise (including without limitation, reasonable attorneys fees
and reasonable expenses), except for losses arising form or out of Assignee's
gross negligence or willful misconduct.
10. Reassignment. At the earlier to occur of (i) such time as Assignor
shall completely satisfy all of the obligations secured hereunder, or (ii) the
Convertible Debenture is secured by the Intended Collateral as provided for in
the Purchase Agreement, Assignee shall execute and deliver to Assignor all
deeds, assignments, and other instruments as may be necessary or proper to
reinvest in Assignor full title to the property assigned hereunder, subject to
my disposition thereof which may have been made by Assignee pursuant hereto.
11. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
12. Attorneys' Fees. If any action relating to this Assignment is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and disbursements.
13. Amendments. This Assignment may be amended only by a written
instrument signed by both parties hereto.
14. Counterparts. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
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15. Law and Jurisdiction. This Assignment shall be governed by the laws
of the Commonwealth of Massachusetts, without regard for choice of law
provisions. Assignor and Assignee commit to the nonexclusive jurisdiction of any
state or federal court located in Massachusetts.
16. Confidentiality. In handling any confidential information, Assignee
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Assignment
except that the disclosure of this information may be made (I) to the affiliates
of the Assignee, (ii) to prospective transferee or purchasers of an interest in
the obligations secured hereby, provided that they have entered into comparable
confidentiality agreement in favor of Assignor and have deliver a copy to
Assignor, (iii) as required by law, regulation, rule or order, subpoena judicial
order or similar order and (iv) as may be required in connection with the
examination, audit or similar investigation of Assignee.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment on
the day and year first above written.
Address of Assignees: Assignor:
FiberCore Incorporated
P.O. Box 206
174 Charlton Road
Sturbridge, MA 01566
By:____________________________
Name: Mohd Aslami
Title: President
Address of Assignee: Assignee:
AMP Incorporated
470 Friendship Road, Mail Stop 176-034
Harrisburg, Pennsylvania 17111
Attention: Corporate Development
By:____________________________
Name: James E. Marley
Title: Chairman of the Board
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EXHIBIT A
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<CAPTION>
United States Patent (19) (11) Patent Number: 4,596,589
Perry (45) Date of Patent: June 24, 1986
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<S> <C>
[54] METHOD FOR PRODUCING A SINGLE Attorney, Agent, or Firm - Howard A. Kenyon
MODE FIBER PREFORM
[76] Inventor: Gregory A. Perry, 2693 Wood [57] ABSTRACT
Hollow Dr., Dorsville, GA 30360
A method for fabricating a single mode fiber
[21] Appl. No.: 378,484 preform is described. The method consists of
placing a core rod in a glass lathe, sliding a
[22] Filed: February 9, 1984 barrier tube over the core rod, partially attaching
the barrier tube to the core rod, rotating and heating
[51] 1st Cl4.....................C03B 37/018: C03B 37/012 the barrier tube, and traversing the heat sources until
[52] U.S. Cl.............................68/3.12; 65/3.11 the barrier tube collapses onto the core rod. A second
[58] Field of Search...............65/3.11, 13. 3.12, 3.2 tube of high purity quartz called a primary jacket tube
is then slipped over the combination fabricated from
[56] Reference Cited the core rod and barrier tube, rotating and heating the
primary jacket tube, and traversing the heat source
U.S. PATENT DOCUMENTS until the primary jacket tube collapses onto the barrier
tube. A third tube of high purity quartz called a
3,711,262 1/1973 Keck et al...................65/3.11 secondary jacket tube is then slipped over the comb-
3,826,560 7/1974 Schultz.....................65/212 % ination fabricated from the core, barrier tube and
3,901,474 8/1975 Strsck et al.................65/3.11 primary jacket tube, partially attaching the secondary
3,933,454 1/1976 DeLuca.......................65/3.12 jacket tube to the primary jacket tube, rotating and
4,062,665 12/1977 Isawa et al..................65/13 % heating the secondary jacket tube, and traversing the
4,089,586 5/1978 French et al...............350/94.30 heat source until the secondary jacket tube collapses
4,154,891 5/1979 French et al...............65/3.11 % over the primary jacket tube to form a single mode
fiber preform.
FOREIGN PATENT DOCUMENTS
16 Claims, 5 Drawing Figures
54.131043 10/1979 Japan.........................65/3.11
57.92334 6/1982 Japan.......................65/3.11
Primary Examiner - Kenneth M. Schor
DIAGRAM
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EXHIBIT C
EXCEPTIONS TO CORPORATION'S WARRANTIES AND REPRESENTATIONS
Section
3c(i) The Corporation has executed a terms sheet with
Middle East Specialized Cables Company for a
prospective joint venture which includes among its
terms the purchase by the joint venture partner of
286,000 shares of Common Stock. The Corporation is
presently negotiating to reduce this number of
shares.
Subject to approval of the boards of directors of the
Corporation and Automated Light Technologies, the
Corporation anticipates acquiring Automated Light
Technologies Inc.
for approximately 1,400,000 shares of Common Stock.
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EXHIBIT D
INTENDED COLLATERAL
The Intended Collateral shall consist of one or more, and any
combination of (such number and combination to be determined by the Corporation
in its sole discretion), items of Eligible Equipment (as defined below) that
together shall have, as of the date on which such items are pledged as
contemplated under the agreement of which this Exhibit D forms a part (such
agreement, the "Purchase Agreement") an aggregate Collateral Value (as defined
below) of not less than $5,000,000.
"Eligible Equipment" shall include any of the following types of
equipment: (a) preform lathe with delivery systems, (b) draw tower; (c) strength
tester; (d) tube cleaning system; (e) over jacketing lathe; (f) etching
facility; (g) scrubber; (h) glass shaft lathe; (i) profile analyzer; (j) optical
time delay refractometer; (k) fiber physical geometry measuring device; (l)
optical tester; and (m) any equipment that is substantially similar to any of
the foregoing items or is an attachment or other item that may be attached or
related thereto; provided, however, that in each case, such item shall be
related to the creation, manufacturing or production of preforms or fiberoptic
fibers or cables from such preforms.
With respect to one or more items of Intended Collateral that are
acquired by the Corporation on or after the date of the Purchase Agreement, the
"Collateral Value" shall be an amount equal to the sum of (I) the purchase price
of such item(s), (ii) the costs of any engineering study or other evaluations
commissioned or obtained by the Corporation in connection with the purchase,
transportation or installation of such item(s), (iii) to the extent paid by the
Company, the costs of the transportation and/or installation of such item(s),
(iv) the costs of preparing such item(s) for continuous and regular operation,
(v) all other costs associated with the start-up of such item(s) and (vi) any
other costs associated with the acquisition and installation of such item(s) as
have been paid by or on behalf of the Corporation and are permitted to be
capitalized and amortized as acquisition costs under the customary accounting
and financial practices of the Corporation in valuing similar items of equipment
and are so capitalized and amortized in a manner consistent with generally
accepted accounting principles.
With respect to one or more items of Eligible Equipment that were owned
by the Corporation prior to the date of the Purchase Agreement, or are acquired
by the Corporation from an affiliate and were owned by such affiliate prior to
the date of the Purchase Agreement, the "Collateral Value" shall mean the net
book value on the books of the Corporation or such affiliate at the time of
transfer determined in accordance with generally accepted accounting principles.
Simultaneously with its pledge of the items of Intended Collateral, the
Corporation shall deliver to the Purchaser a written schedule setting for the
Collateral Value of each such item.
After the date on which the items of Intended Collateral are pledged as
contemplated by the Agreement, the Corporation shall be entitled from time to
time to substitute in place of one or
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more items then subject to such pledge (such item(s), "Replaced Collateral") one
or more other items of Eligible Equipment (whether now owned or hereafter
acquired by the Corporation) (such items, "Substitute Collateral"), provided in
each case that (a) the Collateral Value of the Substitute Collateral (as of the
date on which such substitution is made) shall be not less than the Collateral
Value of the Replaced Collateral (such Collateral Value being calculated as of
the date on which such Replaced Collateral was earlier pledged) and (b) the
Corporation shall deliver to the Purchaser a schedule identifying the item(s) of
Replaced Collateral and the Collateral Value(s) thereof . In addition, in each
case of substitution, simultaneously with such substitution, the Corporation
shall execute and deliver to the Purchaser an instrument confirming that the
Substitute Collateral is subject to the lien of the Purchase Agreement, and
shall file or caused to be filed on or before the date of such substitution
appropriate financing statements under applicable law relating to the Substitute
Collateral, and the Purchaser shall execute any instrument reasonable requested
by the Corporation for the purpose of releasing such item of Replaced Collateral
from all liens thereon in favor of the Purchaser.
All determinations of Collateral Value as reported by the Corporation
to the Purchaser shall be binding upon the Purchaser absent manifest error.
ROYLE EXH10-29
COOPERATION AGREEMENT BY AND BETWEEN:
John Royle & Sons (Royle), 1000 Cannonball Road, Pompton Lakes, New Jersey 07442
and, FiberCore Inc., 174 Charlton Road, P.O. Box 206, Sturbridge, Massachusetts
01566;
WHEREAS, Royle is a stockholder in FiberCore and Royle's principal owner is a
director of FiberCore, the parties have agreed that it is necessary to define
and agree on the terms of all business dealings between the parties.
THEREFORE, Royle and FiberCore have agreed to cooperate and to compensate each
other in accordance with the articles of this agreement.
Article 1
FiberCore Purchase of Equipment from Royle
Not for Sale to Third Parties or JVs
Royle agrees to provide a very favorable purchase price for FiberCore's initial
order of a quantity of draw towers. The discount will be negotiated and agreed
between the parties.
Subsequent FiberCore purchases of Royle manufactured equipment will be sold by
Royle at market prices reduced by 10%.
Article 2
Sale of Draw Towers to Third Parties
Royle agrees to pay FiberCore a 5% royalty on the selling price of fiber draw
towers that are sold to third parties as compensation to FiberCore for provision
of proprietary designs and process information for conveying to third party
purchasers. FiberCore will be obligated to provide technology updates.
Royalty payments will only be required for sales of draw towers made within five
years of the date of this agreement.
Article 3
Fiber and Fiber Cable Joint Ventures
FiberCore agrees that Royle will have the right to enter into fiber cable JVs
that commence with the fiber coloring operation and that FiberCore must obtain
Royle's agreement before consummating a JV for the same purpose.
<PAGE>
Royle agrees that FiberCore will have the right to enter into preform and fiber
JVs and that Royle must obtain FiberCore's agreement before consummating a JV
for the same purpose.
Article 4
Payment of Fees/Commissions
Royle agrees to pay FiberCore a commission on equipment sales that are
consummated as a result of FiberCore's initiation of inquiry. The commission
amount could vary from 1% to 5%, depending upon FiberCore's involvement as a
finder, negotiator, or enabler of the transaction, but must be discussed case by
case.
FiberCore agrees to pay Royle a commission for the sale of FiberCore technology
or products. The commission amount could vary from 1% to 5%, depending upon
Royle's involvement as a finder, negotiator, or enabler of the transaction, but
must be discussed case by case.
Each party agrees to pay a fee to the other party for acting as the intermediary
for initiating, negotiating, and facilitating a fiber or fiber cable joint
venture. The amount of the fee must be discussed case by case.
Article 5
Confidentiality and Non-Disclosure
The parties agree to be bound by the Confidentiality and Non-Disclosure
Agreement, Appendix 1 attached hereto.
Article 6
Non-Competition in Fiber and Fiber Cable Products
The parties agree that they will not compete in the marketplace in each other' s
product lines .
FiberCore' s product lines are defined as technology and products of operations
prior to fiber coloring.
Royle's product lines are defined as technology and equipment for operations
including and subsequent to fiber coloring.
Article 7
Arbitration
This agreement shall be governed by and construed by the laws of the State of
Vermont.
<PAGE>
The parties agree that any disputes will initially be discussed in an effort to
reach amicable settlement. In the event this fails the parties agree to settle
disputes by arbitration whereby each party would select an arbitrator and a
third arbitrator would be selected by agreement between the parties.
Article 8
Notices
This agreement may be modified only by written instrument executed by both
parties.
All notices and reports pursuant to this agreement shall be sent to the
addresses defined in this agreement. Any change in the address of either party
must be notified to the other party.
Article 9
Validity
This agreement is the only agreement that exists between the parties.
This agreement will remain valid from the date of signing by both parties for a
period of five years.
___/s/_____________________ ___/s/_______________________
Mohd A. Aslami, President John C. Ramsey, President
FiberCore, Inc. John Royle & Sons
Date: 6/17/94 Date: 6/17/94
<PAGE>
APPENDIX 1
Confidentiality and Non-Disclosure Agreement
The parties will transfer to each other documents that may include, but not be
limited to, know-how, specifications, drawings, engineering data, business plan
and strategy, and customer lists and shall be considered confidential. The party
receiving the information must retain it in confidence and assure that its
employees, affiliates, subsidiaries, and subcontractors are obligated to the
following terms and conditions:
1. The party receiving information agrees to keep confidential such
information disclosed by the other party hereto which was not
previously known to the recipient, or to the general public, or in the
public domain prior to such disclosure.
2. Recipient agrees to maintain this disclosed information in confidence
until such confidential information shall have been made public by an
act of a party other than or unrelated to recipient, or until recipient
receives such information from a third party without knowledge to
recipient of any breach of confidence with disclosure, or until passage
of five years from the date such disclosure is received, whichever
shall first occur.
3. The parties hereto agree that, except for purposes of evaluation,
neither party will directly nor indirectly disclose to any other
person, firm, or corporation, or utilize the other's information, which
is considered confidential hereunder, in its business without first
obtaining written permission from the other party.
4. Upon request, the recipient agrees to promptly deliver to the discloser
all materials obtained from or on behalf of the discloser in any way
relating to the discloser's confidential information. Recipient,
however, may retain a copy of such materials in its confidential files
for record purposes only.
5. No right or license whatsoever, either expressed or implied, is granted
to either party pursuant to this agreement under any patent, patent
application, or other proprietary right now or hereafter owned or
controlled by the other party.
<PAGE>
AMENDMENT 1 TO COOPERATION AGREEMENT
EXECUTE JUNE 17, 1995
1. Article 4 of the existing Cooperation Agreement of June 17, 1994
between FiberCore and Royle granting each party the right to sales
commissions for sale of products and/or services of the other party to
joint ventures and unrelated parties is to be voided. Henceforth, none
of the parties will be entitled to sales commissions from any other of
the parties for the sale of equipment, fiber, preform, or services.
2. MEFC and FOI obligations precede this termination and settlement of
commissions for these ventures will be negotiated by Ramsey and Aslami
on behalf of Royle and FiberCore.
3. None of the parties, nor any related entities, shall be entitled to
finders fees for bringing in potential joint venture partners.
4. As the preceding resolutions remove all financial incentives for any
party to prefer on potential joint venture partner over another, the
parties will consolidate and coordinate all joint venture negotiations
in the fiber and fiber cable fields, and institute a thorough due
diligence procedure for determining the most desirable partner(s) in
each market.
5. Each party retains sole authority for negotiating prices, terms, and
conditions of its own product and service offerings to any joint
venture. Initial offerings by either party to a potential partner,
whether in the form of a model business plan or draft agreement will be
based on standard price quotations from the respective parties. It is
the intent of the parties that each will directly participate in any
formal negotiations for final terms of joint ventures.
6. Equity participation of any of the parties in any joint venture will be
solely at the discretion of that party. Equity participation will be on
real cash or cash equivalent basis. Cash equivalents are selling price
discounts from market levels on products and services, or increases in
the level of products or services without corresponding price
increases. Each party will negotiate its own contribution to any joint
venture with the other joint venture partners.
-------------------------------- -------------------------------
Mohd A. Aslami, President John C. Ramsey, President
FiberCore, Inc. John Royle & Sons
Note: The Common Stock Purchase Warrants described herein have been collaterally
assigned to the Company pursuant to the terms of a $900,000 Promissory Note,
dated January 11, 1996 between Techman International Corporation, Inc. as Payor,
and the Company, as Payee.
W-18
Void after February 1, 1998 Right to Purchase
Shares of Common Stock
(subject to adjustment) of
FiberCore, Inc.
FIBERCORE, INC.
COMMON STOCK PURCHASE WARRANT
FiberCore, Inc. (the "Company"), a Nevada corporation, hereby certifies
that, for value received, Techman International Corporation, Inc., or assigns,
is entitled, subject to the terms set forth below, to purchase from the Company
at any time on or from time to time after January 11, 1996 and before 5:00 P.M.,
Boston time, on February 1, 1998, $550,696 fully paid and non-assessable shares
of Common Stock of the Company, at the price per share (the "Purchase Price") of
$1.634. The number and character of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided herein.
This Common Stock Purchase Warrant (the "Warrant") is issued to the
person specified above as the holder hereof as of January 11, 1996 and evidences
the right to purchase an aggregate of not more than the number of shares of
Common Stock of the Company specified above, subject to adjustment as provided
herein.
As used herein the following terms, unless the context otherwise
required, have the following meanings:
(a) The term "Company" includes any corporation which shall succeed to
or assume the obligations of the Company hereunder.
(b) The term "Common Stock" includes all voting stock of any class or
classes (however designated)of the Company, authorized upon the Original Issue
Date or thereafter, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment
<PAGE>
of dividends and distributions on any shares entitled to preference.
(c) The "Original Issue Date" is January 11, 1996, the date as of which
the Warrants were first issued.
(d) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to section 6 or otherwise.
(e) The terms "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the Securities
Act, to permit the disposition of Common Stock (or Other Securities) issued or
issuable upon the exercise of Warrants, and any post-effective amendments and
supplements filed or required to be filed to permit any such disposition.
(f) The term "Securities Act" means the Securities Act of 1933 as the
same shall be in effect at the time.
1. Sale or Exercise Without Registration. If, at any time of any
exercise, transfer or surrender for exchange of a Warrant or of Common Stock,
(or Other Securities) previously issued upon the exercise of Warrants, such
Warrant of Common Stock (or Other Securities) shall not be registered, or
qualified under the Securities Act, the Company may require, as a condition of
allowing such exercise, transfer or exchange, or the securities or "Blue Sky"
laws of any state or other jurisdiction that the holder or transferee of such
Warrant or Common Stock (or Other Securities), as the case may be, furnish to
the Company a satisfactory opinion of counsel to the effect that such exercise,
transfer or exchange may be made without registration or qualifications under
the Securities Act, or such securities or "blue sky" laws. The persons specified
above as the holder of the Warrants, by its acceptance hereof, represents to the
Company that such person is acquiring the Warrants for investment and not with a
view to the distribution thereof.
2. Exercise of Warrant; Partial Exercise.
2.1 Exercises in Full. Subject to the provisions hereof, this
Warrant may be exercised in full by the holder hereof by surrender of this
Warrant, with the form of subscription at the end hereof duly executed by such
holder, to the Company at its principal office, accompanied by payment, in cash
or by certified or official bank check payable to the
2
<PAGE>
order of the Company, in the amount obtained by multiplying the number of shares
of Common Stock called for on the face of this Warrant (without giving effect to
any adjustment therein) by the Purchase Price.
2.2 Partial Exercise. Subject to the provisions hereof, this Warrant
may be exercised in part by surrender of this Warrant in the manner and at the
place provided in subsection 2.1 except that the amount payable by the holder
upon any partial exercise shall be the amount obtained by multiplying (a) the
number of shares of Common Stock (without giving effect to any adjustment
therein) designated by the holder in the subscription at the end hereof by (b)
the Purchase Price. Upon any such partial exercise, the Company at its expense
will forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or Warrants of like tenor, in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock equal (without giving effect to any adjustment therein)
to the number of such shares called for on the face of this Warrant minus the
number of such shares designated by the holder in the subcription at the end
hereof.
2.3 Company to Reaffirm Obligations. The Company will at the time of
any exercise of this Warrant, upon the request of the holder hereof acknowledge
in writing its continuing obligation to afford to such holder any rights to
which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant provided that if the holder of
this Warrant shall fail to make any such request, such failure shall not affect
the continuing obligation of the Company to afford such holder any such rights.
3. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 10 days thereafter the Company at it expense (including the payment
by it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof, or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of full paid and non-assesable shares of Common Stock (or Other
Securities) to which such holder shall be entitled upon such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled
cash equal to such fraction multiplied by the then current market value of one
full share, together with any other stock or other securities and property
(including cash where applicable) to which such holder is entitled upon such
exercise pursuant to section 4 or otherwise.
4. Adjustment for Dividends in Other Stock, etc., Reclassification,
etc. In case at any time or from time to time after the Original Issue Date the
holders of Common Stock (or Other Securities) shall have received, or (on or
after the record date fixed for the determination of stockholders eligible to
receive) shall have become entitled to receive, without payment therefor
3
<PAGE>
(a) other or additional stock or other securities or property (other
than cash) by way dividend, or
(b) any cash paid or payable (including, without limitation, by way
of dividend), except out of earned surplus of the Company, or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement.
(d) then, and in each such case the holder of this Warrant, upon the
exercise hereof as provided in section 2, shall be entitled to receive the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this section 4) which such holder
would hold on the date of such exercise if on the Original Issue Date he had
been the holder of record of the number of shares of Common Stock called for on
the face of this Warrant and had thereafter, during the period from the Original
Issue Date to and including the date of such exercise, retained such shares and
all such other or additional (or less) stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and (c) of this
section 4 receivable by him as aforesaid during such period giving effect to all
adjustments called for during such period by section 6 and 7 hereof.
5. Reorganization, Consolidation, Merger, etc.
5.1 General. In case the Company after the Original Issue Date shall
(a) effect a reorganization, (b) consolidate with or merge with or into any
other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company within 24 months from the date of such transfer,
then, in each such case, the holder of this Warrant, upon the exercise hereof as
provided in section 2 at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall be entitled to receive (and the Company shall be entitled to
deliver), in lieu of the Common Stock (or Other Securities) issuable upon such
exercise prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if such holder had so exercised this Warrant immediately prior
thereto, all subject to further adjustment thereafter as provided in section 4
and 6 hereof.
5.2 Warrant to Continue in Full Force and Effect. Upon any
reorganization, consolidation, merger or transfer (and any dissolution following
any transfer)
4
<PAGE>
pursuant to section 5.1, this Warrant shall continue in full force and effect
and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable upon the exercise of this Warrant after the
consummation of such reorganization, consolidation, merger, transfer or
dissolution, as the case may be, and shall be binding upon the issuer of any
such stock or other securites, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets of the
Company whether or not such person shall have expressly assumed the terms of
this Warrant.
6. Further Assurances. The Company will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock upon the exercise of all Warrants
from time to time outstanding.
7. Accountants' Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of the Warrants, the Company at its expense will
promptly cause the Company's regularly retained auditor to compute such
adjustment or readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based, and the
number of shares of Common Stock outstanding or deemed to be outstanding after
giving such effect to such adjustment. The Company will forthwith mail a copy of
each such certificate to each holder of a Warrant.
8. Notices of Record Date, etc. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of detemining the holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of the Company) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of the assets of the Company to or consolidation or merger
of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then in each such event, the Company shall mail or
cause to be mailed to the holder of this warrant a prior written notice
specifying the date on which a record discussed in clause (a) is to be taken or
an event discussed in clause (b) or (c) is to occur and
5
<PAGE>
the amount and character of any stock or other securities, or rights or options
relating there to proposed to be insured or granted, the date of such proposed
issue or grant and are persons to whom suchh proposed issue or grant is to be
offered or made.
9. Reservation of Stock, etc., Issuable on Exercis of Warrants. The
Company will at all times reserve and keep available solely for issuance and
delivery upon the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of the Warrants.
10. Exchange of Warrants. Subject to the provisions of paragraph 1 and
paragraph 14 hereof, upon surrender for exchange of any Warrant, properly
endorsed, to the Company, the Company at its own expense will issue and deliver
to or upon the order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (upon payment by such holder
or any applicable transfer taxes) may direct, calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called for on the
face or faces of the Warrant or Warrants so surrendered.
11. Replacement of Warrants. Upon receipt of evidence reasonbly
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satifactory in form and amount to the
Company or, in case of such mutilation, upon surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver in lieu thereof a
new Warrant of like tenor.
12. Warrant Agent. The Company may by written notice to each holder of
a Warrant appoint an agent having an office in Boston, Massachusetts, for the
purpose of issuing Common Stock (or Other Securities) upon the exercise of the
Warrants pursuant to section 2, exchanging Warrants pursuant to section 10 and
replacing Warrants pursuant to section 11, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
14. Restrictions on Transfer and Assignability. This Warrant is
non-assignable and non-transferable without the prior written consent of the
Company and in the event of such consent shall continue to be subject to the
provisions of Section 1 of this Warrant.
6
<PAGE>
(a) subject to the provisions hereof title to this Warrant may be
transferred by endorsement (by the holder hereof executing the form of
assignment at the end hereof).
(b) until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary.
15. Notices, etc. All notices and other communications fron the Company
to the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder, or, until an address is so furnished to
and at the address of the last holder of this Warrant who has so furnished an
address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant is being delivered in the State of Massachusetts and
shall be construed and enforced in accordance with and governed by the laws of
such State. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.
Date: 4/1/96
---------
FIBERCORE, INC.
By /s/ Ghias Massarani, President
---------------------------------
Ghais Massarani, President
[Corporate Seal]
Attest:
- --------------------------
Secretary
7
EXH10-31
A G R E E M E N T
between
FiberCore, Inc.
174 Charlton Road, P.O. Box 206
Sturbridge, MA 01566
and
FiberCore Jena GmbH
Gschwitzer Stra(beta)e 20
07745 Jena-Burgau
FiberCore Inc. participates, with effect from July 1, 1994, in accordance with
the provisions below, in the business of FiberCore Jena GmbH, with a capital
contribution of DM 5775200 ("Capital contribution") in exchange for special
profit participation rights.
<PAGE>
1
The capital contribution is payable to FiberCore Jena GmbH through 5/30/95.
<PAGE>
2
1. FiberCore Inc. will receive an annual profit share, prior to the
determination of retained earnings available to the shareholders of
FiberCore Jena GmbH. The profit share will comprise
a. a basic profit share amounting to 7% of the nominal amount of the
capital contribution, and
b. a bonus profit share in the same percentage amount as the dividend
resolved and distributed.
If retained earnings are insufficient to cover payment of the basic
distribution amount, this will be correspondingly reduced. There is no
claim for later payment of the amount of the reduction.
2. FiberCore Inc. is entitled to the profit share from July 1, 1997.
3. The distribution of the profit share on the capital contribution is due on
the first bank working day after the general meeting of FiberCore Jena
GmbH's shareholders in which the annual financial statements for the
financial year just ended are approved and a resolution on the
appropriation of the profit is passed, unless the resolution approving the
financial statements stipulates a different due date.
<PAGE>
3
1. FiberCore Inc. participates in full in a current loss (net loss for the
year) of FiberCore GmbH in that its right of repayment is reduced. The loss
is allocated in the proportions of the capital contribution to nominal
share capital.
2. If thereafter net profits are earned in later years covered by this
agreement, the rights of repayment will be increased out of these profits
until they equal the nominal amount of the capital contribution, before any
other appropriations of the net profits for the years are resolved.
<PAGE>
4
1. FiberCore Inc. does not receive any shareholders' rights from its profit
participation rights, in particular, no rights to attend, participate in,
and vote at, meetings of FiberCore Jena GmbH shareholders.
2. FiberCore Jena GmbH is entitled, and, if FiberCore Inc. demands, obliged,
to prepare documents on the special profit participation rights in
accordance with this agreement. The parties to this agreement will agree on
the form and contents of these documents if these are not obvious from this
agreement.
<PAGE>
5
1. This agreement is concluded for an indefinite period. Either party to
the agreement can give notice of termination of at least two years
effective at the end of a financial year of FiberCore Jena GmbH, but at
the earliest with effect from 2001.
2. If notice of termination is given, FiberCore Inc.'s capital
contribution will be repaid to that company, if appropriate less its
shares of losses. The amount to be repaid is payable at December 31 of
that year in which the shareholders resolved the approval of the
financial statements for the financial year at the end of which
termination became effective. It bears interest at 7% p.a. from the
effective termination date until repayment date.
<PAGE>
6
FiberCore Inc. hereby agrees to subordinate its repayment rights to liabilities
to all other creditors of FiberCore Jena GmbH. If FiberCore Jena GmbH should be
liquidated, the capital contribution can only be repaid after the liabilities to
all other creditors have been settled in full. FiberCore Inc. has no right to
participate in proceeds of liquidation.
<PAGE>
7
The participation in losses (ss. 3) and the subordination of the right of
repayment (ss. 6) can not be retroactively restricted, nor can the period of the
agreement and the notice of termination (ss. 6} be reduced retroactively.
FiberCore Jena GmbH will be entitled to receive a refund of a premature
repayment of the capital contribution, without account being taken of
contradicting provisions.
<PAGE>
8
FiberCore Inc. can dispose of its claims and rights - by assignment or otherwise
- - only after obtaining FiberCore Jena GmbH's prior approval.
<PAGE>
9
1. Only the laws of the Federal Republic of Germany apply in respect of the
rights and obligations arising from this agreement. The place of
performance is Jena.
2. The place of jurisdiction for all disputes arising from, or connected with,
this agreement is Jena.
<PAGE>
10
If one of the provisions of this agreement should be, or should become, partly
or wholly invalid,. the validity of the agreement as a whole is not otherwise
affected. A rule which fulfills the economic intention of the agreement as
nearly as possible, in a legally acceptable manner, is held to be agreed to
replace the invalid provisions.
Jena, (date)
___/s/____________________
Mohd A. Aslami, President
___/s/____________________
EXH10-32
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT is made and entered to this 11th day of Ramadan,
1416H (corresponding to the 31st day of January, 1996G) by and among:
1. MR. MOHAMED SULIMAN ABDULLAH AL NAMLA a Saudi National having identity card
No. 17719 dated 29/611379, issued in Riyadh, with an occupation as a
businessman, born in 1377H, residing in Riyadh with an address at P.O. Box
517 Riyadh 11421 (the "First party");
2. MR. .MOHAMED ALI ABDULLAH AL SOWAILEM a Saudi National having identity card
No. 7, dated 13/9/1386H~ issued in Bakriyah, with an occupation as a
businessman, born in 1346H, residing in Riyadh, with an address at P.O. Box
1799 Riyadh 11441 (the "Second Party");
3. MR. ISMAIL FAWZI ISMAIL ABU KHADRA a Saudi National having identity card
No. 464 dated 28/12/1384H, issued in Jeddah, with an occupation as a
businessman born in 1349H, residing in Riyadh, with an address at P.O. Box
1799 Riyadh 11441 (the "Third Party");
4. MR. MANSOUR ABDUL AZIZ MOHAMED a Saudi National having identity card No.
103582 dated 21/12/1385H, issued IN Mekkah, with an occupation as a
businessman, born in 1374H, residing in Riyadh. with an address at P.O. Box
34 Riyadh 1 1411 (the "Fourth Party");
5. ROYLE MID EAST LTD., a company organized and existing under the laws of the
Cayman Islands with an address of P.O. Box 3059) S.M.B. George Town. Grand
Cayman. Cayman Islands. BWI (the "Fifth Party); and
6. FIBERCORE MID EAST LTD., a company organized and existing under the laws of
the Cayman Islands with an address of P.O. Bow 30592 S.M.B. George Town,
Grand Cayman, Cayman Islands, BWI (the "Sixth Party").
WHEREAS, the First, Second. Third and Fourth Parties formed and are the sole
owners of Middle East Fiber Optic Cable Manufacturing Company Limited, a Saudi
Arabian limited liability company with Commercial Registration No. 1010136511
issued in Riyadh on 11/3/1416H, with an address of P.O. Box 60536, Riyadh 11555,
Saudi Arabia (the Company"), pursuant to an industrial license issued under
Resolution of the Minister of Industry & Electricity No. 895/S dated 1/11/1415H,
which authorized the Company to manufacture optical fibers and fiber optic
cables (the "Products") with a share capital of Six Million Three Hundred Fifty
Thousand Saudi Rivals (SR6,350,000);
<PAGE>
WHEREAS, the First, Second, Third and Fourth Parties wish to increase their
respective contributions to the Company's capital and to include foreign
partners who have technical and commercial experience and expertise from which
the Company can benefit;
WHEREAS the Fifth Party possesses or has access to substantial experience and
expertise in connection with the manufacture of production lines in relation to
the Products and the Operation of facilities for the manufacture of the Products
and wishes to invest in and participate in the ownership of the Company, and the
Fifth Party's parent company has agreed to provide a complete production line
for the Company pursuant to the terms and conditions of the Production Line
Supply Agreement to be entered into concurrently with this Agreement (the
"Production Line Agreement");
WHEREAS the Sixth Party possesses or has access to substantial experience and
expertise in the manufacture of optical fiber and in the manufacture and use of
preforms required for the manufacture of the Products ("Preforms") wishes to
invest in and participate in the ownership of the Company and is prepared to
commit to supply or arrange for the supply of optical fiber and Preforms to the
Company pursuant to the terms and conditions set forth in this Agreement and to
market Products manufactured by the Company pursuant to the terms and conditions
set forth in the Commission Agency Agreement attached hereto as Exhibit I (the
"Commission Agency Agreement");
WHEREAS the Fifth and Sixth Parties have decided to make the necessary
investment to join in the ownership of the Company, and the First, Second, Third
and Fourth Parties have consented to the participation of the Fifth and Sixth
Parties in the Company and have agreed to increase their own contributions to
the capital of the Company and a license has been issued pursuant Minister of
Industry & Electricity No. 98 dated 17/7/1416H to authorize the participation of
the Fifth and Sixth Parties in the Company; and
WHEREAS the above-mentioned Parties (hereinafter collectively referred to
collectively as the "Partners" and each individually as a "Partner") have
entered into this Agreement in Order to make clear the terms and conditions upon
which the Fifth and Sixth Parties will acquire equity in the Company and upon
which the Company shall be operated;
NOW THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement, the Parties hereby agree as follows:
1. Amendment of Articles of Association
1.1 As soon as practicable following the execution of this Agreement. the
Partners shall use their best efforts to cause the license issued under
Resolution of the Minister of Industry & Electricity No. 98 dated
17/7/1416H to be amended so as to reflect the Ownership structure set
forth in Article 2.3 below and to correctly identify the parent company
of the Sixth Party.
<PAGE>
1.2 The Partners shall use their best efforts to cause the articles of
association of the Company to be amended and restated in their entirety
in accordance with the draft first amendment to the Company's articles
of association which is attached hereto as Exhibit I (hereinafter
referred to as the "Articles of Association"). The Articles of
Association shall be submitted to the Ministry of Commerce for approval
as soon as practicable following the execution of this Agreement and,
if necessary, the amendment of the license issued under Resolution of
the Minister of Industry & Electricity No. 98 dated 17/7/1416H as
provided in Article 1. 1.
1.3 If the Ministry of Commerce requests any changes in the Articles of
Association they shall be revised and resubmitted only after all
Partners have agreed to the changes in writing. The Partners shall
execute, or cause their duly authorized representatives to execute, the
Articles of Association, in the form agreed by the Partners and
approved by the Ministry, before the competes Notary Public in the
Kingdom and take such further actions as are necessary to amend the
Commercial Registration of the Company as soon as reasonably
practicable thereafter.
2. Capitalization
2.1 The Company's share capital shall be increased to twelve million five
hundred thousand Saudi Rivals (SR12,500,000).
2.2 The capital shall be divided into twelve thousand five hundred (12,500)
cash shares each having a value of one thousand Saudi Rivals (SAR
1,000).
2.3 The capital of the Company, expressed as cash shares, will be
apportioned among the Partners as follows:
<TABLE>
<CAPTION>
- --------------------------------- ----------- --------- ---------------- ----------------
PERCENTAGE IN
THE
PARTNER NO. OF SHARE TOTAL SHARES COMPANY'S
SHARES VALUE VALUE CAPITAL
- --------------------------------- ----------- --------- ---------------- ----------------
<S> <C> <C> <C> <C>
Mr. Mohamed Suliman 3625 1000 3,625,000 29%
Abdullah Al Namla
- --------------------------------- ----------- --------- ---------------- ----------------
Mr. Mohamed Ali 2250 1000 2,250,000 18%
Abdullah Al Sowailem
- --------------------------------- ----------- --------- ---------------- ----------------
Mr. Ismail Fawzi Ismail 1375 1000 1,375,000 11%
Abu Khadra
- --------------------------------- ----------- --------- ---------------- ----------------
Mr. Mansour Abdul 1500 1000 1,500,000 12%
Aziz Mohamed Al Kaaki
- --------------------------------- ----------- --------- ---------------- ----------------
Royle Mid East Limited 1875 1000 1,875,000 15%
- --------------------------------- ----------- --------- ---------------- ----------------
Fibercore Mid East Limited 1875 1000 1,875,000 15%
- --------------------------------- ----------- --------- ---------------- ----------------
TOTAL 12500 12,500,000 100%
- --------------------------------- ----------- --------- ---------------- ----------------
</TABLE>
<PAGE>
2.4 Each Partner shall deposit in cash the full value (or. in respect of
the Firsts Second, Third and Fourth Parties, the difference between the
amount already deposited by such Partner and the full value) of the
cash shares apportioned to him or it at a bank in the Kingdom to be
agreed by the partners, in the name of the Company, no later than seven
(7) days following signature by all Partners of the Articles of
Association before the Notary Public.
2.5 The transfer, assignment, encumbrance or other disposal of shares shall
be governed by the terms and conditions of the Articles of Association
and this Agreement related thereto.
2.6 New shares may be issued or the initial capital of the Company
increased or decreased only with the prior unanimous written consent of
all Partners in accordance with the terms and conditions of the
Articles of Association related thereto.
2.7 A Partner may not pledge his or its shares (or interest) in the Company
or otherwise use such shares (or interest) as security, unless he or it
first obtains the prior written consent of the other Partners
3. Financial Requirements
3.1 In order to finance the startup costs related to the construction and
establishment of the manufacturing facilities, the Partners agree that
they shall cause the Company to apply for and use its best efforts to
obtain a loan from the Saudi Industrial Development Fund in the
approximate amount of eighteen million seven hundred fifty thousand
Saudi Rivals (SAR 18,750,000) and credit and other banking facilities
from one or more commercial banks in the approximate amount of six
million two hundred fifty thousand Saudi Rivals (SAR 6,250,000).
3.2 The Partners agree that. as a general rule, following the start-up
period, the financial requirements of the Company for its day-to day
operations shall be met from the paid-m capital and cash flow, but that
if additional financing is required, it shall be obtained through
commercial bank credit facilities or loans from the Partners, as
determined by the Partners.
3.3 All banking and credit facilities,. whether obtained in the Kingdom or
abroad. shall be managed in accordance with normal and sound business
principles and the terms and conditions of any such facilities shall
require prior writben approval of the Partners in accordance with
Article 5. If guarantees are required from the Partners in connection
with such facilities, each Partner shall issue a guarantee in
proportion to his or its interest in distributions of the Company's
profits provided, however, that neither the Fifth nor the Sixth Party
shall be required to guarantee any facility necessary to fund the
letter of credit to be issued under the Production Line Agreement,
which shall be fully guaranteed (if necessary) by the First, Second,
Third and Fourth Parties.
<PAGE>
3.4 In the event the Partners agree that additional financing shall be
obtained through loans from them, then, unless the Partners agree
otherwise on a case-by case basis, each Partner's share of the loan
shall be in proportion to the Partner's percentage interest in
distributions of the Company's profits. Loans advanced by the Partners
shall be repaid prior to the distribution of any profits, unless agreed
otherwise
3.5 For the avoidance of doubt, no Partner shall be required to provide a
guarantee in respect of any loan or other credit facility which may
create any form of indebtedness which that Partner has not approved nor
shall any Partner be required to participate in a Partner loan which he
or it has not approved.
4. Budgets
4.1 Prior to the Company transacting any additional business, the Partners
shall jointly prepare a capital and operating budget (an "Annual
Budget") for the remainder of the Company's first fiscal year.
Thereafter, the Manager of the Company shall, at least sixty (60) days
prior to the conclusion of each fiscal year, prepare and submit an
Annual Budget for the next fiscal year to the Partners for their review
and approval.
4.2 Without otherwise limiting the ultimate content of any Annual Budget,
the Partners agree that each Annual Budget shall contain:
(a) the estimated cash disbursements which the Company will be
required to incur for capital expenditures during each month
for the period covered by the Annual Budget and details of the
items in respect of which the disbursements will be made;
(b) the estimated cash disbursements which the Company will be
required to incur for its day-to day capital and operating
expenditures during each month for the period covered by the
Annual Budget and details of the items in respect of which the
disbursements will be made;
(c) the extent to which such disbursements will be satisfied by
cash on hand or income to be received;
(d) the extent, if any, to which additional financing will be
required and the proposed source for such financing;
(e) if it is expected that loans from the Partners may be
required, details of the amounts which may be required during
the period covered by the Annual Budget and the anticipated
date or dates in each month of that period in which payments
from the Partners would be required; and
(f) such other information as any Partner may request.
<PAGE>
4.3 Without the prior written approval of the Partners, the Company shall
not: (i) exceed the budgeted cost for an item by more than ten percent
(10%) or (ii) incur any extraordinary expenditure (pertaining to an
item not included in an Annual Budget).
5. Partners Meetings
5.1 Except for those matters expressly placed under the authority and
control of the Manager of the Company, the general meeting of Partners
shall have ultimate responsibility for the management and operation of
the Company. The Partners shall act through meetings and resolutions
duly held and adopted in accordance with the terms and conditions of
the Articles of Association.
6. Manager of the Company
6.1 The Partners shall appoint an individual of sufficient experience and
expertise to act as the Manager of the Company. The Partners shall do
all things necessary to implement the provisions of the Company's
Articles of Association dealing with the appointment and powers of the
Manager of the Company and to enable the Manager to carry out his
responsibilities and exercise his authorities in a proper and efficient
manner.
6.2 The Partners shall cause the Manager to enter into a contract of
employment with the Company which shall specify the Manager's
authorities and responsibilities (which shall be in accordance with
this Agreement and the Articles of Association), and all Other terms
and conditions of his employment.
6.3 In addition to such other reports as may be required of the Manager
pursuant to this Agreement or the Articles of Association, the Partners
shall require the Manager to deliver to each Partner the following
periodic financial reports:
(a) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the
Company, a copy of the audited balance sheet of the Company as
of the end of such year and the related statements of income
and cash flows for such year, setting forth in each case in
comparative form the figures for the previous year;
(b) as soon as available, but in any event not later than forty
"five (45) days after the end of each fiscal quarter of the
Company, the unaudited balance sheet of the Company as at the
end of each such quarter, and the related unaudited statements
of income and cash flows of the Company for such quarter and
the portion of the fiscal year through such date, setting
forth in each case in comparative form the figures for the
previous year;
<PAGE>
(c) as soon as practicable, but in any event within thirty (30)
days after the end of each fiscal month, a copy of the
unaudited balance sheet of the Company as at the end of such
month and the related unaudited statements of income and cash
flows of the Company for such month and the portion of the
fiscal year of the Company through the end of such date,
setting forth in each case in comparative form the figures for
the previous year;
(d) concurrently with the delivery of the financial statements
referred to in (a) and (b) above, a certificate of the Manager
of the Company stating that all such financial statements are
complete and correct in all material respects and have been
prepared in reasonable detail and in accordance with generally
accepted accounting principles applied consistently throughout
the periods reflected therein; and
(e) such additional financial and other information as any Partner
may request from time to time.
6.4 The Partners acknowledge and agree that the Manager must manage the
Company for the mutual benefit and to the full satisfaction of the
Partners. Should any Partner be dissatisfied with the Manager's
performance of his duties and so notify the other Partners, the
Partners shall convene a Partners meeting within thirty (30) days to
consider whether to replace the Manager. If one or more Partners
holding (in the aggregate) at least thirty percent (30%) of the capital
of the Company so request following the conclusion of such meeting, the
Partners agree that they shall promptly cause the Manager to be
replaced in accordance with the Articles of Association and any
relevant provisions of the Manager's employment contract.
7. Warranties Representations and Undertakings
7.1 Each of the First, Second, Third and Fourth Parties represents and
warrants that he is a Saudi Arabian national who is not a government
official and no government official has any interest in his interest in
this Agreement or the transactions contemplated hereby.
7.2 Each of the Fifth Party and the Sixth Party represents and warrants
that it is a duly existing corporation formed and in good sanding under
the lass of the Cayman Islands and that no governmental official has
any interest in the such Party or in its interest herein or in the
transactions contemplated hereby.
7.3 Each Partner undertakes to advise the other Partners and take
appropriate remedial action in the event that any representation or
warrant by such Partner contained in Articles 7.1 and 7.2 become untrue
during the term of this Agreement.
7.4 The First, Second, Third and Fourth Parties further represent and
warrant that:
(a) the Company is a duly formed and validly organized and
registered limited liability company under the laws of Saudi
Arabia;
<PAGE>
(b) the Company's initial capital, in the amount of Six Million
Three Hundred Fifty Thousand Saudi Rivals (SR6,350,000) has
been fully paid;
(c) the 31 December 1995 balance sheet of the Company attached
hereto as Exhibit in (the "test Balance Sheet") accurately
and completely reflects the financial condition, assets,
liabilities and results of operations of the Company as of 31
December 1995 and has been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis, and since the date of the Last Balance Sheet
there has been no maternal change in the financial condition.
assets, liabilities or operations of the Company;
(d) the Company has not committed any act (including any failure
to act) which constitutes (or, with the lapse of time or
giving of notice, would constitute) a default of any
regulatory requirements or contractual undertakings made by or
on behalf of the Company or any act which could result in any
Partners being deemed personally liable for the obligations of
the Company;
(e) they have or will have taken all necessary acts to enable the
Fifth and Sixth Parties to acquire an interest in the Company
such that, upon signature of the Articles of Association and
deposit of their respective contributions to the Company's
capital, the Fifth and Sixth Parties will acquire their shares
in the Company free and clear of any further assessment,
encumbrance, charge or claim by any party; and
(f) they are not aware of any information which has not been
disclosed to the Fifth and Sixth Parties which, if disclosed,
could reasonably be expected to influence the decision of
someone deciding whether or not to acquire an interest in the
Company.
7.5 Recognizing the reliance of the Fifth and Sixth Parties on the
representations and warranties contained in Article 7.1, the First,
Second, Third and Fourth Parties undertake (i) that the Company shall
take no action prior to the Fifth and Sixth Parties acquiring their
respective shares in the Company which would cause of such
representations and warranties to be untrue, and (ii) that, from the
date hereof, the Company shall enter into no contracts and incur no
liabilities except as approved by the Partners in accordance with this
Agreement and the Articles of Association. The First, Second, Third and
Fourth Parties hereby agree to indemnify and hold harmless the Fifth
and Sixth Parties against any and all liabilities which relate to the
conduct of the Company's business prior to the Fifth and Sixth Parties
acquiring their respective shares in the Company and participating in
the decision-making process, regardless of when such liabilities
actually arise or come to the attention of the Partners except for
those liabilities disclosed in the Latest Balance Sheet.
7.6 Under no circumstances will the any of the Partners take any action or
cause the Company to take any action if either the Fifth or the Sixth
Party advises the other Partners that the taking of such action would
cause it or any person or company affiliated or
<PAGE>
associated with it to be deemed in violation of the United States
Export Administration Act or those provisions of the Federal Income
Tax Law or Regulations, noncompliance with which would increase or
accelerate its U.S. tax liability or that of any person or company
affiliated or associated with it with respect to income earned under
this Agreement or pursuant to the transactions contemplated by this
Agreement.
7.7 Each Partner undertakes and agrees that he or it shall not, and shall
not permit the Company directly or indirectly to, offer, pay, promise
to pay or authorize the payment or giving of any money, or anything of
value (i) to any official of any government or any instrumentality
thereof, or (ii) to any person, while knowing or having reason to know
that all or a portion of such money or thing of value will be Offered,
given, or promised, directly or indirectly, to any official of any
government or any instrumentally thereof, for the purposes of:
(a) influencing any act or decision of such official in his
official capacity, including a decision to fail to perform his
official functions: or
(b) inducing such official to use his influence with any
government or any instrumentality thereof to affect or
influence any act or decision of such government or
instrumentality, in order to obtain or retain business for or
with, or direct business to, any person.
7.8 Under no circumstance may any Partner sign any document, perform any
act, or make any commitment, undertaking, warranty or representation on
behalf of ~e other Partners without the express written consent of such
other Partners. No Partner may sign any document, perform any act, or
make any commitment, understanding, warranty or representation on
behalf of the Company without the express prior written consent of the
Company.
7.9 The Partners, in their capacity as owners of the Company, shall
exercise the voting rights attached to their shares in a manner
consistent with the terms and conditions of this Agreement the
Production Line Agreement, the Commission Agency Agreement and the
Articles of Association, and which ensures that the Company conducts
all of its operations in accordance with those terms and conditions.
7.10 Each Partner agrees to indemnify and hold harmless the other Partners
and the Company from and against any loss, liability, cost or expense
any of them may suffer or incur as a result of the indemnifying
Partner's breach of any representation warranty or undertaking
contained in this Agreement.
8. Mutual Covenants Regarding Business Opportunities and Dealings with the
Company
8.1 The Partners shall in all cases treat the Company as a separate and
important profit center and make every reasonable effort to conduct the
affairs of the Company and their own dealings with the Company in a
manner which maximizes the net profits of the Company.
<PAGE>
The Partners therefore agree that in their business transactions with the
Company, be it directly or indirectly, they shall neither receive any
unusual benefits nor fix prices or other terms which are consistent
with business principles which are normal and acceptable in that field.
None of the Partners, however, makes any representation to any of the
others as to the likely success or profitability of the Company and no
Partner shall be responsible to any other for any losses suffered or
liabilities incurred by the Company, except to the extent he or it is
liable therefor by virtue of holding his or its interest in the
Company.
8.2 Subject to the provisions of this Article 8, the Company may contact,
upon terms which are commercially competitive, with any Partner for the
supply of goods and services including without limitation:
(a) design, engineering and construction services;
(b) construction equipment, materials, supplies and tools;
(c) housing and office space;
(d) translation services; and
(e) technical assistance and consulting.
8.3 Each Partner shall have the right to review and approve any proposed
agreements between the Company and any other Partner or any person or
company affiliated with another Partner.
8.4 The Partners acknowledge that their participation in the Company should
not prevent the Partners or their Affiliates (as defined in 10.1(b)
below) from participating in other companies having different
objectives. The Partners hereby consent to the participation of the
Fifth Party and/or the Sixth Party or an Affiliate of either in other
companies at any time in the future, whether or not any Partner is a
partner in any such other companies, provided that such other companies
have objectives which are separate and distinct from the objectives of
the Company. The Partners undertake and agree to provide the Fifth
Party and the Sixth Party with such letters of no objection or other
documentation as the Fifth Party and/or the Sixth Party may reasonably
require in order to evidence such consent and enable the Fifth Party
and/or the Sixth Party or an Affiliate of either to form or participate
in such other companies.
8.5 Immediately following the commencement of commercial production of any
Product by the Company the Partners shall cause the Company to enter to
the Commission Agency Agreement with the Sixth Party.
<PAGE>
9. Assistance by the Partners
9.1 The First, Second. Third and Fourth Parties will provide the following
assistance in connection with the start-up and operation of the
Company, subject to such additional terms and conditions as the
Partners may from time to time agree:
(a) on behalf of the Company and for the Company's account, seek
to obtain the credit and other banking facilities referred to
in Article 3.1;
(b) on behalf of the Company and at the Company's cost, arrange
with the relevant Saudi Arabian governmental entities for the
Company to lease the land required for the manufacturing
operations of the Company.
(c) on behalf of the Company and at the Company's cost, seek to
obtain from the appropriate Saudi Arabian government agency
any licenses or permits necessary for the operation of the
Company.
(d) participate in the management of the Company through the
partners meetings.
(e) upon the request of the Manager of the Company, provide
consultation and advice to the Manager of the Company as to
how problems involving any Saudi governmental official or
entity should best be handled and in those cases an which the
Company is unable to resolve a problem, render whatever direct
assistance he or it is able to render in liaising with the
concerned Saudi governmental official or entity in attempting
to resolve the problem.
(f) upon the request of the Manager of the Company, provide
consultation and advice to the responsible official of the
Company as to how any problem, dispute or controversy
involving a Saudi national or local resident (including, but
not limited to, employees of the Company) should best be
handled and in those cases in which the Company is unable to
resolve a problem, render whatever assistance he or it is able
to render in attempting to resolve the problem, dispute or
controversy.
9.2 The Fifth Party will provide or arrange for an affiliated company to
provide the following assistance in connection with the start up and
operation of the Company, subject to such additional terms and
conditions as the Partners may from time to time agree:
(a) supply production equipment for the Company's manufacturing
facility as provided in the Production Line Agreement;
(b) provide technical advice and assistance as provided in the
Production Line Agreement;
(c) nominate qualified individuals to fill agreed
technical/managerial positions within the Company;
<PAGE>
(d) upon request of the Manager of the Company, provide on-going
advice and assistance with respect to technical matters on the
same terms and conditions that such assistance is normally
provided by the Sixth Party to it subsidiaries and affiliates;
and
(e) participate in the management of the Company through the
partners meetings.
9.3 The Sixth Party will provide or arrange for an affiliated company to
provide the following assistance to the Company, subject to such
additional terms and conditions as the Partners may from time to time
agree:
(a) supply the company pursuant to its usual terms and conditions
of sale, with Optical Fiber and Preforms in the quantities and
for the prices indicated in Exhibit IV;
(b) upon request of the Manager of the Company provide technical
advice and assistance in the use of such preforms on the same
terms and conditions that such advice and assistance is
normally provided by the Sixth Party to its subsidiaries and
affiliates;
(c) promote the sale of the Company's Products pursuant to the
Commission Agency Agreement, which the Partners agree shall be
renewed for so long as the Sixth Party is a partner in the
Company unless terminated pursuant to Clauses 2.2, 2.3 or 2.4
thereof; and
(d) participate in the management of the Company through partners
meetings.
10. Competition
10.1 For purposes of this Article 10:
(a) the "Territory" shall mean and include:
(i) at any time following the commencement of commercial
production of any Product by the Company, the Kingdom
of Saudi Arabia, Yemen, the United Arab Emirates,
Iraq, Lebanon, Syria, Egypt, Mauritania, Palestine,
Jordan, Oman, Kuwait, Bahrain, Qatar, Libya, Morocco,
Tunisia, Algeria, Sudan, Somalia and Iran;
(ii) for two (2) years only following the commencement of
commercial production of any Product by the Company,
all countries local on the continent of Africa except
those mentioned in (a) above; and
<PAGE>
(iii) for one (l) year only following the commencement of
commercial production of any Product by the Company's
Turkey (excepting the following customer: HESS
Hacilar Elektrik Sahayi VE Ticaret A.S.); and
(b) a Partner's "Affiliates" shall mean and include its
shareholders (in respect of a Partner which is a company) and
any entity in which a Partner, or any shareholder of a Partner
which a company, or any combination of Partners or
shareholders of Partners has a direct or indirect ownership
interest of fifty percent (50%) or more.
10.2 No Partner and no Affiliate of a Partner shall invest in any venture
for the manufacture of Products within the Territory (a "Venture")
except after offering the other Partners the opportunity to participate
in the Venture as follows:
(a) The Partner who (or whose Affiliate) wishes to participate in
a Venture (the "Initiating Partner") shall send the other
Partners a written notice describing the Venture in sufficient
detail to permit the other Partners to determine, on a
preliminary basis, whether they would be interested in
participating in the Venture and offering to enter into good
faith negotiations respecting the participation by all
interested Partners in the Venture as equal partners (after
satisfying any legal requirements as to equity ownership in
the venture by venture of the country in which the Venture is
located.)
(b) Upon receipt of the above-mentioned notice from the Initiating
Partner, the other Partners shall each have the option, but
not the obligation, to accept the offer to enter into good
faith negotiations respecting their possible participation in
the Venture. Any such acceptance must be in writing and
delivered to the Initiating Partner within thirty (30) days
after the date of the Initiating Partner's notice. Failure by
any Partner to give timely notice of its acceptance (m whole
or in part) shall be deemed an election by him or it not to
exercise his or its option. A Partner may accept to enter into
negotiations for less than an equal equity ownership with the
other Partners, in which case the equity not taken up by that
Partner shall be offered to each of the other Partners
equally.
(c) If the other Partners fail to exercise their option to enter
into good faith negotiations, or such negotiations do not
result in a binding agreement among all interested Partners
within one (1) year of the date by which the Partners were
required to give notice to the Initiating Partner of their
acceptance to enter to such negotiations, the Initiating
Partner (or his or its Affiliate) be free to proceed with the
Venture as initially described to the other Partners.
10.3 In order to compensate the Firsts Seconds Third and Fourth Parties for
potential loss of income from the Company due to activities by the
Fifth or Sixth Party (or Affiliates of either) in the Territory which
may compete or result in competition with the Company - without in any
way restricting the Fifth or Sixth Party (or their respective
Affiliates) from selling in the Territory - the Partners agree as
follows:
<PAGE>
(a) The Fifth Party shall pay to the First Party for the account
of and for distribution to the First, Second, Third and Fourth
Parties as agreed by those parties a fee equal to five percent
(5%) of the ex-works invoice price of any Preform preparation
equipment and/or draw towers sold by it or any of its
Affiliates to customers in the Territory other than customers
in which each of the Partners (or Affiliates of each Partner)
hold all interest. No fee shall & payable in respect of the
sale of any other equipment or services.
(b) The Sixth Party shall pay to the First Party for the account
of and for distribution to the First, Second, Third and Fourth
Parties as agreed by those parties a fee equal to five percent
(5%) of the ex-work; invoice price of any optical fiber or
Preforms sold by it or any of its Affiliates to customers in
the Territory (excluding Iran), other than customers in which
each of the Partners (or Affiliates of each Partner) hold an
interest, plus an additional three percent (3%) fee insofar as
any such sales result from orders referred to the Sixth Party
by the Company in writing and accepted by the Sixth Party or
one of its Affiliates within six (6) months of the referral,
provided. however, that if the Company fails during its first
three years of production to purchase from the Sixth Party or
its Affiliates 225.000 kilometers of optical fiber and
Preforms in the aggregate, then the Sixth Party shall have no
further obligation to pay such fees to the First Party unless
such failures due to the Sixth Party's failure to supply fiber
and Preforms in accordance with Article 9.3(b).
(c) All fees payable hereunder shall be paid on a pro-rata basis
within thirty (30) days of actual receipt by the Fifth or
Sixth Party (or an Affiliate of either) from a customer of a
payment on which such fee is due. Payments to the First Party
as provided herein shall fully satisfy the Fifth or Sixth
Party's payment obligations vis-a-vis all Parties entitled to
share in such fees.
10.4 Each Party other than the Fifth and Sixth Parties undertakes that,
except as otherwise provided in this Article 10, he or it shall not and
his or its Affiliates shall not directly or indirectly engage in any
business activity relating to the manufacture or sale of the Products
or Preforms or other equipment for the manufacture of the Products,
within the Territory or elsewhere, which competes with the Company, or
with the Fifth Party or the Sixth Party or any Affiliates of the Fifth
or Sixth Parties without the prior written consent of the Company, the
Fifth Party or the Sixth Party, as the case may be.
11. Confidentiality
11.1 The Fifth Party and the Sixth Party have developed in the course of
their respective businesses a number of trade secrets including
formulas, methods, processes, techniques, designs, information,
knowledge know-how and trade practices in various forms, including
computer software (hereinafter referred to as Proprietary
Information"). The
<PAGE>
Partners agree that all Proprietary Information shall remain in the
exclusive ownership of the Fifth and/or Sixth Party, as the case may
be, and shall be for the Company's temporary use only and shall be
returned as provided in Article 13.l(e). None of the Partners or the
Company shall disclose Proprietary Information except as permitted in
Article 11.2 below. Proprietary Information shall not include any
information which is generally available for public use, unless such
information has become available to the public due to the unauthorized
disclosure of such information by a Partner or the Company.
11.2 If any Proprietary Information is (or has, prior to the date of this
Agreement, been) communicated by the Fifth Party, the Sixth Party or
the Company to another Partner the following provisions shall apply:
(a) the receiving party shall take every reasonable precaution to
safeguard and keep secret all such Proprietary Information and
will comply with all reasonable and specific precautions which
may be requested by the disclosing Partner or the Company as
to its nondisclosure; and
(b) the receiving party will disclose Proprietary Information only
to such of his or Its employees who require the information in
the performance of their duties, and all personnel likely to
receive Proprietary Information shall be advised of its secret
and confidential nature and of the restrictions on its use and
further disclosure.
11.3 No Partner shall knowingly take any action or cause the Company to take
any action which would infringe the rights of any Partner under any
patent, regardless of where such patent is registered.
11.4 The Partners' undertakings in this Article 11 shall survive the
termination of this Agreement and the dissolution of the Company and
shall continue to apply to a Partner even if the Partner transfers his
or its shares.
12. Duration: Termination
12.1 This Agreement shall remain in full force and effect with respect to
each Partner until such time as this Agreement is terminated pursuant
to Clause 12.2 or that Partner ceases to have an inters in the Company
or the Company's dissolved, whichever occurs first. Unless otherwise
herein expressly provided, no Partner that has transferred his or its
shares in accordance with the provisions of this Agreement shall be
bound by its terms and conditions after the date of such transfer,
provided that the party to which such shares have been transferred
agrees in writing with the other Partners, in a form reasonably
acceptable to the other Partners, that the transferee shall be bound by
the terms and conditions of this Agreement.
12.2 If any Partner shall be in material default of this Agreement (the
"Defaulting Partner") and shall not remedy such default within a period
of ninety (90) days after receiving written notice of such de-fault ~m
any of the Partners which are not in default (the "Non-
<PAGE>
Defaulting Partners"), which notice shall also be copied to the other Partners,
the Non-Defaulting Partners may exercise either of the following
options:
(a) if all Non-Defaulting Partners so agree, one or more of the
Non-Defaulting Partners may purchase all or any portion of the
shares in the Company then held by the Default Partner at
ninety percent (90%) of the par value or book value of said
shares determined pursuant to Article 12.5 whichever is lower,
provided that if more than one Non-Defaulting Partner wishes
to purchase the Default Partner's shares, each such purchasing
Partner shall be entitled to purchase that percentage of the
Defaulting Partners shareholding which is equal to the
percentage that purchasing Partner's shareholding comprises of
the total shareholdings of all purchasing Partners; or
(b) if all Non-Defaulting Partners so agree, the Non-Defaulting
Partners may require that the Default Partner sign whatever
resolutions and documents and take whatever action may be
necessary to promptly liquidate the Company, including without
limitation, voting in favor of liquidation at a general
meeting of the Partners.
The options stated above shall be exercisable within ninety (90) days
after the expiration of the aforementioned notification period of
ninety (90) days by written notice by the Non-Defaulting Partners to
the Defaulting Partner. If all option is exercised, the Default Partner
shall promptly thereafter take whatever action is necessary and sign
whatever documents or agreements the Non-Defaulting Partners provides
to him or it in order to effectuate the appropriate share transfer or
liquidation, as the case may be.
12.3 If the Non-Defaulting Partners do not agree to exercise either option
provided under Article 12.2 above within the time periods specified
therein, any Non-Defaulting Partner who has notified the other
Non-Defaulting Partners at least thirty (30) days before the expiration
of such time periods of his or its desire to exercise either such
option may, by written notice to the other Non-Defaulting Partners
within thirty (30) days after the expiration of such time periods,
offer to sell his or it; shares to the such other Partners at a price
equal to the book value of his or its shares determined in accordance
with Article 12.5 below. If none of the other Partners accept the offer
within a further period of thirty (30) days, then the Company must be
liquidated. If several Partners accept the offer, each of them shall
purchase a percentage of the shares of the withdrawing Partner which is
equal to the percentage such purchasing Partner's shareholding
comprises of the total shareholdings of all purchasing Partners.
12.4 The rights as provided for in Articles 12.2 and 12.3 above shall be in
addition to and not in substitution for all other remedies that may be
available to the No-Defaulting Partners hereunder and any exercise of
such rights shall not relieve the Defaulting Partner from any
obligations accrued prior to the date of termination or from any
liability or damage to the Non-Defaulting Partners for breach of this
Agreement.
<PAGE>
12.5 The book value of the shares as stipulated in Articles 12.2 and 12.3
above shall be based on the financial status of the Company on the last
day of the calendar month immediately preceding the date of the
exercise of any option regarding such shares and shall be determined
and certified by the Company's then appointed independent auditors.
12.6 If the Company is dissolved or liquidated for any reason, this
Agreement shall be terminated automatically at the end of such
liquidation except for the obligations under any provisions hereof
which are expressed to survive this Agreement.
12.7 The failure of any Partner to attend, by a representative or proxy,
after two (2) successive calls a properly called and convened partners
meeting of the Company, which failure is not attributable to force
majeure as described in Article 14 below or to the failure or inability
to obtain any necessary Saudi Arabia visa, shall constitute a default
by such Partner and the Non-Defaulting Partners shall have the right to
exercise all or any remedies provided for under Article 12.2 above or
any other provision of this Agreement.
13. Procedure Upon Termination
13.1 In the event of the withdrawal of a Partner or termination of this
Agreement under the provisions hereof, the Partners agree to cooperate
to arrange for appropriate settlements between the Partners on a fair
and equitable basis and. if the Company is being liquidated, the
orderly winding up of the Company's operations, in accordance with the
following guidelines:
(a) amounts due to one Partner for the transfer of his or it
shares in the Company are to be paid promptly upon signing the
instrument of transfer;
(b) where appropriate, any loans made by a withdrawing partner to
the Company shall also be repayable with accrued commission
according to their terms up to the date of transfer of the
shares in the Company;
(c) where one Partner makes a claim for damages against another,
the Partners will use their best endeavors to reach an
amicable agreement, provided, however, that in the event the
claim is subject to arbitration or other legal process, the
claim shall only be settled after due process and may not be
set off against other amounts due to be pad upon termination;
(d) upon the transfer of the shares of the Partner withdrawing
from the Company and in the event the withdrawing Partner is
not in default of this Agreement, the other Partner(s) shall
cause appropriate actions to be taken to transfer or discharge
any guarantees or other security given by the withdrawing
Partner to secure loans raised by the Company in the course of
its business to the extent that such guarantees do not relate
to the withdrawing Partner's unfulfilled obligations which had
arisen before the date of withdrawal; and
<PAGE>
(e) m the event this Agreement is terminated or the Fifth Party
and/or the Sixth Party withdraws from the Company, all
Proprietary Information provided to the Company or any Partner
shall, at the Fifth Party's and/or the Sixth Party's option,
as the case may be, forthwith be returned to the Fifth Party
and/or the Sixth Party, as the case may be, or destroyed.
14. Force Majeure
14.1 None of the Partners shall be liable for the non-performance or for
delays in the performance of this Agreement due to compliance with the
laws, orders or regulations of Saudi Arabia, or the United States of
America or due to acts of God, wars, armed conflicts, riots embargoes,
sabotage, blockades, epidemics, hijackings, kidnappings, other acts of
terrorism, strikes and other labor disturbances or any other cause
beyond the reasonable control of that Partner.
15. Fees and Costs: Taxes
15.1 All costs, fees and expenses paid in connection with the preparation of
this Agreement applications for and the licensing, registration and
qualification of the Company and the amendment of its licenses and
registrations in accordance with this Agreement, shall be borne by the
Company.
15.2 Except as otherwise expressly agreed in writing:
(a) each Partner shall be solely responsible for the payment of
any zakat or any Saudi Arabian income tax which imposed on (i)
his or its respective share of the Company's profit, or (ii)
his or its respective ownership in the Company, or (iii) any
other payments made to him or it by the Company, and no
Partner shall be entitled to reimbursement by the Company or
the other Partners for the income tax, deemed profit tax or
zakat that he or it is obligated to pay;
(b) each Partner shall authorize the Company to withhold from any
payments to be made to him or it any Saudi Arabian income tax
or zakat that is due from him or it and to pay such amounts
directly to the Department of Zakat & Income Tax (the "DZIT")
in Saudi Arabia for the account of that Partner so that the
Company can obtain the necessary tax clearance certificate;
and
(c) if at any time additional amounts are required from a Partner
to cover any income tax, deemed profit tax or Zakat for which
he or it is responsible, that Partner shall pay such amounts
to the Company for payment to the DZIT so as to enable the
Company to obtain its tax clearance certificate.
16. Governing Law
<PAGE>
16.1 This Agreement shall be governed by and construed in accordance with
the laws of the Kingdom of Saudi Arabia. However, nothing in this
Agreement shall be construed to require the Fifth or the Sixth Party to
take or omit to take any action if such act or omission is contrary to
the laws of the United States of America.
17. Dispute Resolution
17.1 Any disputes arising under this Agreement which cannot be settled
amicably among the Partners shall, unless otherwise agreed at the time,
be referred to the appropriate tribunal of the Board of Grievances for
a final and binding decision.
18. Notices
18.1 Any notices given hereunder shall be deemed to be sufficiently given if
in writing and delivered by postpaid registered mail or international
air courier or facsimile addressed as follows
(i) in the case of The First Party: Mohamed Suliman Abdullah A1 Namla
P.O. Box 517
Riyadh 11421
Kingdom of Saudi Arabia
Fax: (966-1) 498-5935
(ii) in the case of the Second Party: Mohamed Ali Abdullah A1 Sowailem
P.O. Box 1799
Riyadh 11441
Kingdom of Saudi Arabia
Fax: (966-1) 498-5935
(iii) in the case of the Third Party: Ismail Fawzi Ismail Abu Khadra
P.O. Box 1799
Riyadh 11441
Kingdom of Saudi Arabia
Fax: (966-1) 498-5935
(iv) in the case of the Fourth Party: Mansour Abdul Aziz Mohamed Al Kaaki
P.O. Box 34
Riyadh 11411
Kingdom of Saudi Arabia
Fax: (966-1) 498-5935
<PAGE>
(v) in the case of the Fifth Party: Royle Mid East Ltd.
1000 Cannonball Road
Pompton Lakes, NJ 07442
United States of America
Fax: (1-201) 839-7327
Attention: John C. Ramsey
(vi) in the case of the Sixth Party: Fibercore Mid East Ltd.
P.O. Box 206
174 Charlton Road
Sturbridge, MA 01566
United States of America
Fax: (1-508) 347-2778
Attention: Mohamed A. Aslami
or to such other address or facsimile number or person as a Partner
may hereafter designate.
18.2 A notice shall be deemed to have been given and received: (i) when left
at the appropriate address if sent by registered mail or international
air courier; or (ii) when actually received or when dispatched and safe
receipt is acknowledged by the receiving facsimile machine, if sea by
facsimile.
19. Effect of Headings
19.1 The headings used throughout this Agreement are inserted for reference
purposes only and are not to be considered or taken into account in
construing the terms and provisions of any paragraph nor to be deemed
in any way to qualify, modify or explain the effects of any such
provisions or terms.
20. Miscellaneous
20.1 In the event of any conflict or inconsistency between the provisions of
this Agreement and the Articles of Association of the Company's the
following order of precedence shall prevail as between the Partners:
this Agreement and then the Articles of association.
20.2 If any provisions of this Agreement are found to be inconsistent with
or void under applicable law, the validity of the remaining provisions
shall not be adversely affected. In such case the Partners shall
re-negotiate in good faith concerning the ineffective provision with
the object of replacing it as closely as possible with a provision
affording the same basic rights, obligations and economic effects, both
to the Partners and to the Company.
20.3 This Agreement constitutes the full understanding and entire agreement
among the Partners and defines all rights granted herein and all
obligations assumed by each Partner at the date of execution of this
Agreement. No modification or amendment to this Agreement shall be
effective as to any Partner who has not consented thereto in the form
of a written addendum to this Agreement signed by the authorized
representative of that Partner.
<PAGE>
20.4 This Agreement shall inure to the benefit of and be binding upon the
Partners and their respective heirs, successors and assigns.
20.5 The Partners declare that they have not concluded, and shall not
conclude any contracts or agreements which are inconsistent with the
provisions of this Agreement.
20.6 This Agreement has been prepared and executed by the Partners in the
English language in seven (7) original counterparts. Unless mutually
agreed otherwise, the English text shall govern and each document,
certificate, statement, report, accounts, agenda, minutes and other
written material referred to in this Agreement, shall be in the English
language or shall be accompanied by a certified English translation
thereof.
20.7 For purposes of this Agreement, the passage of time shall be construed
according to the Gregorian calendar.
IN WITNESS WHEREOF, the Partners have caused this Agreement to be executed as of
the day and year first above written.
The First Party The Second Party
___/s/___________________ ___/s/_____________________
The Third Party The Fourth Party
___/s/___________________ ___/s/_____________________
The Fifth Party The Sixth Party
___/s/___________________ ___/s/_____________________
Name: J.C. Ramsey Name: Gregory A. Perry
Title: President Title: Vice President
<PAGE>
Exhibit I
DRAFT FIRST AMENDMENT
TO THE ARTICLES OF ASSOCIATION
OF
MIDDLE EAST FIBER OPTIC CABLE MANUFACTURING COMPANY LIMITED
(A Limited Liability Company)
THIS FIRST AMENDMENT TO THE ARTICLES OF ASSOCIATION has been made and entered
into this day of , 1416H (corresponding to the day of , 1995G) by and among:
1. MR. MOHAMED SULIMAN ABDULLAH AL NAMLA a Saudi National having identity card
No. 17719 dated 29/6/1379, issued in Riyadh, with an occupation as a
businessman, born in 1377H, residing in Riyadh. with an address at P.O. Box
517 Riyadh 11421
(First Party);
2. MR. MOHAMED ALI ABDULLAH AL SOWAILEM a Saudi National having identity card
No. 7, dated 13/9/1386H, issued in Bakriyah, with an occupation as a
businessman born in 1346H, residing in Riyadh, with an address at P.O. Box
1799 Riyadh 11441
(Second Party);
3. MR. ISMAIL FAWZI ISMAIL ABU KHADRA a Saudi National having identity card No
. 464 dated 28/12/1384H, issued in Jeddah. with an occupation as a
businessman, born in 1349H, residing in Riyadh, with an address at P.O. Box
1799 Riyadh 11441
(Third Party);
4. MR. MANSOUR ABDUL AZIZ MOHAMED AL KAAKI a Saudi National having identity
card No. 103582, dated 1/12/1385H, issued in Mekkah, with an occupation as
a businessman, born in 1374H, residing in Riyadh. with an address at P.O.
Box 34 Riyadh 11411
(Fourth Party);
5. ROYLE MID EAST LTD a company organized and existing under the laws of the
Cayman Islands with an address of P.O. Box 30599 S.M.B. George Town. Grand
Cayman. Cayman Islands. BWI
<PAGE>
(Fifth Party); and
6. FIBERCORE MID EAST LTD a company organized and existing under the laws of
the Cayman Islands with an address of P.O. Box 30592 S.M.B. George Town,
Grand Cayman. Cayman Islands. BWI
(Sixth Party).
Recitals
WHEREAS, the First, Second, Third and Fourth Parties formed and are the sole
owners in of Middle East Fiber Optic Cable Manufacturing Company Limited
(hereinafter referred to as the "Company"), a Saudi Arabian limited liability
company formed pursuant to an industrial license issued under Resolution of the
Minister of Industry & Electricity No. 895/S dated 1/11/1415H, whose Articles of
Association were recorded by the Riyadh Notary Public on pages 165 and 166 of
Volume 26 under number 2446 on 15/1/1416H, and which was registered in the
Commercial Register of the city of Riyadh under number 1010136511 on 11/2/1416H,
with a capital of Six million three hundred fifty thousand Saudi Rivals (SR
6,350.000) which has been allocated among the above-mentioned four (4) partners;
WHEREAS, the Company has to date not conducted any business activity, and the
First, Second, Third and Fourth Parties wish to enlarge its financial resources
and shareholding base and admit foreign companies to benefit from their
experience in the company's field of activities and accordingly have agreed to
admit the Fifth and Sixth Parties as new partners in the company and to increase
the Company's capital to twelve million five hundred thousand Saudi Rivals (SR
1'.500,000);
WHEREAS, the Fifth and Sixth Parties wish to join as new partners in the
Company;
WHEREAS, the parties have obtained Resolution No. _ dated from the Minister of
Industry & Electricity authorizing the participation of the Fifth and Sixth
Parties in the Company; and
WHEREAS the parties wish to amend and restate the Articles of Association of the
Company in their entirety:
NOW, THEREFORE the parties agree as follows:
First: The above recitals shall constitute an integral part of this Amendment.
Second: The partners in the Company shall be the following:
1. Mr. Mohamed Suliman Abdullah Al Namla:
2. Mr. Mohamed Ali Abdullah Al Suwailem;
3. Mr. Ismail Fawzi Ismail Abu Khadra:
<PAGE>
4. Mr. Mansour Abdul Aziz Mohamed Al Kaaki:
5. Royle Mid East Limited; and
6. Fibercore Mid East Limited.
Third: The Articles of Association of the Company are hereby amended and
restated to read in their entirety as follows:
Article 1: Name of the Company
The name of the Company is "Middle East Fiber Optic Cable Manufacturing Company
Limited" a limited liability company.
Article 2: Objectives of the Company
The objectives of the Company shall be: the manufacture of optical Fiber and
fiberoptic cable.
The Company shall carry out its activities after obtaining any necessary
licenses from the relevant authorities.
Article 3: Participation in Other Companies
The Company may own shares in other existing companies or consolidate therewith.
The Company may also participate with others in setting up joint ventures and
limited liability companies to conduct similar or supplementary activities after
satisfying the relevant laws and regulations.
Article 4: Head Office
The head office of the Company shall be in the City of Riyadh, Kingdom of Saudi
Arabia. The Company may transfer its head office to any other place in the
Kingdom of Saudi Arabia and may establish branches within and/or outside the
Kingdom if the interests of the Company so require. subject to the approval of
all of the partners and the receipt of any necessary governmental approvals.
Article 5: Duration of the Company
The Company has been formed for a period of fifteen (15) years starting from the
date of its registration in the Commercial Register in the Kingdom of Saudi
Arabia. The duration of the Company will automatically be extended for similar
periods unless one of the partners notifies the others of his or its desire not
to continue the Company at least six (6) months prior to the
<PAGE>
expiration of the initial period or an! subsequent period. by a registered
letter sent to their addresses.
Article 6: Capital of the Company
The Company's share capital shall be twelve million five hundred thousand Saudi
Rivals (SR12,500,000), divided into twelve thousand five hundred (12,500) cash
shares of equal value, the value of each share being one thousand Saudi Rivals
(SR1,000), apportioned among the partners as follows:
<TABLE>
<CAPTION>
- --------------------------------- ----------- --------- ---------------- ----------------
PERCENTAGE IN
THE
PARTNER NO. OF SHARE TOTAL SHARES COMPANY'S
SHARES VALUE VALUE CAPITAL
- --------------------------------- ----------- --------- ---------------- ----------------
<S> <C> <C> <C> <C>
Mr. Mohamed Suliman 3625 1000 3,000,000 29%
Abdullah Al Namla
- --------------------------------- ----------- --------- ---------------- ----------------
Mr. Mohamed Ali 2250 1000 2,250,000 18%
Abdullah Al Sowailem
- --------------------------------- ----------- --------- ---------------- ----------------
Mr. Ismail Fawzi Ismail 1375 1000 1,375,000 11%
Abu Khadra
- --------------------------------- ----------- --------- ---------------- ----------------
Mr. Mansour Abdul 1500 1000 1,500,000 12%
Aziz Mohamed Al Kaaki
- --------------------------------- ----------- --------- ---------------- ----------------
Royle Mid East Limited 1875 1000 1,875,000 15%
- --------------------------------- ----------- --------- ---------------- ----------------
Fibercore Mid East Limited 1875 1000 1,875,000 15%
- --------------------------------- ----------- --------- ---------------- ----------------
TOTAL 12500 12,500,000 100%
- --------------------------------- ----------- --------- ---------------- ----------------
</TABLE>
The partners declare that the original capital of the Company. in the amount of
six million three hundred fifty Thousand Saudi Rivals (SR 6,350,000) was fully
paid at the time of the Company's formation and that the increase in the capital
of the Company, in the amount of twelve million one hundred fifty thousand Saudi
Rivals (SR 6,150,000), has been fully paid and deposited in one of the approved
banks in the Kingdom in the name of the Company, as evidenced by the certificate
of the said bank in this regard.
Article 7: Increase or Reduction of Capital
The capital of the Company may be increased only with the unanimous consent of
the partners.
The capital of the Company may also be decreased by a decision of the general
meeting, provided that the capital may not become less than the minimum amount
allowed. and in accordance with the following guidelines:
(a) If the capital is decreased because it is in excess of the
Company's needs the Company's creditors must be notified
pursuant to a notice to be posted in a paper published in the
city where the head office of the Company is
<PAGE>
established. The creditors may object to such decrease within
sixty (60) days of the publication date. In the event one of
the creditors objects and presents to the Company documents
substantiating Its claim within the above-mentioned period of
time the Company must either pay the debt if it is due at that
time or provide an adequate guarantee of payment if the debt
is due at a later date.
(b) In the event the Company has incurred losses totaling
three-fourths (3/4) of its capital, its capital may not be
decreased.
Article 8: Rights of Partners
Except as the partners may otherwise agree in writing all shares confer equal
rights and obligations upon their holders and each share in the capital of the
Company shall entitle its holder to one vote and an equal proportionate share in
the assets of the Company upon liquidation. Each partner shall be entitled to
participate in the deliberations of the general meetings and to use and enjoy
his or its voting and other rights in accordance with the provisions of these
Articles and the Companies Regulations.
If any shares are transferred in accordance with Article 9 hereof, all rights
and obligations attached to a share shall be automatically transferred to the
new owner. Ownership of shares and the determination of rights and obligations
arising therefrom shall be governed by the provisions of these Articles and the
decisions of the general meetings.
Each partner shall have the right to examine all books records. accounts,
inventors lists and other documents of the Company during normal working hours.
It is the responsibility of the Manager of the Company to facilitate the
exercise of this right by the partners.
Article 9: Shares
The shares shall be freely transferable among the partners. However, no partner
may assign one or more of his or its shares to a third party. with or without
consideration. except with the prior written consent of the other partners.
Nevertheless. every partner shall have the right to recover such shares pursuant
to Article 165 of the Companies Regulations at the net book value thereof as
determined by the Company's auditor as of the end the last fiscal month prior to
the date notice of the intended share transfer was given.
No partner may pledge, mortgage or otherwise encumber any of his or its shares
without the prior written consent of all the partners and no such action shall
be binding on the Company or the other partners in the absence of such consent.
A share in the capital of the Company is indivisible. If for any reason the
ownership of a share is vested in more than one person the Company shall be
entitled to suspend the enjoyment of rights conferred by such share until the
joint owners have chosen from among themselves one person to be considered as
sole owner of such share in relation to the Company. The Company may fix a
<PAGE>
period within which the joint owners shall make this choice. If they fail to do
so within the period specified. the Company may offer the share for sale for the
account of the joint owners to the other partners or a third party.
Article 10: Share Register
The Company shall establish and keep at its head office a share register in
which it shall enter the names of the partners. the number of shares owned by
each and all transactions affecting the shares. No transfer of ownership of such
shares shall be effective vis-a-vis the Company or any third party unless the
reason for the transfer of ownership is entered in the aforementioned register.
The register must contain all of the following information:
(a) the name of each partner and his occupation, nationality,
address and identity card (or passport) number;
(b) the number and value of the shares owned by each partner;
(c) the number and value of shares which have been transferred,
along with a description of the manner in which the shares
were transferred - whether by sale, purchase, inheritance,
gift or otherwise:
(d) the name and signature of the transferor and ~e transferee;
(e) the date of the transfer; and
(f) the number and value of shares owned by each partner after any
such transfer.
The pages of the share register shall be numbered sequentially. No page may be
deleted nor any erasure or revision made to the information contained therein.
Each partner shall have the right to examine the share register during the
normal working hours of the Company.
Article 11: Management of the Company
The management of the Company shall be delegated to a Manager appointed by a
resolution of the partners duly adopted in accordance with Article 12.
The Manager of the Company shall have the following responsibilities and
authority:
(a) managing and controlling the day-to-day operations of the
Company and causing the Company to carry out its operations in
accordance with his best professional judgment and approved
policies and guidelines these Articles and the laws and
regulations of the Kingdom:
<PAGE>
(b) managing and controlling all capital and revenue expenditures
within the scope of budgets approved by the partners;
(c) representing and acting on behalf of the Company vis-a-vis
third parties and before all governmental and official bodies.
including courts and tribunals;
(d) operating bank accounts in accordance with guidelines
established by the partners;
(e) entering into contracts and agreements on behalf of the
Company provided that contracts whose value is greater than
one hundred thousand Saudi Rivals (SR100,000) or whose
duration is longer than one (1) year shall require the prior
approval of the partners.
(f) utilizing credit facilities, subject to approval of the
partners;
(g) hiring and firing the agents and employees of the Company and
determining their wages. benefits and other terms and
conditions of employment; granting work visas. exit and
re-entry and final exit visas to the Company's employees and
sponsors and transferring and assigning their sponsorship; and
(h) within the scope of his authority and responsibility,
delegating power to others and revoking such delegations and
taking whatever actions may be necessary to ensure that the
Company is run as efficiently and profitably as possible.
The partners shall execute such powers of attorney or other documents as may be
necessary to allow the Manager of the Company to fulfill his responsibilities
and obligations specified in this Article or otherwise required of him in
accordance with these Articles of Association.
The employment of the Manager of the Company may be terminated by a resolution
of the partners. In the event the employment of the Manager of the Company is
terminated his successor shall be appointed in the manner set forth in this
Article. The partners agree that the manager shall be replaced if partners
holding at least thirty percent (30%) of the capital so request in writing.
Article 12: Partners' Meetings
The duly authorized representatives of each partner shall have the right to
attend and to take part in the deliberations of and to vote at all general
meetings. Each partner shall provide the other partners in writing from
time-to-time with the names of the individuals appointed to represent him or it
at the general meeting and to cast a vote on his or its behalf.
General meetings shall be held at the head office of the Company or at such
other places as may be agreed by the partners. General meetings shall be held at
least once every six (6) months and at such additional times as the Manager of
the Company and/or any partner may require on at
<PAGE>
least fifteen (15) days prior notice To the partners. Notice of each partners'
meeting shall include the agenda and all documents concerning the business to be
transacted at the meeting. The partners may waive these requirements for notice
by a vote at the beginning of a meeting and before any other business is
transacted. The partners may designate. from among those appointed to represent
each of them at general meetings, one person who shall chair general meetings.
The chairman shall select a person to act as the secretary of the Company and
the person will ensure that an adequate and accurate record of partners'
meetings is made and kept.
The Manager of the Company shall convene an annual general meeting within six
(6) months following the close of each fiscal year of the Company to:
(a) review and approve a report from the Manager of the Company
concerning the management and administration of the Company;
(b) review and approve the auditor's report for the preceding
fiscal year;
(c) consider and take any appropriate decision in relation to any
of the foregoing matters;
(d) appoint or reappoint auditors to audit the Company's accounts
for the ensuing fiscal year and determine their fees and
choose the legal advisors and banks to be used by the Company;
and
(e) discuss and decide upon any other business or matter relating
to the Company.
The presence of the duly authorized representatives of all partners shall be
necessary to constitute a valid quorum. If, however a quorum is not achieved at
any validly called meeting, the meeting shall be postponed for seven (7) days at
the same time and place and the duly authorized representatives of the partners
present for the postponed meeting shall constitute a valid quorum provided that
they represent partners holding at least seventy-five percent (75%) of the
Company's capital.
Article 13: Partners' Decisions
Each partner shall have a number of votes equal to the number of shares he or it
has in the Company on each matter presented to the partners for decision.
Partners' decisions relating to any change in the nationality of the Company or
any increase in the financial burdens of the partners shall be unanimous. .411
other decisions shall require the affirmative vote of those representing at
least seventy-five percent (75%) of the capital of the Company.
After circulation. a resolution in writing signed by the requisite number of
partners shall be as valid and effective as if it had been passed at a partners
meeting duly convened and held.
<PAGE>
Any such resolution may consist of several documents in like form each signed by
the duly authorized representatives of one or more of partners wherever they may
be situated.
Except for matters expressly placed under the authority of the Manager of the
Company pursuant to these Articles or pursuant to a resolution of the partners,
decisions related to the management and operation of the Company may be made
only by a partners' resolution adopted in accordance with Article 12 above and
this Article.
Article 14: Books of Accounts and Annual Financial Statements
The Manager of the Company shall cause the Company to maintain proper books of
accounts and complete and accurate records regarding:
(a) all income and expenditures of the Company,
(b) all contracts entered into by the Company;
(c) all purchases and sales made by the Company; and
(d) the assets and liabilities of the Company.
All books of account and records shall be maintained in accordance with
generally accepted accounting principles and the regulations of the Kingdom and
kept at the head office of the Company.
Article 15: Auditor
The partners shall cause an auditor to be appointed annually by a partners
resolution adopted at a general meeting. The auditor must be licensed to
practice in the Kingdom in accordance with the Auditors Regulations. The auditor
shall ensure that the Articles of Association of the Company and the Companies
Regulations are being applied. He shall review all inventories and final annual
accounts and inspect the balance sheet and submit an annual report to each
partner and to the Manager. For that purpose he may review all the Company's
books. documents and contracts entered into with third parties and may request
clarification and information as he deems necessary. The partners shall
determine the auditor's remuneration on an annual basis.
Article 16: Fiscal Year
(a) The first fiscal year of the Company shall commence on the
date of its registration in the Commercial Register and end on
22 Shaaban 1417H corresponding to 31 December 1996G. The
duration of each subsequent fiscal year shall be twelve (12)
months.
<PAGE>
(b) The Manager of the Company shall. within four (4) months
following the end of such fiscal year, prepare a balance
sheet. profit and loss account, and a report describing the
Company's activities and financial position and containing his
recommendations as to the distribution of profits. The Manager
shall send to each partner and to the Companies' Department at
the Ministry of Commerce a copy of these documents, together
with a copy of the auditor's report.
within two (2) months of their date of preparation.
Article 17: Distribution of Profits
The annual net profits of the Company, after deduction of general costs and
expenses shall be distributed in the following manner:
(a) The Company shall set aside ten percent (10%) of its annual
net profits to constitute the statutory reserve required under
Article 176 of the Companies Regulations. The Company may
cease setting aside this reserve when it reaches one-half
(1/2) of the Company's capital.
(b) The partners may resolve to establish additional reserves or
to carry forward the profits in whole or in part to the next
fiscal year.
(c) The remainder of the net profits shall be distributed to the
partners in proportion to their respective shares in the
capital unless the partners unanimously resolve on an
alternative method of distribution.
Article 18: Losses
If losses are incurred, they shall be borne by the partners to the extent of
each partner's ownership of shares in the Company's capital or carried over to
the next fiscal year. No profits shall be distributed until the losses are fully
covered. If the Company's losses reach three-quarters (3/4) of its capital the
Manager of the Company must summon the partners to a meeting within a period not
to exceed thirty (30) days from the date on which the losses reach this level in
order to consider whether to continue the Company, in which case the partners
must pay its debts, or to dissolve it. The resolution of the partners in this
respect shall not be valid unless it is issued in accordance with Article 173 of
the Companies Regulations and the resolution must in all cases be published in
the manner provided in Article 164 of the Companies Regulations. If the Company
continues to pursue its business without the issuance of a decision to continue
it pursuant to the foregoing conditions, or to dissolve it. the partners shall
become jointly and severally liable to pay all of the Company's debts and any
interested party may request that it be dissolved.
<PAGE>
Article 19: Dissolution and Liquidation of the Company
The Company may be dissolved for any of the reasons for dissolution contained in
Article 15 of the Companies Regulations. Upon the Company's dissolution it shall
enter the stage of liquidation in accordance with the provisions of Chapter 11
of the Companies Regulations. In case of voluntary liquidation, the partners
shall appoint one or more liquidator(s) for purpose of liquidating the Company
and shall determine their authority and fees and the following must be observed:
(a) A report certified by a chartered accountant licensed to
practice in the Kingdom shall be prepared regarding the
financial status of the Company as of the date of issuance of
the partners resolution to dissolve and liquidate the Company
which establishing the Company's ability to discharge its
obligations and its debts vis-a-vis third parties.
(b) All entitlements of creditors must be paid in full or a
settlement entered into with them. Otherwise, the Company
shall not be liquidated until after a decision is issued by
the Board of Grievances announcing the bankruptcy of the
Company pursuant to a request by the creditors or the Company
in accordance with the Commercial Court Regulations.
Subject to the provisions of the Companies Regulations, the Company shall be
automatically dissolved upon the occurrence of any of the following:
(a) the dissolution or death of a partner; or
(b) the Company or any partner becomes bankrupt, insolvent,
applies for or consents to the appointment of a receiver or a
liquidator for his or its assets, or seeks relief under any
law for the aid of debtors or takes or permits any action
under the laws of Saudi Arabia or under other applicable laws
similar to the foregoing; or
(c) any other event occurs which the partners shall have agreed
should cause the Company to be dissolved.
Notwithstanding the above. after the occurrence of any of the events referred to
in the preceding paragraph that result in an automatic dissolution of the
Company, the remaining partners may agree to continue the Company.
Article 20: Company Documents
The Company's letterhead shall clearly show the name of the Company. followed by
the phrase 'a limited liability company," as well as the address of Its head
office. its commercial registration number and Its capital. All other documents
shall comply with any applicable rules and regulations.
Article 21: Notices
Any notices given hereunder shall be deemed to be sufficiently given if in
writing and delivered by postpaid registered mail or international courier or
facsimile addressed as follows or as may be advised by one party to the company
in writing from time-to-time and registered in the partners registry:
<PAGE>
(a) in the case of The First Party: Mohamed Suliman Abdullah A1 Namla
P.O. Box 517
Riyadh 11421
Kingdom of Saudi Arabia
Fax: (966-1)
(b) in the case of the Second Party: Mohamed Ali Abdullah A1 Sowailem
P.O. Box 1799
Riyadh 11441
Kingdom of Saudi Arabia
Fax: (966-1)
(c) in the case of the Third Party: Ismail Fawzi Ismail Abu Khadra
P.O. Box 1799
Riyadh 11441
Kingdom of Saudi Arabia
Fax: (966-1)
(d) in the case of the Fourth Party: Mansour Abdul Aziz Mohamed Al Kaaki
P.O. Box 34
Riyadh 11411
Kingdom of Saudi Arabia
Fax: (966-1)
(e) in the case of the Fifth Party: Royle Mid East Ltd.
1000 Cannonball Road
Pompton Lakes, NJ 07442
United States of America
Fax: (1-201) 839-7327
Attention: John C. Ramsey
(f) in the case of the Sixth Party: Fibercore Mid East Ltd.
P.O. Box 206
174 Charlton Road
Sturbridge, MA 01566
United States of America
Fax: (1-508) 347-2778
Attention: Mohamed A. Aslami
A notice shall be deemed to have been made and received: (i) when delivered to
the appropriate address. if sent by registered mail or international courier or
(ii) when received or when dispatched and sate receipt is acknowledged by the
receiving facsimile machine if sent by facsimile.
<PAGE>
Article 22: General Provisions
(a) The Company shall be subject to all laws in effect in the Kingdom of
Saudi Arabia.
(b) All matters not governed by these Articles of Association shall be
governed by the Companies Regulations.
Article 23: Counterparts
These Articles of Association have been executed in several counterparts of
which each partner shall receive one counterpart. The remaining counterparts
shall be submitted to the concerned authorities for purposes of registering the
Company in the Commercial and Companies Registers.
IN WITNESS WHEREOF, this First Amendment to the Articles of Association has been
executed as of the date first written above.
The First Party The Second Party
- ---------------------- ------------------------
The Third Party The Fourth Party
- ---------------------- ------------------------
The Fifth Party The Sixth Party
- ---------------------- ------------------------
Name: Name:
Title: Title:
<PAGE>
Exhibit II
COMMISSION AGENCY AGREEMENT
THIS COMMISSION AGENCY AGREEMENT is entered into as of the _________ day of
_________ 1996, by and between:
(i) MIDDLE EAST FIBER OPTIC CABLE MANUFACTURING COMPANY LIMITED, a
limited liability company organized and existing under the
laws of the Kingdom of Saudi Arabia, having Commercial
Registration No. 1010136511 issued at Riyadh on 11/2/1416H
("MEFC"); and
(ii) FIBERCORE MID EAST LTD., a company organized and existing
under the laws of the Cayman Islands with an address of P.O.
Box 30592 S.M.B., George Town. Grand Cayman, Cayman Islands.
BWI ("Agent").
1. Appointment
MEFC hereby appoints Agent and Agent hereby accepts such appointment.
subject to the provisions of this Agreement. as the sole commission
agent in the countries listed in Appendix A hereof (the "Territory")
for optical fiber and fiberoptic cable products produced by MEFC (the
"Products").
2. Term and Termination
2. 1 This Agreement will take effect on the date hereof and shall continue
through the third anniversary of such date unless earlier terminated as
provided in this Agreement. MEFC shall not be responsible to Agent for
any costs or damages resulting from the termination of this Agreement.
This Agreement shall automatically be renewed for successive one (1)
year periods unless either party sends the other written notice of an
intention not to renew. which notice must be given no less than one
hundred eighty (180) days prior to each anniversary date of this
Agreement provided. however, that in no event shall the term of this
Agreement exceed fifteen (15) years from the date hereof
2.2 Either party may terminate this Agreement at any time in the event the
other party breaches any of its obligations contained herein. Such
termination shall be effective thirty (30) days after written notice is
given to the party in breach specifying the claimed breach(es) The
party in breach may avoid termination if it cures the breach(es) prior
to the end of such thirty (30) day period.
2.3 MEFC may terminate this Agreement with immediate effect if at the end
of the third year from the date hereof or at the end of any subsequent
year the aggregate ex-works value of orders referred by the Agent to
the Company in the Territory are less than seventy-five percent (75%)
of the target amount appearing in the annual budget of the Company in
respect of such year.
<PAGE>
2.4 Either party may terminate this Agreement with immediate effect if the
other party becomes bankrupt or insolvent or is placed in liquidation
or receivership.
3. Orders and Commissions
3. 1 Agent has no authority to accept orders on behalf of MEFC and therefore
agrees that it must promptly refer all orders to MEFC in writing. All
orders are subject to approval and acceptance, either entirely or
partially, by MEFC in writing. MEFC shall have no liability to Agent or
any third party if it declines to accept an order. Unless MEFC agrees
otherwise in writing, all sales will be made upon MEFC's then current
standard sales terms and conditions and list prices. Except as
otherwise agreed between MEFC and Agent, MEFC reserves the right to
alter its standard sales and conditions and list prices from
time-to-time, provided that it shall not change prices or orders
already accepted and shall give Agent at least thirty (30) days prior
written notification of any price change.
3.2 MEFC agrees to pay Agent commissions equal to:
(a) ten percent (10%) of MEFC's ex-works invoice price of any
Products sold by MEFC to a customer in the Territory as a
result of an order referred to MEFC by the Agent pursuant to
Clause 3.1 and accepted by MEFC within six (6) months of such
referral; and
(b) five percent (5 %) of MEFC's ex-works invoice price of any
Products sold by MEFC to a customer in the Territory otherwise
than in accordance with (a) above ("Direct Sales"), provided
that no commission shall be payable in respect of direct sales
of Products to customers in Italy.
3.3 Commissions shall be payable within thirty (30) days from when MEFC
receives payment for Products. If partial payments are received by
MEFC, the commission payable shall be appropriately pro rated.
Commission shall be paid to Agents bank account, as notified by the
Agent to MEFC pursuant to Clause 10.
4. Delay in Performance
Neither party shall be liable for failure or delay in the performance
of any of its obligations under this Agreement. if such delay or
failure is caused by circumstances beyond the control of the party
affected.
5. Waiver
None of the provisions of this Agreement shall be deemed to have been
waived by any act of or acquiescence on the part of MEFC its agents or
employees. but only by an instrument in writing signed by an authorized
officer of MEFC. No waiver of any
<PAGE>
provisionof this Agreement shall constitute a waiver of any other
provision or of the same provision on another occasion.
6. No Partnership or Power of Attorney
It is expressly declared that this Agreement and relationships between
the parties established hereby does not constitute a partnership, joint
venture. power of attorney or contract of employment between them. For
the avoidance of doubt, Agent shall have no authority to accept orders
on behalf of MEFC or to enter into any contract or undertaking or on
behalf of .MEFC and covenants not to purport to do so.
7. Arbitration
7. 1 MEFC and Agent agree that they will attempt in good faith to resolve
any disagreement or dispute arising under, by reason of, or in any way
connected with this Agreement by negotiation. In the event that either
party in its sole discretion believes that such negotiation is not
likely to resolve such disagreement or dispute, that party may send a
notice to the other party requesting arbitration of the dispute. MEFC
and Agent both agree that all such disagreements or disputes shall,
following notice, be subject to binding arbitration in London. England
under international arbitration rules and consent to jurisdiction and
venue there for that purpose. Arbitration is to be conducted solely in
the English language. MEFC and Agent agree that an arbitral award may
be entered as a final judgment in any appropriate court and be enforced
by or through such court(s).
7.2 In the event an arbitration is commenced to enforce a party's rights
under this Agreement. the prevailing party in such action shall be
entitled to recover its costs and reasonable attorneys' fees.
8. Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
Agent may not assign or transfer its rights or obligations under this
Agreement in any way without the prior written consent of MEFC.
9. Severability
Except as otherwise provided herein, if any provision of this Agreement
shall be held by a court of competent jurisdiction to be illegal,
invalid or unenforceable, the remaining provisions shall remain in full
force and effect.
10. Notices
10.1 Any notices given hereunder shall be deemed to be sufficiently given if in
writing and delivered by postpaid registered mail or international courier or
facsimile addressed as follows:
<PAGE>
If to MEFC: _____________________________
Telephone:
Fax:
Attention:
If to Agent: Fibercore Mid East Ltd.
P.O. Box 206
174 Charlton Road
Sturbridge, MA 01566
United States of America
Telephone:
Fax: (1-508) 347-2778
Attention:
or to such other address or facsimile number either party may designate in
writing.
10.2 A notice shall be deemed to have been given and received: (i) when left
at the appropriate address if hand-delivered or sent by registered
mail; or (ii) when actually received. or when dispatched and safe
receipt is acknowledged by the receiving facsimile machine
MIDDLE EAST FIBER CABLE FIBERCORE MID EAST LTD
COMPANY
- ---------------------------- -----------------------------
By By
- ---------------------------- -----------------------------
Name (Print) Name (Print)
- ---------------------------- -----------------------------
Title Title
- ---------------------------- -----------------------------
Date Date
<PAGE>
Appendix A
Territory
The Territory comprises: the United States of America and all territories on the
continent of Europe, excluding any part of Turkey.
<PAGE>
TABLE - BALANCE SHEET
<PAGE>
TABLE - BALANCE SHEET
<PAGE>
TABLE - MIDDLE EAST FACTORY BUILDING
<PAGE>
TABLE - MIDDLE EAST VEHICLES
<PAGE>
TABLE - MIDDLE EAST FURNITURE AND FIXTURES
<PAGE>
TABLE - MIDDLE EAST OFFICE EQUIPMENT
<PAGE>
TABLE - MIDDLE EAST PLANT SERVICES EQUIPMENT
<PAGE>
TABLE - MESC PAYABLES
<PAGE>
Exhibit IV
SALES OF FIBER and PREFORMS
The Third Party will supply or arrange for an affiliate to supply Single Mode
Fiber ("SMF") and Single Mode Preforms ("SMP") to the Company in the following
maximum quantities during the following periods, starting on the date on which
the Company commences commercial production of any Products ("CCP"):
First six (6) months after CCP 12,500 km/SMF
12,500 km/SMP
Next twelve (12) months 90,000 km/SMP'
Next twelve (12) months 135,000 km/SMP
Next twelve (12) months 180,000 km/SMP
Each twelve (12) months thereafter 225,000 km/SMP
The above quantities assume approximately equal monthly shipments. The Company
shall have absolute discretion to adjust quantities ordered below the above
limits, but will endeavor to do so not more frequently than quarterly.
Pricing of SMF shall be 10% less than proven competitive prices for SMF
delivered in Saudi Arabia with equivalent specifications.
Pricing of SMP shall be $42.50 per km ex-works Jena, Germany for the period
ending in December 1995. and thereafter at a price at least US$15.00 per
kilometer (ex-works) less than any bona fide fiber prices with equivalent
specifications available for delivery to the Kingdom, from either Corning, Inc.
or AT&T.
SMF and SMP will be sold to the Company on the Third Party's standard terms and
conditions of sale a copy of which is attached hereto and made a part hereof.
<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of this 13th day of April, 1995 between MIDDLE
EAST SPECIALIZED CABLES CO. ("the Purchaser") and FIBERCORE, INCORPORATED ("the
Company") a Nevada Corporation.
WHEREAS the Purchaser with others entered into a Joint Venture
Agreement Term Sheet dated March 14th, 1995 (the "JV Term Sheet") for the
formation of Middle East Fiber Cables Co. ("MEFC") in the Kingdom of Saudi
Arabia to engage in the manufacture and sale of fiber optic cable products and
to sell and distribute such products throughout the Middle East, Africa and
Turkey; and
WHEREAS pursuant to the JV Term Sheet MEF is required to confirm the
purchase of shares of the Company's common stock (the "Shares") and the
Purchaser and MEF desire that the Purchaser acquire such Shares pursuant to the
terms and conditions of this agreement;
NOW THEREFORE in consideration of the premises and the mutual covenants
and agreements herein contained the parties agree as follows:
1. Offer.
1.1 The Purchaser hereby agrees to subscribe for and purchase 200,000 shares of
the Company at the purchase price of $5.00 per share in two blocks of 100,000
shares subject to the conditions hereinafter set forth;
1.2 Upon execution and delivery of this agreement by both parties the Purchaser
will pay to the Company the sum of $500,000 against delivery of the first block
of 100,000 shares of the Company subject to the terms and conditions of this
offer (the "first closing").
1.3 Upon acceptance of the offer and in addition to the delivery of the 100,000
shares of FiberCore to the Purchaser, the Company shall:
a) deliver into escrow 85,000 shares of FiberCore in
consideration of the Purchaser and its partners agreeing to
enter into a contract for the exclusive supply of FiberCore
products to the MEFC Joint Venture. The escrowed shares are to
be released to the Purchaser upon the completion and execution
of the product supply contract between the Company and MEFC.
b) deliver into escrow 150,000 warrants, granting the Purchaser
the right to purchase 150,000 common shares of FiberCore for a
purchase price of $6.00 per share exercisable in whole or in
part at any time within a 2 year period. The escrowed warrants
to be delivered as further consideration for the purchaser and
its partners agreeing to enter into the contract for the
exclusive supply of FiberCore products to the MEFC Joint
Venture. The warrants are to be delivered to the Purchaser
<PAGE>
immediately following execution of the product supply
agreement by the MEFC Joint Venture.
c) deliver into escrow 65,000 shares of FiberCore to be released
to the purchaser immediately upon the Purchaser exercising its
rights to purchase shares pursuant to the terms of the
warrants referred to in clause 1.3 (b).
1.4 The offer for the second block of shares is conditional upon the parties
hereto reaching an agreement as to the terms of a joint venture company, Middle
East Fiber Cables Co. ("MEFC") to be formed in the Kingdom of Saudi Arabia to
engage in the manufacture and sale of fiber optic products and to sell and
distribute such products throughout the Middle East, Africa and Turkey.
1.5 Upon execution by all of the partners of MEFC of all of the documents
required to complete the formation MEFC and to define the respective interests,
obligation and restrictions on each of the joint venture partners including the
exclusive product supply agreement with the Company, Purchaser will pay to the
Company the further sum of $500,000 against delivery of the second block of
100,000 shares subject to the terms and conditions of this offer (the "second
closing") and the Vendor shall cause to be delivered to the Purchaser:
a) the 85,000 shares of the Company referred to in clause 1.3 (a);
b) the 150,000 warrants referred to in clause 1.3 (b);
c) confirmation by the escrow agent that the 65,000 shares of the
Company are being held for release to the purchaser pending
exercise of the warrants referred to in clause 1.3 (b).
2. Acceptance.
2.1 The Company agrees to sell to the Purchaser 200,000 Shares at the
subscription price of $5.00 per Share in two blocks of 100,000 Shares each
subject to the terms and conditions of this offer and to deliver the 150,000
shares of the Company and the 150,000 warrants referred to in clause 1.3 (a) (b)
and (c) to an escrow agent approved by the purchaser. The Company further agrees
that upon receipt of the purchase price of the second block of 100,000 shares
the entire amount of the said purchase price ($500,000.00) for the said block of
shares shall be invested in MEFC as a capital contribution to the joint venture
by Company or its wholly owned subsidiary and the company or its subsidiary
shall acquire a 20% interest in MEFC upon payment of the said funds.
3. Delivery of Shares and Warrants.
3.1 At the first closing upon payment of the purchase price for the first block
of 100,000 shares, the Company shall deliver to the Purchaser one or more stock
certificates registered in the name of the Purchaser, an executed escrow
agreement and a confirmation from the escrow agent that the shares and the
warrants referred to in clause 1.3 have been delivered to the escrow agent for
release pursuant to the terms of this Agreement.
Within two business days prior to the first
<PAGE>
closing, the Purchaser shall notify the Company in writing of the names in which
all shares and warrants are to be registered.
3.2 At the second closing and upon payment of the purchase price for the second
block of Shares, the Company shall deliver to the Purchaser one or more stock
certificates registered in the name of the Purchaser or in such name or names as
may be designated by the Purchaser and delivery of the shares referred to in
clause 1.3 (a) and the warrants referred to in clause 1.3 (b) registered in the
name of the Purchaser or in such name or names as may be designated by the
Purchaser . 4. Representations and Warranties of the Company.
4.l The Company hereby represents and warrants to, and covenants with the
Purchaser as follows:
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws of the state of
Nevada and is in good standing under such laws. The Company is not in violation
of its Certificate of Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation of its properties
and assets, and to carry on its business as presently conducted or now proposed
to be conducted. The Company is duly qualified as a foreign corporation in each
jurisdiction in which ownership of its property or the nature of its business
requires such qualification and where the failure to be so qualified would be
material to the Company.
(b) Corporate Action. The Company has all the necessary corporate power
and has taken the corporate action required to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company, its Director and Stockholders necessary for the
authorization, execution, delivery, and performance of this Agreement by the
Company, the authorization, sale, issuance, and delivery of the Shares and the
performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company enforceable in accordance
with its terms. The issuance of the securities does not require any further
corporate action, will not be subject to preemptive rights or other preferential
rights in any present stockholders of the Company and will not conflict with any
provisions of any agreement to which the Company is a party or by which it is
bound.
(c) Capitalization, Status of Capital Stock. The Company has a total
authorized capitalization consisting of 20,000,000 shares of Common Stock, $.01
par value, of which 6,594,264 shares are issued and outstanding. All outstanding
shares of Common Stock have been duly and validly authorized and issued, are
fully paid and nonassessable and were not issued in violation of or subject to
any preemptive or other similar rights to subscribe for or purchase any
securities. The Shares, when issued and delivered in accordance with the terms
hereof will be duly authorized, validly issued, fully-paid and non-assessable.
The Company will reserve 400,000 shares of its common stock for issuance under a
Stock Option Plan. All issued and outstanding warrants options or other
agreements to acquire shares of the Company are set forth
<PAGE>
in Schedules "A" and "B" hereof and these shares, when issued and delivered in
accordance with the terms of the warrants, options or other agreements will be
duly authorized, validly issued, fully paid and non-assessable. AMP Incorporated
is lending $5,000,000 to the Company and has the right to convert the loan into
common stock pursuant to the term sheet attached hereto as Schedule "B" subject
to the approval of the Board of Directors of the both companies. Except as
provided or described in this Stock Purchase Agreement, there is no other
option, warrant, conversion privilege, or other contractual rights presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the company's capital stock or other securities of the Company.
(d) Disclosure. To the Company's knowledge and belief, neither this
Agreement, the Private Placement Memorandum dated October 12th, 1994 (the
"Memorandum") as supplemented by this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchaser by or on
behalf of the Company in connection with the transaction contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no material fact within the special knowledge of any of the
executive officers of the Company which has not been disclosed herein or in
writing by them to the Purchaser and which materially adversely affects the
business, properties, assets or condition of the Company.
(e) Government Approvals. No authorization, consent, approval, license,
exemption, from or filing of registration with any court of governmental
department, commission, board, bureau, agency or instrumentality, domestic, or
foreign, is or will be necessary for the execution and delivery by the Company
of this Agreement, for the offer, issue, sale and delivery of the shares, or for
the performance by the Company of its obligations under this Agreement, except
for certain filing under state securities laws, the offer and sale of the shares
will be exempt from the registration requirements of applicable federal and
state securities laws.
(f) Litigation. There is no material litigation or governmental
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company affecting any of its properties or assets, or
against any officer, key employee or the Company, nor, to the knowledge of the
Company, has there occurred any event or does there exist any condition on the
basis of which any litigation, proceeding or investigation might properly be
instituted. The Company is not in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency applicable to it. There are no actions or proceedings pending
or threatened or any basis therefore known to the Company which might result,
either in any case or in the aggregate, in any material adverse change in the
business, operations, affairs or condition of the Company or in any of its
properties or assets, or which might call into question the ability of the
Company to consummate the transactions contemplated by this Agreement.
(g) Compliance with Other Instruments. Neither the execution, issuance
and delivery of this Agreement or the shares, nor the consummation by the
Company of any transaction contemplated hereby or thereby, constitutes or
results in or will constitute or result in a default or
<PAGE>
violation of any term or provision of the charter and By-laws of the Company, as
amended and in effect, and the terms and provisions of the mortgages,
indentures, leases, agreements, and other instruments and of all judgments,
decrees, governmental orders, statutes rules, or regulations by which the
Company or its properties are bound.
(h) Taxes. The Company has prepared and timely filed all federal, state
and other tax return required by law to be filed by it, has paid or made
provisions for the payment of all taxes known to be due and all additional
assessments, and adequate provision has been made for all current taxes and
other charges to which the Company is subject.
(i) Indebtedness. Except for the accrued expenses of this offering,
patent reviews and filing, or expenses incurred in the ordinary course of
business since December 31, 1994, the Company has no outstanding indebtedness
and it is not in default of any contract or agreement of the Company.
(j) Financial Statements. The audited financial statements for the
period ending December 31, 1993 attached to the Memorandum and the related
statements of shareholders equity and cash flows and notes thereto, all of which
are accompanied by the related audit opinion of the Company's independent
certified public accountants, Mottle, McGrath & Company and unaudited Balance
Sheet, Income Statement, Cash Flow and Administrative Expenses for period ending
December 31st, 1994 have been prepared in accordance with generally accepted
accounting principals applied on a consistent basis throughout the period
covered by such statements and present fairly the Company's financial condition
and results of operations and statements of cash flows as of the dates
indicated. Except as otherwise disclosed herein, since December 31st, 1994 there
has not been:
(i) any change in the assets, liabilities, financial
condition, or operations of the Company from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse;
(ii) any change, except in the ordinary course of business, in
the contingent obligations of the Company, whether by way of guaranty,
endorsement, indemnity, warranty, or otherwise;
(iii) any damage, destruction, or loss, whether or note
covered by insurance, materially and adversely affecting the properties or
business of the Company;
(iv) any declaration or payment of any dividend or other
distribution of the assets of the Company;
(v) any labor organization activity; or
<PAGE>
(vi) to the best of the Company's knowledge, any other event
or condition of any character which has materially and adversely affected the
Company's assets, liabilities, financial condition, or operations.
(k) Patents and Other Intangible Rights. The Company owns, or is
licensed to use, rights to all patents, trade names, service marks, trademarks,
copyrights, and other intellectual property necessary to carry on its business
as currently conducted or proposed to be conducted as described in the
Memorandum, with any such licensed rights being adequate both in scope and
duration for such purposes. Except as may be disclosed in the Memorandum, to the
best of its knowledge the Company is not infringing upon or otherwise acting
adversely to any right or claimed right of any person under or with respect to
any patents, patent rights, trademarks, service marks, copyrights, trade names,
or any other third-party rights except for such infringement or other adverse
action which would not, individually or in the aggregate, have a material
adverse effect on the financial condition or business of the Company.
5. Purchaser Representations
5.1 In connection with this subscription, the Purchaser hereby makes the
following acknowledgment and representations:
(a) The execution of this Share Purchase Agreement has been duly
authorized by all necessary action on the part of the Purchaser, has been duly
executed and delivered, and constitutes a valid, legal, binding, and enforceable
agreement of the Purchaser;
(b) The Purchaser is acquiring the Shares for it own account, for
investment, and not with a view to any "distribution" thereof within the meaning
of the Securities Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Shares have not been
registered under the Act, it cannot dispose of any of the Shares unless such
Shares are subsequently registered under the Act or exemptions from such
registration are available. The Purchaser acknowledges, and understand that, it
has no right to require the Company to register the Shares. The Purchaser
further understands that the Company may, as a condition to the transfer of any
of the Shares, require that the request for transfer be accompanied by an
opinion of counsel, in form and substance satisfactory to the Company, to the
effect that the proposed transfer does not result in a violation of the Act,
unless such transfer is covered by an effective registration statement under the
Act. The Purchaser understands that each certificate representing the Securities
will bear the following legend or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933. These securities
have been acquired for investment and not with a view to
distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement
<PAGE>
for such shares under the Securities Act of 1933, or an opinion of
counsel satisfactory to the corporation that registration is
not required under such Act.
(d) The Purchaser understands the offering is being made pursuant to
the exemption from registration with the Securities and Exchange Commission (the
"Commission") afforded by Section 4 (2) of the Act and/or Regulation D adopted
by the Commission relating to transactions by an issuer not involving any public
offering, and similar federal, state, and foreign laws or policies.
Consequently, the memorandum and related offering materials have not been
subject to review and comment by the staff of the commission or by any state or
foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to ask questions of
and receive answers from the Company concerning the terms and conditions of its
investment, and to obtain any additional information of the same kind that is
specified in Part I of a Registration Statement on Form SB-2 under the Act, or
that is necessary to verify the accuracy of the other information obtained. The
Purchaser or its purchaser representative has examined the Memorandum and other
information furnished by the Company and, through discussions and examination of
such materials as the Purchaser has requested, has obtained sufficient
information upon which to make an investment decision. The Purchaser is familiar
with the type of investment which the shares constitute, and has reviewed the
merit and risks of this investment to the extent deemed advisable by the
Purchaser. The Purchaser has such knowledge and experience in financial and
business affairs that it is capable of evaluation the merits and risks of
investing in the shares, and acknowledges that it is able to bear the economic
risks of this investment. Further, the Purchaser understands all matters in this
Agreements.
(f) The investment in the Company by the Purchaser does not constitute
a principal portion of the Purchaser's total assets and the Purchaser is able to
afford a complete loss of the investment contemplated herein.
6. Covenants of the Company
6.1 Annual Reports. The Company agrees to use its best efforts to deliver to the
Purchaser, as soon as practicable after the end of each fiscal year and in any
event within 120 days thereafter, a consolidated balance sheet of the Company as
at the end of such fiscal year, a consolidated Statement of Cash Flow of the
Company for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants selected by the Company.
6.2 Quarterly Reports. The Company agrees to deliver to the Purchaser as soon as
practicable after the end of each of the first three quarterly fiscal periods in
each fiscal year and in any event within 60 days thereafter, a consolidated
balance sheet of the Company as at the end of such period, a consolidated
statement of operations and a consolidated statement of Cash Flow of the Company
for such period, in each case prepared in accordance with generally accepted
<PAGE>
accounting principles consistently applied and setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year, all in
reasonable detail and certified, subject to changes resulting from audit
adjustments, by the principal financial or accounting officer of the Company.
6.3 Inspection. The Company agrees to permit any authorized representative of
the Purchaser to visit the Company to discuss its affairs and finances with its
officers, all upon reasonable notice to the Company, at such reasonable times
and as often as may be reasonably requested.
6.4 Purchaser's Right to Receive Reports. The Company shall deliver the reports
or give the rights specified in Paragraph 6.1, 6.2, and 6.3 to the Purchaser
until the earlier of: (i) the closing date of the Company's first underwritten
public offering pursuant to an effective registration statement filed under the
Act; or (ii) until the Purchaser no longer holds any shares.
7. No Waiver
7.1 Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser, the Purchaser does not thereby or in
any other manner waive any rights granted to it under federal and state
securities laws.
8. Survival of Representation Warranties and Agreements
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations, and warranties made by the Company
and the Purchaser herein shall survive the execution of this Agreement, the
delivery to the Purchaser of the shares being purchased and the payment
therefor.
9. Conditions to Obligations of Purchaser
The obligation of the Purchaser to purchase the Shares on the dates of
the first closing and the second closing is subject to the fulfillment on or
prior to each such closing of the following conditions, any or all of which may
be waived at the option of the Purchaser:
9.1 Representations and Warranties Correct. The representations and warranties
made by the Company in Section 4 hereof shall be true and correct in all
material respects on the date of the first closing and the second closing with
the same force and affect as if they had been made on and as of the said dates.
9.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the date of the first
closing and second closing shall have been performed or complied with in all
material respects.
9.3 Opinion of Company's Counsel. The Purchaser shall have received from
Cadwalader, Wickersham & Taft, counsel to the Company, an opinion addressed to
it, dated the date of each closing substantially to the effect that:
<PAGE>
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nevada, and has all
requisite corporate power and authority to own its properties and conduct its
business;
(b) The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $0.01 per value per share;
(c) The certificates evidencing the Shares to be delivered hereunder
are in due and proper form under Nevada law, and when duly authorized and
delivered to the Purchaser or upon the Purchaser's order against payment of the
agreed consideration therefor in accordance with the provision of this
Agreement, the Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, will not have been issued in violation of
or subject to any preemptive rights or, to such counsel's knowledge, in
violation of any other rights to subscribe for or purchase securities;
(d) Assuming compliance by the Company and by the Purchaser with this
Agreement, the offer, sale and issuance of the Shares in conformity with the
terms of the Agreement will not require registration under the U.S. Securities
Act of 1933 as amended;
(e) The Company has the requisite corporate power and authority to
enter into this Agreement and to sell and deliver the Shares to be sold by it;
this Agreement has been duly and validly authorized by all necessary corporate
action by the Company, has been duly and validly executed and delivered by and
on behalf of the Company, and is a valid and binding agreement of the Company,
enforceable in accordance with its terms;
(f) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not violate any
statute, rule or regulation, or, to such counsel's knowledge, any judgment,
decree or order of any court or governmental body having jurisdiction over the
Company or any of its property;
9.4 No Order Pending. There shall not then be in affect any order enjoining or
restraining the transactions contemplated by this Agreement.
9.5 No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Shares.
9.6 Certificate Regarding Corporate Authority. The Company shall have delivered
to the Purchaser the resolutions of the company's Board of Directors authorizing
the execution and performance of this Agreement, in each case certified to be a
true and correct copy by the Secretary of the Company, together with the
certification that each resolution and actions have not been modified or amended
and remain in full force and effect.
<PAGE>
9.7 Compliance Certificate. The Company shall have delivered to the Purchaser a
certificate executed on behalf of the Company by the Chairman of the Board and
Chief Executive Officer and Chief Financial Officer of the Company on each
closing date certifying to the fulfillment of the conditions specified in
Sections 9.1 and 9.2.
10. Conditions to Obligations of the Company.
The Company's obligation to sell and issue the shares at each Closing
is subject to the fulfillment on or prior to such closing of the following
conditions, any or all of which may be waived at the option of the Company:
10.1 Representations and Warranties Correct. The representations and warranties
made by the Purchaser in Section 5 hereof shall be true and correct in all
material respects on the date of such closing with the same force and affect as
if they had been made on and as of that date.
10.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchaser on or prior to the date of such
closing shall have been performed or complied with in all material respects.
10.3 No Order Pending. There shall not then be in affect any order enjoining or
restraining the transactions contemplated by this Agreement.
10.4 No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Shares.
11. Transferability
11.1 The Purchaser agrees not to transfer or assign this Share Purchase
Agreement, or any of its interest herein, and further agrees that any assignment
or transfer of the shares shall be made only in accordance with applicable
securities laws and that an appropriate legend with respect there to may be
placed by the Company on any certificate evidencing such Shares.
12. Miscellaneous
12.1 Notices. All notices or other communications given or made hereunder shall
be in writing and shall be delivered to the Purchaser at:
Middle East Specialized Cables Co.,
P.O. Box 60536
Riyadh 11555, Saudi Arabia
or sent by facsimile transmission to #966-1-493-5818
<PAGE>
and to the Company at:
174 Charlton Road
P.O. Box 206
Sturbridge, MA 01566
or sent by facsimile transmission to (508) 347-2778
12.2 Governing Law. This Share Purchase Agreement shall be construed in
accordance with the governed by the laws of the Commonwealth of Massachusetts
without giving effect to the conflict of laws.
12.3 Entire Agreement. This Share Purchase Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by all parties.
12.4 Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and by the Purchaser.
12.5 Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
12.6 Severability. In case any provision contained in this Agreement should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
12.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts, have been signed by each party hereto and delivered to
the other party.
12.8 Pronouns. All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons, firm or
other entity may require in the context thereof.
<PAGE>
IN WITNESS WHEREOF that parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
MIDDLE EAST SPECIALIZED CABLES CO.
per:___/s/___________________________
FIBERCORE, INC.
per:___/s/___________________________
Witness: ___/s/_______________________
Charles DeLuca
EXH10-33
NOTE PURCHASE AGREEMENT
THIS AGREEMENT made as of this 15th day of March, 1996 between Hedayat
Amin-Arsala ("the Purchaser") and FIBERCORE, INC. ("the Company") a Nevada
Corporation.
WHEREAS the Purchaser and the Company executed a Term Sheet dated
February 23, 1996 for the purchase and sale of the Company's $200,000
convertible 8.5% note ( the "Note"); and
WHEREAS pursuant to the Term Sheet the Purchaser and the Company are
required to document such purchase and sale,
NOW, THEREFOR in consideration of the premises and the mutual covenants
and agreements herein contained the parties agree as follows:
1. Offer
1.1 The Purchaser hereby agrees to purchase the Note subject to the
conditions hereinafter set forth,
1.2 Upon execution and delivery of this Agreement by both parties and the
execution and delivery of the Note by the Company to the Purchaser, the
Purchaser will pay to the Company the sum of $200,000 ( which amount has been
previously paid).
1.3 In addition to the foregoing, the Company shall deliver to Purchaser 146,850
warrants (the "Warrant"), granting the Purchaser the right to purchase 146,850
common shares of the Company for a purchase price of $1.63 per share exercisable
in whole or in part at any time within a 2 year period.
2. Acceptance
2.1 The Company agrees to sell to the Purchaser the Note subject to the terms
and conditions of this Agreement and to deliver the Warrants referred to in
clause 1.3.
3. Delivery of Warrants
3.1 Upon payment of the purchase price for the Note, the Company shall deliver
to the Purchaser the Warrants registered in Purchaser's name.
4. Representations and Warranties of the Company
4.1 The Company hereby represents and warrants to, and covenants with the
Purchaser as follows:
<PAGE>
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws of the state of
Nevada and is in good standing under such laws. The Company is not in violation
of its Certificate of Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation of its properties
and assets, and to carry on its business as presently conducted or now proposed
to be conducted.
(b) Corporate Action. The Company has all the necessary corporate power
and has taken the corporate action required to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company for the authorization, execution, delivery, and performance
of this Agreement by the Company, the authorization, sale, issuance, and
delivery of the Note and Warrants and the performance of the Company's
obligations hereunder has been taken. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable in accordance with its terms. The issuance of the
Note and Warrants does not require any further corporate action, will not be
subject to preemptive rights or other preferential rights in any present
stockholders of the Company and will not conflict with any provisions of any
agreement to which the Company is a party or by which it is bound.
(c) Government Approvals. No authorization, consent, approval, license,
exemptions from or filing of registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic, or
foreign, is or will be necessary for the execution and delivery by the Company
of this Agreement, and except for certain filings under state securities laws,
the offer and sale of the shares will be exempt from the registration
requirements of applicable federal and state securities laws.
(d) Compliance with Other Instruments. Neither the execution, issuance
and delivery of this Agreement or the Note, nor the consummation by the Company
of any transaction contemplated hereby or thereby, constitutes or results in or
will constitute or result in a default or violation of any term or provision of
the charter and By-laws of the Company, as amended and in effect, and the terms
and provisions of the mortgages, indentures, leases, agreements, and other
instruments and of all judgments, decrease, governmental orders, statutes,
rules, or regulation by which the Company or its properties are bound.
5. Purchaser Representations
5.1 In connection with this subscription, the Purchaser hereby makes the
following acknowledgment and representations:
(a) The execution of this Agreement has been duly authorized by all
necessary action on the part of the Purchaser, has been duly executed and
delivered, and constitutes a valid, legal, binding, and enforceable agreement of
the Purchaser;
<PAGE>
(b) The Purchaser is acquiring the Note and the Warrants for it own
account, for investment, and not with a view to any ;'distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Note and the Warrants
have not been registered under the Act, it cannot dispose of any of the Note and
Warrants unless such Note and the Warrants are subsequently registered under the
Act or exemptions from such registration are available. The Purchaser
acknowledges, and understands that, it has no right to require the Company to
register the Note, the Warrants or any shares obtained through the conversion or
exercise of the foregoing. The Purchaser further understands that the Company
may, as a condition to the transfer of any of the Note or Warrants, require that
the request for transfer be accompanied by an opinion of counsel, in foreign and
substance satisfactory to the Company, to the effect that the proposed transfer
does not result in a violation of the Act, unless such transfer is covered by an
effective registration statement under the Act. The Purchaser understands that
each certificate representing the shares will bear the following legend or one
substantially similar thereto:
The securities represented by this certificate have
not been registered under the Securities Act of 1933.
These securities have been acquired for investment
and not with a view to distribution or resale, and
may not be sold, mortgaged, pledged, hypothecated or
otherwise transferred without an effective
registration statement for such shares under the
Securities Act of 1933, or an opinion of counsel
satisfactory to the corporation that registration is
not required under such Act.
(d) The Purchaser understands the offering is being made pursuant to
the exemption from registration with the Securities and Exchange Commission (the
"Commission") afforded by Section 4 (2) of the Act and/or Regulation D adopted
by the Commission relating to transactions by an issuer not involving any public
offering, and similar federal, state, and foreign laws or policies.
Consequently, any offering materials have not been subject to review and comment
by the staff of the commission or by any state or foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to ask questions of
and receive answers from the Company concerning the terms and conditions of its
investment, and to obtain any additional information of the same kind that is
specified in Part I of a Registration Statement on Form SB-2 under the Act, or
that obtained. The Purchaser or its purchaser representative has examined the
information furnished by the Company and, through discussions and examination of
such materials as the Purchaser has requested, has obtained sufficient
information upon which to make an investment decision. The Purchaser is familiar
with the type of investment which the shares constitute, and has reviewed the
merit and risks of this investment to the extent deemed advisable by the
Purchaser. The Purchaser has such knowledge and experience in financial and
business affairs that it is capable of evaluation the merits and risks of
investing in the shares, and acknowledges that it is able to bear the economic
risks of this investment. Further, the Purchaser understands all matters in this
Agreement.
<PAGE>
(f) The investment in the Company by the Purchaser does not constitute
a principal portion of the Purchaser's total assets and the Purchaser is able to
afford a complete loss of the investment contemplated herein.
6. Covenants of the Company
6.1 Annual Reports. The Company agrees to use its best efforts to deliver to the
Purchaser, as soon as practicable after the end of each fiscal year and in any
event within 120 days thereafter, a consolidated balance sheet of the Company as
at the end of such fiscal year, a consolidated Statement of Cash Flow of the
Company for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants selected by the Company.
6.2 Quarterly Reports. The Company agrees to use its best efforts to deliver to
the Purchaser as soon as practicable after the end of each of the first three
quarterly fiscal periods in each fiscal year and in any event within 60 days
thereafter, a consolidated balance sheet of the Company as at the end of such
period, a consolidated statement of operations and a consolidated statement of
Cash Flow of the Company for such period, in each case prepared in accordance
with generally accepted accounting principles consistently applied and setting
forth in comparative form the figures for the corresponding periods of the
previous fiscal year, all in reasonable detail and certified; subject to changes
resulting from audit adjustments, by the principal financial or accounting
officer of the Company.
6.3 Inspection. The Company agrees to permit any authorized representative of
the Purchaser to visit the Company to discuss its affairs and finances with its
officers, all upon reasonable notice to the Company, at such reasonable times
and as often as may be reasonably requested.
6.4 Purchaser's Right to Receive Reports. The Company shall deliver the reports
or give the rights specified in Paragraph 6.1, 6.2~ and 6.3 to the Purchaser
until the earlier of: (I) the closing date of the Company's first underwritten
public offering pursuant to an effective registration statement filed under the
Act; or (ii) until the Purchaser no longer holds the Note or any Warrants.
7. No Waiver
7.1 Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser the Purchaser does not thereby or in any
other manner waive any rights granted to it under federal and state securities
laws.
8. Survival of Representation Warranties and Agreements
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations, and warranties made by the Company and
the Purchaser herein shall
<PAGE>
survive the execution of this Agreement, the delivery to the Purchaser of the
shares being purchased and the payment therefor.
9. Transferability
9.1 The Purchaser agrees not to transfer or assign this Agreement, or any of its
interest herein, and further agrees that any assignment or transfer of the
shares shall be made only in accordance with applicable securities laws and that
an appropriate legend with respect there to may be placed by the Company on any
certificate evidencing such Shares.
10. Miscellaneous
10.1 Notices. All notices or other communications given or made hereunder
shall be in writing and shall be delivered to the Purchaser at: Hedayat
Amin-Arsala 3723 Morrison Street, N.W. Washington, DC 20015 and to the Company
at: 174 Charlton Road P.O Box 206 Sturbridge, MA 01566
10.2 Governing Law. This Agreement shall be construed in accordance with the
governed by the laws of the Commonwealth of Massachusetts without giving effect
to the conflict of laws
10.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties.
10.4 Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and by the Purchaser.
10.5 Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
10.6 Severability. In case any provision contained in this Agreement should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
10.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other party.
10.8 Pronouns. All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person or persons, firm or
other entity may require in the context thereof.
<PAGE>
IN WITNESS WHEREOF that parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
HEDAYAT AMIN-ARSALA
By: __________________________
Title:________________________
FIBERCORE, INC.
By: __________________________
Title: Chairman/CEO
<PAGE>
EXHIBIT A
CONVERTIBLE
PROMISSORY NOTE
$200,000 Sturbridge, MA
March 15, 1996
FOR VALUE RECEIVED, FiberCore, Inc., a Nevada corporation ("Payor"),
hereby unconditionally promises to pay to the order of Hedayat Amin-Arsala
("Payee"), at his address at 3723 Morrison Streets N.W., Washington, DC 20015
the principal sum of Two Hundred Thousand Dollars ($200,000) as follows:
Interest shall accrue and be paid on the unpaid principal amount of this
Promissory Note at the rate of 8.5% per annum. Accrued interest shall be paid
monthly, with the first payment due on April 30, 1996. Principal and any accrued
interest shall be due and payable on April 1, 1997. All outstanding principal
and accrued interest on this Promissory Note is convertible, at the option of
the holder, at any time into fully paid and nonassessable shares of the Payor's
Common Stock at the conversion rate ( the "Conversion Rate") of $1.36 per share
for the one year period from the date hereof. Any partial conversion of the
Promissory Note shall be deemed a conversion of the principal sum hereof until
the entire principal amount is converted. Thereafter, any conversion shall be
accrued interest. If the Payor is the issuer of securities to be sold by it
under an effective registration statement pursuant to the Securities Act of
1933, as amended, the Corporation will provide no less than ten days prior
notice thereof to the holder and all conversion rights hereunder will terminate
upon the closing of the sale by the Corporation of the securities covered by
said registration statement unless the holder shall have converted this
Promissory Note before said date. In the event the Common Stock is split,
subdivided or combined, the Conversion Rate thereafter in effect shall be
approximately adjusted by the Payor to provide the holder with the number of
shares of Common Stock upon conversion such holder would have received on such
split, subdivision or combination if it had converted this Promissory Note
immediately prior thereto. In the event the Common Stock is reclassified or the
Payor merges or combines with another entity in a transaction in which the
holders of Common Stock receive securities or other consideration in respect of
such Common Stock, the Payor shall be entitled after such event to convert this
Promissory Note into the kind and type of securities it would have received had
the holder converted the Promissory Note immediately prior to such event.
This Promissory Note may be prepaid in whole or in part at any time or
from time to time without penalty or premium together with interest accrued on
the amount so prepaid.
The principal amount of this Promissory Note and interest accrued
thereon shall become immediately due and payable, without presentation, protest,
notice or further demand, all of which are expressly waived, in the event of the
default in any payment of interest or principal when due or in the event of the
filing by or against the Payor of a petition in bankruptcy or reorganization or
insolvency. No event of default shall occur until Payor receives written notice
of an alleged default and, after 30 days, such default has not been remedied or
cured.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to
be duly executed and delivered as of the date set forth above.
FiberCore, Inc.
By:____________________________
Title: Chairman
EXH10-34
JOINT VENTURE AGREEMENT
This agreement is made at Islamabad this 21st day of May 1995, by and between,
Telecom Foundation, sector I-9, Islamabad (herinafter called TF) which
expression shall include their successors and assignees of the first part,
and
Techman International Corporation a company incorporated in USA located at 727
Oxford-Sturbridge Road, (Route 20), Charlton, Massachusetts, USA with local
office at 74 B Nazimuddin Road, F-8/4, Islamabad hereinafter called as "Techman
" (which expression shall include their successors and assignees) as
representative of the foreign investors of the second part.
Whereas on the official visit of the Prime Minister of Pakistan to the United
States of America, a memorandum of Understanding was signed on April 6th 1995,
between Dr. M . Mahmud Awan, Chairman and Chief Executive Officer of Techman
International USA and Secretary Communication, Government of Pakistan to explore
the possibility of investing in Pakistan for establishing optical fiber
industries in association with Telecom Foundation,
NOW IT IS AGREED AS FOLLOWS:
1. Formation of the company
The parties shall cause to be incorporated in accordance with the laws of
Pakistan a limited company (hereinafter referred to as the company) under the
title "Fiber Optic Industries Pvt. Ltd." the provisions hereinafter contained so
far as the same are applicable to the company shall be observed and performed by
the said company.
2. Objectives and constitution
(i) The objective of the company shall be to set up, operate and maintain
an industrial unit for the- manufacture and marketing of the optical fiber cable
and related systems and accessories, etc. The authorized share capital of the
company shall be Rs. 90,000,000 (Rs. Ninety million) divided into 9,000,000
ordinary shares of Rs. 10 each.
(ii) The articles of association shall provide interalia as follows:
a. The registered office of the company shall be at 74-B
Nazimuddin Roads F-8/4 Islamabad.
b. The board of directors shall comprise of not more than seven
directors
<PAGE>
c. The TF shall have the right to appoint two directors. The
Techman and its associates shall appoint five directors. The
right to appoint such directors shall include the right to
remove any director so appointed and appoint any other
director as the case may be.
d. The directors may appoint Alternate Directors. The traveling
expense of the directors traveling on the business of the
company shall be defrayed by the company, but the directors
shall receive no remuneration for their services except any
fee approved by the company in accordance with the laws of
Pakistan. Should a director be resident outside Pakistan then
his traveling expenses to and from Pakistan on the business of
the company shall be met by the company, with the consent of
the board restricted to two visits per year.
e. Five directors shall constitute quorum of the board meeting
out of which at least one shall from TF.
f. The articles of association shall contain such other
provisions as shall be necessary or desirable to carry out the
provisions of this agreement and as may be mutually agreed by
the parties hereto.
g. The majority share holders shall have the right to appoint
chief executive of the company and they shall have the right
to appoint Chairman of the company.
3. Capital Subscription
The share capital shall be issued at par as and when required by the company and
shall be subscribed by the TF or its subsidiary company in Pak Rupees and by
Techman, FiberCore and Royle in US Dollars. Equity participation ratio initially
shall be as follows:
1. TF 15%
2. Foreign investors 85%
i) Techman Intentional
727 Oxford-Sturbridge Road, 40%
Route 20, Charlton, Mass
ii) FiberCore, Inc. 30%
174 Charlton Road,
Sturbridge, Mass. 01566
iii) Royle Systems Group 15%
1000 Cannonball Road,
Pompton Lakes, NJ 07442.
<PAGE>
4. Foreign Investment Protection
The investment of foreign capital shall be protected and governed by the
provisions of "the Foreign Private Investment" (Promotion and protection ) Act
1976 as amended from time to time.
5. Telecom Foundation's Contribution/Project location
The optical fiber and cable factory shall be located at land presently owned by
the TF in sector H-8, Islamabad which will be transferred to the new company
Fiber Optic Industries (Pvt.) Ltd. at the time of the registration of the new
company. TF's share of the equity shall be reserved at 15% of the total. The
price of the land shall be adjusted against the equity of the TF and if required
TF shall contribute further cash upto US Dollars 600,000 to reach its share of
the equity in Pakistan Rupees.
6. Managerial participation by Telecom Foundation
I). TF shall have shared management role in the establishment and operation
of the company. For this purpose TF shall provide their qualified staff and
managerial personnel.
ii). All necessary Federal Government, provincial Government Corporations and
local bodies approval sanctions, licenses and authorizations shall be obtained
by all the parties by concerted efforts.
7. Information to be supplied by Techman
Techman shall provide all the necessary information pertaining to the project.
8. Training of Personnel
Techman and its affiliates shall provide the requisite training to the company's
technicians and other employees.
9. Supply of equipment, Components and parts to the company
i) The company shall buy plant, machinery, equipment and raw material from
Techman and its associate companies for the establishment of optical fiber
industries at prices matching competitive international prices.
ii) Selling prices of the product manufactured by the company shall be fixed by
the company and shall not be lower than the cost of production.
iii) The company shall have the right to export its products to other parts
of the world.
10. Book of Accounts
<PAGE>
The company shall keep proper books of accounts and appoint auditors in
accordance with the laws of Pakistan and the books shall be open for inspection
by the parties.
11. Incorporation of the company/license fee
The parties to this agreement shall get the company incorporated and all charges
pertaining to incorporation, stamp duty, registration fee etc. shall be borne by
the new company under formation.
12. Arbitration
If any difference or dispute arising out of this Agreement is not amicably
settled by the parties hereto, the same shall be referred to arbitration of
three arbitrators. One of the arbitrators shall be appointed by TF and the other
by Techman and the third arbitrator, acting as chairman shall be appointed by
the first two arbitrators by mutual agreement. The decision of the arbitrators
shall be final-and binding upon the parties. The arbitration proceedings can be
governed by the Arbitration Act, 1940 of Pakistan and the rules made thereunder.
The arbitration can be held at Islamabad Pakistan, or an international site
through mutual agreement.
13. Governing Law
This agreement shall be governed by the laws of Pakistan for all activities in
Pakistan and by the laws of the USA for all activities in the USA. This
agreement recognizes the jurisdiction of the US courts regarding the American
Corporate investment in the USA.
14. Changes to the Agreement
Changes to the agreement may be mad by mutual consent of the parties in writing.
Such changes shall have the same validity as this agreement.
15. Period of Agreement
This agreement shall be effective for a period of ten years w.e.f. the date
hereof. However this period can be extended by mutual consent.
16. Public Offering
The parties agree to an early public offering of the shares so that the company
shares can be traded at Pakistan and international stock exchanges.
17. Failing to meet obligations
<PAGE>
If the parties fail to perform their obligations under this agreement for a
period of 12 months from the date of this agreement, this agreement shall be
deemed terminated.
18. Notices
All notices shall be deemed to have been properly given if sent by registered
mail or through courier on the addresses given below:
TF: Plot no. 190, Sector I/9, Islamabad.
Techman: Techman Center, B727, Charlton, Mass. 01508, USA.
In witness whereof the parties have set their hands the day and year first above
written.
Telecom Foundation Techman International
For self and foreign investors.
Name: __________________________ Name:_________________________
(M.A.A. CHOWDHRI) Position: Chairman/CEO
Position: General Manage (Cowap)
Telecom Foundation
Sactor 1-9/2 Islamabad
Witness 1._____________________________ Witness 2.______________________
Name:__________________________________ Name:___________________________
<PAGE>
THE COMPANIES ORDINANCE, 1984
COMPANY LIMITED BY SHARES
MEMORANDUM
AND
ARTICLES OF ASSOCIATION
OF
FIBRE OPTIC INDUSTRIES
(PRIVATE) LIMITED
<PAGE>
THE COMPANIES ORDINANCE, 1984
(Company Limited by Shares)
MEMORANDUM OF ASSOCIATION
OF
FIBRE OPTIC INDUSTRIES (PRIVATE) LIMITED
I. The name of the company is FIBRE OPTIC INDUSTRIES (PRIVATE) LIMITED.
II. The registered office of the Company will be situated in Islamabad
Capital Territory.
III. The objects described at S.No. 1 to 6 hereunder, for which the company
is established, are exclusively to operate its industrial undertaking
anywhere in Pakistan while other objects are incidental to the main
objects:
1. To manufacture optical fibre, Optical fiber cables, metallic
telecommunication cables, fibre optic systems, multi-mode
optical preforms, and multi-mode optical fibres;
2. To manufacture telecommunications products including advanced
digital switches, network controllers, multiplexers, telephone
exchanges, and transceivers;
3. To manufacture advanced electronic products and systems,
electrical equipment, power relays, controls, telephone
relays, and telecom accessories;
4. To manufacture fibre optic sensors, cable monitoring and fault
locating systems, and other industrially engineered products
and systems;
5. To manufacture, market, sub contract, and distribute
nationally, regionally, and internationally all fibre optics
based manufactured goods and primary systems, optical and
ophthalmic products, precision optics, optical processors, and
high speed computers;
6. To export and market world wide proprietary and general use
consumer and industrial products based on conventional and
proprietary technologies harnessed by the Company.
7. To carry on the business of, or to act as Consultants,
Advisors and agents with regard to, or any other manner deal
with Engineering Management, Designing, Fabrication. erection,
installation and any other engineering work of any kind
whatsoever in Pakistan and any where in the world.
<PAGE>
8. To act as general order suppliers and commission agents, and
trade in as general merchants, wholesalers, retailers,
dealers, distributors, stockists, agents, sub-agents in any
goods or products.
9. To plan, design, execute, carry out, equip, improve, work,
develop, administer, manage control works and conveniences of
all kinds, whether for any Government, public body, local
authority, company or individuals.
10. To carry on the business of contractors to the state,
Government, Authority, Local Municipal, District Board or
other individuals, persons, corporations, and to supply goods
of all kinds.
11. To carry on the business of Avionics, and Aerospace, Defence
Electronics, Construction equipment, Custom molded plastics,
Chemicals coatings & resins, Cable products, Diagnostic
instruments, Diamond blades & cutting wheels, Disposable
safety and protective products, Electronic computing equipment
& Peripherals, Fibre optic systems. Fibre glass, Television
and space monitoring equipment, industrial pumps, valves
compresses; Injection molded products, Industrial microscopes,
Laboratory equipment Leisure products including electronic
games Machine tools, Micro processors & Minicomputers, Optical
instruments, oscilloscopes, optical laboratories, Robotics,
Remote Inspection devices, Telecommunication products and
Aerospace systems.
12. To construct, establish and run factories, offices, workshop,
and laboratories for the manufacture or production of raw
materials, apparatus, machinery and things used in any
business or merchandise within the scope of. the Company.
13. To carry on the business of proprietors, managers,
controllers, owners and occupiers of various kinds of mills,
factories and works such as electronics labs, ginning and
pressing mills, soap, flour, rice and starch mills, ice
factories, match factories, paint varnish factories, leather
factories, oil and vegetable mills, sugar mills, plastic
mills, hydraulic works and to establish cottage industries and
research institutes.
14. To establish and constitute agencies, shops, stores, depots,
branches of the Company in Pakistan or any part of the world.
15. To purchase, construct, maintain, take on lease or in
exchange, let or otherwise acquire any interest in any movable
or immovable property in connection with business of the
Company, to pay for any property or rights acquired by the
Company, either in cash or fully paid up shares or by the
issue of securities, partly in one mode and partly in another
and generally on such terms as may be determined.
<PAGE>
16. To purchase or otherwise acquire and undertake all or any part
of the business, good will, property, assets and liabilities
of any person or corporation carrying on any business which
the Company is authorized to carry on.
17. To pay all or any costs charges and expenses preliminary and
incidental to the Company.
18. To promote any other Company for the purpose of acquiring all
or any of the property of the Company or advancing directly or
indirectly the objects or interest thereof and to take or
otherwise acquire and hold shares in any such company.
19. To take or otherwise acquire and hold shares in any other
company having object altogether or in part similar to these
of this Company but not to indulge in the business of an
investment company.
20. To enter into partnership or into any arrangement for sharing
profits, union of interests operation, joint venture,
reciprocal concessions or otherwise with any person or company
carrying on or engaged in or about to carry on or engage in
any business or transactions which this Company is authorized
to carry on.
21. To amalgamate with any person or company carrying on business
similar to that of this company whether by sale or purchase
(for fully paid shares or cash) of the undertaking subject to
the liabilities of this or any such other company as aforesaid
with or without winding up or by purchase of all the shares or
securities of any such other company or in any other lawful
manner.
22. To sell or dispose of the undertakings of the Company or any
part thereof in such manner and for such consideration ,as the
company may think fit and in particular for shares,
debenture-stocks or securities of any other Company, whether
promoted by this Company for the purpose or otherwise and to
improve, manage, develop, exchange, lease, dispose of, turn to
account or otherwise deal with all or any part of the property
and rights of the Company.
23. To open Company's banking accounts and to borrow from banks,
draw, accept, make, endorse, discount, execute, and issue
cheques, promissory notes, bill of exchange, bills of lading,
warrants, debentures and other negotiable and transferable
instruments in connection with the business of the company.
24. To grant pensions, allowances, gratuities and bonuses to
employees or ex-employees of the Company or the dependents of
such persons and to support or subscribe to any charitable or
other institutions, clubs, societies, funds or objects for the
welfare of the employees of the company.
25. To adopt such means of making known the business and products
of the Company as may seem expedient and in particular by
advertisement in press, by circular, by
<PAGE>
purchase and exhibition of works of art or interest, by
publication of books and periodicals and by granting prizes,
rewards and donations.
26. To apply for, purchase or otherwise acquire patents,
concessions, trade marks, licenses, inventions, goodwill and
any other rights and privileges for the purpose of Company's
business and to work any scheme for their development and
exploitation.
27. To do all or any of the above things in any part of the world
and either as principals, agents or trustees and either alone
or in conjunction with others and by or through agents
subcontractors or trustees.
28. To do all things as are incidental or that the Company may
think conductive to the attainment of the above objects or any
of them.
29. It is further declared that notwithstanding anything contained
in the foregoing objects clauses of this Memorandum nothing
therein shall construe any power upon the company to undertake
or indulge in Banking business directly or indirectly business
of investment or insurance company or the managing agency
business or any unlawful operations as restricted under law.
IV. The liability of the members is limited.
V. The authorized share Capital of the Company is Rs. 90,000,000/- (Ninety
Million) divided into 9,000,000 ordinary shares of Rs. 10/- each, with
power to increase and reduce the Capital of the Company and to divide
the shares into several classes subject to any permission required
under the law.
<PAGE>
================================================================================
We the several persons, whose names and addresses are subscribed as under are
desirous of being formed into a Company in pursuance of this Memorandum of
Association and we respectively agree to take the number of shares in the
Capital of the Company set opposite our respective names:
================================================================================
<TABLE>
<CAPTION>
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
Sr. No. Name & Surname Father's/Husband's Nationality Occupation
Name in full with former
Nationality
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
<S> <C> <C> <C> <C>
1. Dr. Muhammad Mahmood Awan S/o Malik Ghulam Ali Awan Pakistani Industrialist
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
2. Ch. Masood Ahmed S/o Ch. Barkat Ali Shamim Pakistani Chairman
Telecom
Foundation
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
3. Mr. Mueen Sadiq Malik S/o Mr. Mohammad Sadiq Malik Pakistani Executive
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
4. Dr. Mohammadd Afzal Aslami S/o M.K. Aslami American "
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
5. Mr. Jack Ramsey S/o Mr. John Ramsey American "
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
6. Mr. Hedayat Amin-Arsala S/o A.H. Arsala Afghan "
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
7. Mr. Charles DeLuca S/o Mr. C. A. DeLuca American "
- -------- ----------------------------------- ------------------------------------ -------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
- -------- ----------------------------------- --------------------------- --------------- ------------
Sr. No. Name & Surname Residential Address in No. of shares Signature
full taken by each
subscriber
- -------- ----------------------------------- --------------------------- --------------- ------------
<S> <C> <C> <C> <C>
1. Dr. Muhammad Mahmood Awan 455 - Shadman Lahore. One /s/
- -------- ----------------------------------- --------------------------- --------------- ------------
2. Ch. Masood Ahmed H. No. 7, Khayaban-e- One
Jauhar I-8/3, Islamabad.
- -------- ----------------------------------- --------------------------- --------------- ------------
3. Mr. Mueen Sadiq Malik H. No. 47, St. No. 2, One
G-9/3, Islamabad.
- -------- ----------------------------------- --------------------------- --------------- ------------
4. Dr. Mohammadd Afzal Aslami 7 Laurel Hill Road. One /s/
Sturbridge, MA 01566
- -------- ----------------------------------- --------------------------- --------------- ------------
5. Mr. Jack Ramsey 1000 Cannon-ball Rd. One
Pompton Lakes, NJ 07442
201-839-7327
- -------- ----------------------------------- --------------------------- --------------- ------------
6. Mr. Hedayat Amin-Arsala 3723 Morrison St. N.W. One
Washington, D.C. 20015
1-202-966-1040
- -------- ----------------------------------- --------------------------- --------------- ------------
7. Mr. Charles DeLuca 261 Foster St. One /s/
S. Windsor, CT 06074
- -------- ----------------------------------- --------------------------- --------------- ------------
Seven
Total:
- -------- ----------------------------------- --------------------------- --------------- ------------
</TABLE>
<TABLE>
<CAPTION>
Witness to above signatures. Dated the _______________day of _____________1995.
<S> <C> <C> <C> <C>
Full Name Father's Name Occupation Nationality Full Address
</TABLE>
EXH10-35
DISTRIBUTOR AGREEMENT
THIS AGREEMENT, Entered into as of the 1st day of November, 1995, by and between
FiberCore, a corporation organized and existing under the laws of the State of
Nevada, and having its principal place of business in Sturbridge, Massachusetts,
hereinafter referred to as the "Company" and
TechMan International Corp.
B-727 TechMan Center Route 20
Charlton City, MA 01508
TEL: 508-248-3211 FAX: 3113
hereinafter referred to as the "Distributor/Representative".
IN CONSIDERATION of the promises and of the mutual covenants and agreements
hereinafter set forth, the parties to this Agreement hereby covenant and agree
as follows:
1. APPOINTMENT AS DISTRIBUTOR
The Company hereby appoints the Distributor to solicit orders for the
purchase of its products enumerated in Section 1 of the attached
Exhibit A within the Territory described in Section 2 of the attached
Exhibit A, from the class of customers set forth in Section 3 of the
attached Exhibit A; and the Representative hereby accepts such
appointment upon and subject to the terms and conditions herein
contained.
2. LIMITED AUTHORITY - DISTRIBUTOR/REPRESENTATIVE
(a) The Distributor/Representative shall solicit orders at such
prices and terms as may be established and set forth in
quotations offered and released by the Company from time to
time.
(b) The Distributor/Representative shall have no authority to
accept orders on behalf of the Company or to commit said
Company to the sale or delivery of any products and all
solicitations of orders shall be made with the understanding
that they are subject to acceptance by the Company.
(c) The Distributor/Representative shall make only such
representations as to quality, capacity, expected life or
duration, and similar representations, with respect to the
products on which orders may be solicited, only in accordance
with the Company's policies and/or sales terms and conditions
in effect, or as may be authorized in writing by the Company
from time to time.
<PAGE>
3. ACCEPTANCE OF ORDERS - COMPANY DISCRETION
(a) The Company reserves the right to approve or disapprove, and
to accept or reject any such orders for any reason whatsoever,
upon receipt of such orders, and no order shall be effective
unless and until it is accepted in writing.
(b) The disapproval or rejection of any order for any reason
whatsoever shall not vest any right in the
Distributor/Representative with respect to compensation, and
the Distributor/Representative's right to compensation shall
be governed by the particular provisions elsewhere in this
Agreement.
4. THE TERMS AND CONDITIONS FOR COMPENSATION
(a) The Distributor/Representative shall be entitled to a rate of
commission designated in Exhibit A, Section 4 which shall be
computed on the net selling price, hereinafter deemed, under
the terms and conditions hereinafter set forth. Such
commissions shall be compensated in full for the services of
the Distributor/Representative .
(b) Subject to paragraphs 1 and 2 and subparagraph (d) herein, the
Distributor/Representative shall be entitled to the designated
rate of commission on all sales consummated, as a result of
the solicitations of orders by the Distributor/Representative
on products enumerated in the attached Exhibit A, within the
Territory set forth in said Exhibit A, and from the class of
customers of which the Distributor/Representative is entitled
to solicit, as indicated in said Exhibit A.
(C) Subject to paragraphs 1 and 2 and subparagraph (d), the
Distributor/Representative shall also be entitled to the
designated rate of commission on all sales consummated as a
result of direct orders received by the Company on products
enumerated in the attached Exhibit A, within the Territory set
forth in said Exhibit A, from the class of customers of which
the Distributor/Representative is entitled to solicit, as
indicated in said Exhibit A.
(d) The Distributor/Representative shall be entitled to the rate
of commission designated in exhibit A section 4 for order of
erection of a new plant and innovation of already existing
plant through a order by the Distributor/Representative or
through a direct order within territory and class of customers
set forth in exhibit A section 2 &3.
The Distributor/Representative shall be entitle to the rate of
commission designated in exhibit A section 4 for the orders of
Telecommunications equipment supplied by the company or other
companies through orders by the Distributor/Representative or
through a direct order within the territory and class of
customers set forth in exhibit A section 2 & 3.
<PAGE>
(e) Should more than one independent Distributor/Representative of
the Company be involved in sales or cause a sale to be
concluded because of his efforts in territory of another, the
company shall have the right to decide on the split of the
commission between the Distributor/Representatives involved.
(f) All commissions shall be due and payable no later than thirty
(30) days after actual receipt of payments by the Company for
the products sold.
(g) For the purpose of this Agreement, the term "net selling
price" as used in subparagraph (a) above, is deemed as the
gross selling price of the products stated in the attached
Exhibit A, reduced by the amounts of discounts, allowances,
cancellations, returns, packing charges, shipping charges,
taxes, duties, or service charges of any nature whatsoever.
(h) It is further understood and agreed that competition or other
circumstances beyond the control of the Company or of the
Distributor/Representative may make it advisable and desirable
to reduce the commissions payable to the
Distributor/Representatives. In such event, the Company and
the Distributor/Representative may, by mutual agreement in
writing, reduce the amount of commission payable on any order
without affecting the provisions of the Agreement in any other
way.
(i) It is further understood and agreed between the Company and
the Distributor/Representative that no commission or other
payment, applicable to orders accepted by the Company after
the date of termination of this Agreement, Shall be due to the
Distributor/Representative. Commissions applicable to orders
accepted by the Company prior to the termination of the
Agreement shall be paid to the Distributor/Representative
after termination of this Agreement. Notwithstanding the
above, no payment of commissions shall be made after the
effective date of termination if the termination was caused by
a breach of this Agreement of the part of the
Distributor/Representative, or for just cause; as defined in
paragraph l5(c).
5. BILLING OF PURCHASERS
All products for which orders are accepted by the Company will be
shipped and billed by the Company directly to the purchaser. All
payments shall be made directly to the Company. The
Distributor/Representative shall have no authority to make collections
from purchasers, but shall assist the Company upon its request in the
collection of over-due accounts by making available to the Company data
regarding such purchasers to which the Distributor/Representative may
reasonably have access.
<PAGE>
6. OTHER OBLIGATIONS OF THE DISTRIBUTOR/REPRESENTATIVE
The Distributor/Representative shall:
(a) Use his best efforts to promote the sale of the Company's
products within his assigned territory.
(b) Handle no other products which in the opinion of the Company
are competitive with those of the Company without obtaining
the prior written consent of the Company, nor place itself in
a position of adverse interest or divided loyalty. In the
event the Distributor/Representative should take on a line
which in the Company's opinion is competitive to its
products, without previously obtaining the Company's consent,
the Distributor/Representative will discontinue the handling
of such competitive line upon receiving due notice from the
Company. If the Distributor/Representative fails to
discontinue the handling of such competitive line within five
(5) days after such notification, or such longer period as
may be granted by the Company, he shall thereby forfeit all
right and claim to any compensation accrued, and any
termination as a result of such conflict of interest shall be
considered a termination for just cause. The Company shall be
the sole judge as to whether a conflict of interest exists.
The Distributor/Representative shall disclose to the Company
any new agreement it has entered with another party for the
solicitation of orders, or as a factory representative or
sales agent, for products similar in design or functional use
to that made by the Company.
The provisions of this subparagraph shall also apply if the
Distributor/Representative or any of his agents or employees
secures an interest in excess of one percent (1%) in a
company which, in the Company's opinion, constitutes a
conflict of interest.
(c) Furnish the Company, upon request, with all information that
said Distributor/Representative may, from time to time
acquire relative to the credit rating and financial position
of any of the Distributor/Representative's accounts for the
Company's products.
(d) Furnish to the Company upon request, appropriate reports to
the sales made pursuant to this Agreement, and any other
information relating to the operation of this Agreement,
including but not limited to the market conditions for the
products of the Company within the Territory governed by this
Agreement.
7. OBLIGATIONS OF THE COMPANY
The Company shall, from time to time:
<PAGE>
(a) Deliver the Distributor/Representative samples of its products in
such an amount and of such a character as it may deem fit.
(b) Designate in writing the selling prices at which its said
products may be offered for sale by the Representative.
(c) Supply the Representative with its current catalogs and regular
literature without charge.
8. EFFECT ON UNWRITTEN AND UNSIGNED AGREEMENTS
No agreement or other understanding in any way modifying the conditions
of this Agreement shall be binding upon the Company or the
Distributor/Representative unless made in writing and signed by them or
their authorized representatives.
9. GENERAL RELATIONSHIP
(a) The Distributor/Representative agrees that in all matters
relating to this Agreement he shall be acting as an independent
contractor; that neither the Distributor/Representative nor his
employees are employees of the Company under the meaning or
application of any Federal or State Unemployment Insurance Laws,
or Old Age Benefit Law, or other Social Security Laws, or any
Workmen's Compensation or Industrial Law, or otherwise; and that
the Distributor/Representative agrees to assume all liabilities
or obligations imposed by any one or more of such laws, with
respect to his employees in the performance of this Agreement.
(b) The Distributor/Representative shall not have any authority to
assume or create any obligation, express or implied, on behalf of
the Company, and said Distributor/Representative shall have no
authority to represent the Company as agent, employee, or in any
capacity other than as hereinbefore set forth. He shall conduct
all of his business in his own name and not in the name of the
Company.
10. ASSIGNMENT
This Agreement constitutes a personal contract which may not be
transferred or assigned by the Distributor/Representative without the
prior written consent of the Company. This contract shall be binding
upon the successors or assignees of the Company.
11. CONFIDENTIAL INFORMATION
In addition to compliance by the Distributor/Representative with the
obligations imposed by the U.S. Espionage Law, Sabotage Law and other
U. S . Government security laws, or Industrial Security Regulations:
(1) The Distributor/Representative agrees to keep in
<PAGE>
strictestconfidence all information identified as secret or
confidential, or which, from the circumstances, in good faith and good
conscience ought to be treated as confidential, relating to the
products, methods of manufacture or trade secrets or secret processes,
price lists, customer lists, or other information of the business
affairs of the Company which the Distributor/Representative may acquire
in connection with or as a result of the performance of this Agreement;
(2) The Distributor/Representative further agrees that, without prior
written consent of the Company, he will neither use, nor publicly
communicate, divulge or disclose to unauthorized persons any such
information during the period of this Agreement or at any time
subsequent thereto; (3) The Distributor/Representative shall return all
such confidential information to the Company upon termination of this
Agreement.
12. TERMINATION
(a) This Agreement shall become effective as of the day and year
first above written, and shall be subject to the right of
either party to terminate the Agreement at any time by serving
upon the other party personally or by registered mail, written
notice of such termination at least thirty (3) days in advance
of the intended termination date of this Agreement, at which
time all provisions of this agreement as to sample, accounting
and commission shall be complied with.
(b) Notwithstanding the above subparagraph, this Agreement may be
terminated at once by either party, without the required
advance notice, if one of the parties to this Agreement
becomes involved in bankruptcy, insolvency's or arrangement
proceedings, or if either party has committed a breach of this
Agreement.
(c) This Agreement shall terminate at once without the required
advance notice, upon the Distributor/Representatives death.
The Company reserves the right to terminate this Agreement at
once without the required advance notice, if there is just
cause to do so. Just cause shall include acts of the
Distributor/Representative that are dishonest, fraudulent, a
conflict of interest, or other acts of misconduct of the
Distributor/Representative. Termination at once, under
subparagraphs (b) and (c) shall be effectuated by serving upon
the Distributor/Representative either personally or by
registered mail, written notice of the termination to be
effective immediately except that no such written notice of
termination shall be required in the event of the death of the
Distributor/Representative and as of the date of such death,
the Agreement shall automatically terminate.
13. ENTIRE CONTRACT
The Agreement contains all the terms and conditions agreed upon by the
parties and constitutes the only Agreement in force and effect between
the parties. Any and all Agreements for solicitation of orders, as
amended, modified or supplemented, heretofore entered into between the
parties hereto are hereby canceled and terminated. This
<PAGE>
Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
this day and year first above written.
FIBERCORE, INC.
Charles DeLuca, Vice President
By:______________________________(L.S.) Date: November 1, 1995
Attest:____________________________
TECHMAN INTERNATION CORP.
Dr. M. Mahmud Awan, Chairman/CEO
By:______________________________(L.S.) Date: November 1, 1995
Attest:____________________________
<PAGE>
EXHIBIT A
to the
DISTRIBUTOR AGREEMENT ("AGREEMENT")
between
FIBERCORE, INC.
and
TECHMAN INTERNATIONAL CORP.
Effective Date: 1st of November, 1995
Section l. PRODUCTS SUBJECT TO AGREEMENT COMMISSION
Optical Fiber & Preform
Section 2. TERRITORY SUBJECT TO AGREEMENT - The
Distributor/Representative shall solicit orders in the
following Territory only:
Unrestricted worldwide where FiberCore is not represented.
Section 3.
CLASS OF CUSTOMERS - The Distributor/Representative shall
solicit orders from the following class of customers only:
Telecomm, CATV, LAN, MAN, WAN companies, OEM's, commercial
accounts, state and governmental agencies.
Section 4. RATE OF COMMISSION
To be negotiated on case by case
<PAGE>
Section 5. COMPANY RESERVATION - The Company reserves to itself the exclusive
right to solicit the following customers directly except customers in the
Territory mentioned in Exhibit A, Sec. 2 & 3.
A. All Exporters
B. All businesses in which delivery is to be made outside the
United States and its possessions.
C. All Distributors - Unless introduced by
Distributor/Representatives
D. Any other businesses, groups or organizations not specifically
enumerated in Section 3 of this Exhibit A.
FIBERCORE, INC.
Charles DeLuca, Vice President
By:______________________________(L.S.) Date: November 1, 1995
Attest:____________________________
TECHMAN INTERNATION CORP.
Dr. M. Mahmud Awan, Chairman/CEO
By:______________________________(L.S.) Date: November 1, 1995
Attest:____________________________
<PAGE>
November 1, 1995
Dr. M. Mahmud Awan
Chairman/CEO
Techman International Corporation, Inc.
Techman Center, Route 20
Charlton City, Mass. 01508-0727
Subject: Compensation in the form of FiberCore Shares
REF: Our Distributor Agreement of November 1, 1995 (Attached)
Dear Dr. Awan,
This is to advise you that FiberCore, because of existing cash flow constraints,
is not in a position to pay cash for the earned commissions in connection with
the Distributor Agreement signed earlier today.
We are prepared to issue FiberCore shares to you for the full value of such
earned commissions. Please note that because of your status as the sole owner of
Techman International Corporation, these shares can be issued to you directly or
to your company.
Please indicate your approval of this arrangement by signing below, where
indicated. This letter wil be an integral supplement to the Distributor
Agreement.
Yours truly,
For FiberCore, Inc.
G. Charles DeLuca
Corporate Secretary
Accepted :___________________________
For Techman International Corporation
Dr. M. Mahmud Awan, Chairman/CEO
TERM LOAN AGREEMENT
Dated as of November 27, 1996
By and Between
FIBERCORE, INC., as Borrower
and
AMP INCORPORATED, as Lender
<PAGE>
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement") is made as of November 27, 1996,
by and between FIBERCORE, INC., a Nevada corporation ("Borrower"), having its
chief executive office at 174 Charlton Road, Sturbridge, MA 01566 and AMP
INCORPORATED, a Pennsylvania corporation ("Lender"), having an office at 470
Friendship Road, M/S 176-034, Harrisburg, Pennsylvania 17111.
SECTION I
DEFINITIONS
1.1 Definitions.
All capitalized terms used in this Agreement or in the Note or
in any certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:
Acquisition. Any transaction, or any series of related transactions, by
which Borrower or any of its Subsidiaries directly or indirectly (a) acquires
all or substantially all of any ongoing business or all or substantially all of
the assets of any firm, partnership, joint venture, corporation or division
thereof, whether through purchase of assets, merger or otherwise, or (b)
acquires (in one transaction or as the most recent transaction in a series of
transactions) control of at least a majority of the stock of a corporation
having ordinary voting power for the election of directors of such corporation,
or (c) acquires control of more than fifty percent (50.0%) of the ownership
interest in any partnership or joint venture.
Affiliate. With respect to any Person, (a) each Person that, directly
or indirectly, owns or controls, whether beneficially or as a trustee, guardian
or other fiduciary, five percent (5.0%) or more of the stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person or (c) each of such Person's officers, directors, joint
venturers and partners; provided, however, that in no case shall Lender be
deemed to be an Affiliate of Borrower for purposes of this Agreement. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
ALT. Automated Light Technologies, Inc., a Delaware corporation.
AMP Affiliate. With respect to Lender, (a) each Person that, directly
or indirectly, owns or controls, whether beneficially or as a trustee, guardian
or other fiduciary, twenty percent (20.0%) or more of the stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person or (c) each of such Person's officers, directors, joint
venturers and partners; provided, however, that in no case shall Lender be
deemed to be an Affiliate of Borrower for purposes of this Agreement. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
<PAGE>
Berliner Bank Loan. The loan made by Berliner Bank to Borrower pursuant
to the loan documents attached hereto as Exhibit K.
Business Day. Any day other than a Saturday, Sunday, legal holiday or
other day on which banks in Massachusetts or New York are required or permitted
by law to close.
Capital Expenditures. All payments made for Acquisitions or for any
fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one (1) year and which are
required to be capitalized under GAAP, including Capital Lease Obligations.
Capital Lease. As to any Person, any lease of any Property by such
Person as lessee that is, or should be in accordance with Financial Accounting
Standards Board Statement No. 13, classified and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.
Capital Lease Obligation. With respect to any Capital Lease, the amount
of the obligation of the lessee thereunder that, in accordance with GAAP, would
appear on a balance sheet of such lessee in respect of such Capital Lease or
otherwise be disclosed in a note to such balance sheet.
Cash Collateral. Cash Collateral has the meaning given to such term in
Section 2.4.
Change in Control. Change in Control means the occurrence, after the
date of this Agreement, of any of the following except in furtherance of the
Voting Agreement: (i) any person or two or more persons acting as a "group"
within the meaning of section 13(d) of the Exchange Act acquiring beneficial
ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act),
directly or indirectly, of securities of Borrower (or other securities
convertible into such securities) representing 40% of more of the combined
voting power of all securities (including the securities so acquired) of
Borrower entitled to vote in the election of directors; or (ii) during any
period of up to 12 consecutive months, commencing after the date hereof,
individuals who at the beginning of such 12-month period were directors of
Borrower ceasing for any reason to constitute a majority of the Board of
Directors of Borrower unless the persons replacing such individuals were
nominated by the Board of Directors of Borrower or by Lender; or (iii) any
person or two or more persons acting as a "group" within the meaning of section
13(d) of the Exchange Act acquiring by contract or otherwise, or entering into a
contract or arrangement which upon consummation will result in its or their
acquisition of, or control over, securities or Borrower (or other securities
convertible into such securities) representing 40% or more of the combined
voting power of all securities (including the securities so acquired or
controlled) of Borrower entitled to vote in the election of directors.
Closing Date. The date of this Agreement.
Code. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
Collateral. Collateral means all of the collateral referred to in the
German Security Agreement.
Commitment Amount. Three Million United States Dollars (US$3,000,000).
Common Stock. Common Stock of Borrower.
2.
<PAGE>
Controlled Group. All trades or businesses (whether or not
incorporated) under common control that, together with Borrower, are treated as
a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of
ERISA.
Convertible Debenture. That certain Amended and Restated Convertible
Debenture dated as of April 17, 1995, in the original principal amount of
$2,000,000.
Current Assets. On a consolidated basis for Borrower and its
Subsidiaries, as at any date of determination, all amounts that should, in
accordance with GAAP, be included as current assets on the consolidated balance
sheet of Borrower and its Subsidiaries.
Current Liabilities. On a consolidated basis for Borrower and its
Subsidiaries, as at any date of determination, all amounts that should, in
accordance with GAAP, be included as current liabilities on the consolidated
balance sheet of Borrower and its Subsidiaries, plus, to the extent not already
included therein, all Indebtedness that is payable upon demand or within one
year from the date of determination thereof unless such Indebtedness is
renewable or extendable at the option of Borrower or any Subsidiary to a date
more than one year from the date of determination.
Debt Conversion Agreement. Amendment No. 1 to Convertible Debenture
Purchase Agreement, entered into by and between Borrower and Lender, dated as of
the date hereof.
Default. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
EBITDA. As calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as of any date of determination, the sum of (a) Net
Income, plus (b) all amounts treated as expenses for depreciation and the
amortization of intangibles of any kind to the extent included in the
determination of Net Income, plus (c) all taxes on or measured by income to the
extent included in the determination of Net Income, plus (d) Interest Expense to
the extent included in the determination of Net Income.
Encumbrances. See Section 6.4
Environmental Laws. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted or promulgated), of all governmental agencies, bureaus or departments
which may now or hereafter have jurisdiction over Borrower or any of its
Subsidiaries and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal property or human
health or the environment, including, without limitation, all requirements
pertaining to reporting, licensing, permitting, investigation, remediation and
removal of emissions, discharges, releases or threatened releases of Hazardous
Materials, chemical substances, pollutants or contaminants whether solid, liquid
or gaseous in nature, into the environment or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of such Hazardous Materials, chemical substances, pollutants or
contaminants.
Equity. On a consolidated basis for Borrower and its Subsidiaries, as
at any date of determination, the consolidated total assets of Borrower and its
Subsidiaries minus, Total Liabilities.
3.
<PAGE>
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time be supplemented or amended and remain in effect.
Event of Default. Any event described in Section 8.1.
Existing Loan Documents. The Convertible Debenture Purchase Agreement,
dated as of April 17, 1995, by and between Borrower (as successor-in-interest to
FiberCore Incorporated, a Nevada corporation) and Lender and the related
Convertible Debenture in the original principal amount of $5,000,000, as amended
from time to time.
Fiscal Quarter. Each fiscal quarter of Borrower ending on each March
31, June 30, September 30 and December 31 unless quarters ending on different
dates are consented to in writing in advance by Lender.
Fiscal Year. Each fiscal year of Borrower ending on each December 31
unless fiscal years ending on different dates are consented to in writing in
advance by Lender.
GAAP. Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
German Government Grant. The grant made by the German government to
Guarantor pursuant to the documents attached hereto as Exhibit L.
German Guaranty. That certain Subsidiary Guaranty in the form of
Exhibit D executed by Guarantor in favor of Lender.
German Security Agreement. That certain Security Agreement in the form
of Exhibit E executed by Guarantor, pursuant to which Guarantor grants to Lender
a security interest in all equipment owned by Guarantor as security for
Guarantor's obligations under the German Guaranty.
Guaranties. As applied to Borrower and its Subsidiaries, all
guarantees, endorsements or other contingent or surety obligations with respect
to obligations of others whether or not reflected on the consolidated balance
sheet of Borrower and its Subsidiaries, including any obligation to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity.
Guarantor. FiberCore Glasfaser Jena, GmbH, a corporation organized
under the laws of Germany and a wholly-owned subsidiary of Borrower.
Hazardous Material. Any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste"
"hazardous material" or "hazardous substance" or "controlled industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments thereto
4.
<PAGE>
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and any
applicable local statutes and the regulations promulgated thereunder; (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of any foreign country, the United States, any state of the
United States, or any political subdivision thereof to the extent any of the
foregoing has or had jurisdiction over Borrower; or (iv) without limitation,
which contains gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PCB's").
Indebtedness. As applied to Borrower and its Subsidiaries, means,
without duplication, (i) all obligations for borrowed money or other extensions
of credit whether or not secured or unsecured, absolute or contingent,
including, without limitation, unmatured reimbursement obligations with respect
to letters of credit or guarantees issued for the account of or on behalf of
Borrower and its Subsidiaries and all obligations representing the deferred
purchase price of property, other than accounts payable arising in the ordinary
course of business, (ii) all obligations evidenced by bonds, notes, debentures
or other similar instruments, (iii) all obligations secured by any mortgage,
pledge, security interest or other lien on property owned or acquired by
Borrower or any of its Subsidiaries whether or not the obligations secured
thereby shall have been assumed, (iv) that portion of all obligations arising
under capital leases that is required to be capitalized on the consolidated
balance sheet of Borrower and its Subsidiaries, (v) all Guaranties, and (vi) all
obligations that are immediately due and payable out of the proceeds of or
production from property now or hereafter owned or acquired by Borrower or any
of its Subsidiaries.
Interest Expense. As calculated on a consolidated basis for Borrower
and its Subsidiaries for any period as at any date of determination, cash
interest expense for such period (including, without limitation, all
commissions, discounts, fees and other charges under letters of credit and
similar instruments) classified and accounted for in accordance with GAAP.
Interest Payment Date. The last day of each March, June, September and
December.
Interest Period. A calendar quarter.
Investment. As applied to Borrower and its Subsidiaries, the purchase
or acquisition of any share of capital stock, partnership interest, evidence of
indebtedness or other equity security of any other person or entity, any loan,
advance or extension of credit to, or contribution to the capital of, any other
person or entity, any real estate held for sale or investment, any commodities
futures contracts held other than in connection with bona fide hedging
transactions, any Acquisition or commitment to make any Acquisition, any other
investment in any other person or entity, and the making of any commitment or
acquisition of any option to make an Investment.
License. Any copyright license, Patent License, trademark license or
other license of rights or interests now held or hereafter acquired by Borrower.
Loan. The loan made to Borrower by Lender pursuant to Section II of
this Agreement.
Loan Documents. This Agreement, the Note, the Debt Conversion
Agreement, the Convertible Debenture, the Warrant, the German Guaranty, the
German Security Agreement, the Voting Agreement, and any other agreements,
documents, financing statements or instruments executed by Borrower in
connection with this Agreement, as the same may be amended, modified,
supplemented or renewed from time to time.
5.
<PAGE>
Long Term Debt. On a consolidated basis for Borrower and its
Subsidiaries, as at any date of determination, all amounts that should, in
accordance with GAAP, be included as long term debt on the consolidated balance
sheet of Borrower and its Subsidiaries.
Material Adverse Effect. Any set of circumstances or events which (a)
has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of any Loan Document, (b) is or
could reasonably be expected to be material and adverse to the financial
condition or business operations or prospects of Borrower or Guarantor, (c)
materially impairs or could reasonably be expected to materially impair the
ability of Borrower to perform timely its Obligations, (d) materially impairs or
could reasonably be expected to materially impair the ability of Guarantor to
perform timely its obligations under the German Guaranty, (e) materially impairs
or could reasonably be expected to materially impair the value or priority of
Lender's security interest in the collateral (as described in the German
Security Agreement) or (f) materially impairs or could reasonably be expected to
materially impair the ability of Lender to enforce any of its available legal
remedies pursuant to the Loan Documents.
Maturity Date. November 27, 2006.
Mission Statement. Borrower's mission statement setforth in Exhibit H.
Net Income. As calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net income (or
loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.
Note. A promissory note of Borrower, substantially in the form of
Exhibit A hereto, evidencing the obligation of Borrower to Lender to repay the
Loan.
Obligations. Any and all obligations of Borrower to Lender under the
Loan Documents or under the Purchase Agreement, of every kind and description,
direct or indirect, absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising, regardless of how they arise, and
including obligations to perform acts and refrain from taking action as well as
obligations to pay money.
Patent License. Any of the following now owned or hereafter acquired by
Borrower: any written agreement granting any right with respect to any invention
on which a Patent is in existence.
Patents. All of the following in which Borrower now holds or hereafter
acquires any interest: (a) letters patent of the United States or any other
county, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country; (b) all reissues, continuations,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals,
and patents of addition; and (d) all patents to issue in any such applications.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
Permitted Encumbrances. See Section 6.4.
6.
<PAGE>
Person. Any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.
Plan. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by Borrower or any member
of the Controlled Group for employees of Borrower or any member of the
Controlled Group or (ii) if such Plan is established, maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which Borrower or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five Plan years made contributions.
Prime Rate. The prime rate as quoted in the Wall Street Journal on the
Business Day immediately preceding the commencement of an Interest Period.
Property. Any interest in any kind of property or asset, whether real,
personal or mixed, whether tangible or intangible.
Purchase Agreement. That certain Purchase Agreement, dated as of July
29, 1996, by and between Lender and Borrower, regarding the purchase of glass
optical fiber by Lender from Borrower.
Qualified Investments. As applied to Borrower and its Subsidiaries,
investments in (i) notes, bonds or other obligations of the United States of
America, Germany, or any agency thereof that as to principal and interest
constitute direct obligations of or are guaranteed by the United States of
America or Germany; (ii) certificates of deposit or other deposit instruments or
accounts of banks or trust companies organized under the laws of the United
States or any state thereof, or Germany, that have capital and surplus of at
least $100,000,000, (iii) commercial paper that is rated not less than prime-one
or A-1 or their equivalents by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or their successors, and (iv) any repurchase
agreement secured by any one or more of the foregoing.
Recent ALT Financing. The intercompany loan pursuant to which ALT
extended a loan to Borrower in the original principal amount of $367,000.
Subsidiary. Any corporation, association, joint stock company, business
trust or other similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors or
other governing body of such entity is held or controlled by Borrower or a
Subsidiary of Borrower; or any other such organization the management of which
is directly or indirectly controlled by Borrower or a Subsidiary of Borrower
through the exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, in which Borrower has a 50% ownership interest.
Total Assets. As calculated on a consolidated basis for Borrower and
its Subsidiaries as of any date of determination, the total assets of Borrower
and its Subsidiaries.
Total Liabilities. As calculated on a consolidated basis for Borrower
and its Subsidiaries as of any date of determination, the total liabilities of
Borrower and its Subsidiaries.
Voting Agreement. The voting agreement in substantially the form of
Exhibit I.
7.
<PAGE>
Warrant. The warrant issued by Borrower to Lender in substantially the
form of Exhibit B.
1.2 Accounting Terms. All terms of an accounting character shall have
the meanings assigned thereto by generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
Section 4.6 of this Agreement, modified to the extent, but only to the extent,
that such meanings are specifically modified herein.
SECTION II
DESCRIPTION OF CREDIT
2.1 The Term Loan. Subject to the terms and conditions of this
Agreement, Lender agrees to make a single term loan (the "Loan") to Borrower on
the Closing Date in an aggregate principal amount equal to the Commitment
Amount. Amounts borrowed and repaid may not be reborrowed.
2.2 The Note. (a) The Loan shall be evidenced by the Note, payable to
the order of Lender and shall be due and payable in full on the Maturity Date.
The Note shall be dated the Closing Date and shall have the blanks therein
appropriately completed.
(b) Lender may enter in its records appropriate notations
evidencing the date and the amount of the Loan and the date and amount of each
payment of principal made by Borrower with respect thereto; and in the absence
of manifest error, such notations shall constitute conclusive evidence thereof.
No failure on the part of Lender to make any notation as provided in this
subsection (b) shall in any way affect any Loan or the rights or obligations of
Lender or Borrower with respect thereto.
2.3 Interest Rates and Payments of Interest; Payments of Principal. (a)
The Loan shall bear interest on the outstanding principal amount thereof at a
rate per annum initially equal to _______%; thereafter, on the first day of each
Interest Period, the interest rate shall be adjusted to a fixed rate for such
Interest Period equal to the Prime Rate (as quoted on the Business Day
immediately preceding the commencement of such Interest Period) plus one percent
(1%). Such interest shall be due and payable quarterly in arrears on each
Interest Payment Date and when such Loan is due (whether at maturity, by reason
of acceleration or otherwise); provided, however, that so long as no Default or
Event of Default has occurred and is continuing, (i) on each Interest Payment
Date prior to September 30, 2001, the accrued and unpaid interest for such
Interest Period shall be added to principal and thereafter interest shall accrue
on such amount and (ii) on each Interest Payment Date on or after September 30,
2001, the accrued interest for such Interest Period shall be due and payable to
Lender in immediately available funds.
2.4 Use of Proceeds. Lender shall advance the proceeds of the Loan
directly to Guarantor's deposit account with Berliner Bank, as a capital
contribution from Borrower to Guarantor. DM 3,850,000 of the Loan proceeds shall
be held by Berliner Bank as collateral (the "Cash Collateral") for the Berliner
Bank Loan and the balance will be used (i) to reimburse Borrower for its
corporate allocation in accordance with the 1996 annual budget approved by
Borrower's board of directors and (ii) to prepay indebtedness owing to ALT in
connection with the Recent ALT Financing in an amount not to exceed $367,000.
2.5 Voluntary Prepayment of the Loan. Borrower may prepay the Loan, in
whole or in part, at any time, without premium or penalty, upon thirty (30)
day's prior written notice to Lender. Any interest accrued on the amounts so
prepaid to the date of such payment must be paid at the time of any such
payment.
8.
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2.6 Mandatory Prepayment of the Loan. Borrower shall prepay the Loan in
full, together with all accrued interest, upon the earlier of (i) the Maturity
Date, (ii) the repayment of the Berliner Bank Loan, (iii) the release of the
Cash Collateral by the Berliner Bank, and (iv) acceleration of the Loan pursuant
to Section 8.2.
2.7 Method of Payment. All payments and prepayments of principal and
all payments of interest shall be made by Borrower to Lender at its office in
immediately available funds, on or before 1:00 p.m. (Pennsylvania time) on the
due date thereof, without set off and free and clear of, and without any
deduction or withholding for, any taxes or other payments of any kind
whatsoever.
2.8 Overdue Payments. Overdue principal (whether at maturity, by reason
of acceleration or otherwise) and, to the extent permitted by applicable law,
overdue interest and fees or any other amounts payable hereunder or under the
Note shall bear interest from and including the due date thereof until paid,
payable on demand, at a rate per annum equal to 2% above the rate then
applicable to Loan.
2.9 Computation of Interest and Fees. Interest and all fees payable
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day
that is not a Business Day such payment may be made on the next succeeding
Business Day, and such extension, if taken, shall be included in computing
interest in connection with such payment.
2.10 Maximum Interest. Notwithstanding any provision to the contrary
herein contained, Lender shall not collect a rate of interest on any obligation
or liability due and owing by Borrower to Lender in excess of the maximum
contract rate of interest permitted by applicable law. Lender and Borrower have
agreed that the interest laws of the State of New York shall govern the
relationship between them, but in the event of a final adjudication to the
contrary, Borrower shall be obligated to pay to Lender only such interest as
then shall be permitted by the laws of the state found to govern the contract
relationship between Lender and Borrower. All interest found in excess of that
rate of interest allowed and collected by Lender shall be applied to the
principal balance in such manner as to prevent the payment and collection of
interest in excess of the rate permitted by applicable law.
SECTION III
CONDITIONS OF LOAN
3.1 Conditions Precedent to Loan. The obligation of Lender to make its
initial Loan is subject to the condition precedent that Lender shall have
received, in form and substance satisfactory to Lender and its counsel, the
following:
(a) this Agreement and the Note, duly executed by Borrower;
(b) the Warrant, duly executed by Borrower in favor of Lender;
(c) the Voting Agreement, duly executed by each of the parties
thereto;
(d) the Purchase Agreement, duly executed by each of the parties
thereto;
9.
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(e) the German Guaranty and the German Security Agreement, duly
executed by each of the parties thereto;
(f) evidence that $3,000,000 of the principal amount outstanding
under the Existing Loan Documents plus accrued interest thereon has been
converted into shares of Common Stock at the rate of $1.15762 per share pursuant
to the terms of the Debt Conversion Agreement.
(g) copies of the documentation evidencing the Berliner Bank Loan
and the German Government Grant, including (i) evidence that both the Berliner
Bank Loan and the German Government Grant have funded, will fund concurrently
with the Loan from Lender, or are available to Borrower without the satisfaction
of any further conditions, and (ii) verification that Lender has a first
priority perfected security interest, or substantial equivalent under German
law, senior to both the Berliner Bank and the German government, in Collateral
having a book value equal to or exceeding 125% of the aggregate outstanding
principal amount of the Loan.
(h) a certificate of the Secretary or an Assistant Secretary of
Borrower with respect to resolutions of the Board of Directors authorizing the
execution and delivery of this Agreement, the Note, and each other Loan Document
to which Borrower is a party, and identifying the officer(s) authorized to
execute, deliver and take all other actions required under this Agreement and
the other Loan Documents, and providing specimen signatures of such officers;
(i) a certificate of the Secretary or an Assistant Secretary of the
Guarantor with respect to resolutions of the Board of Directors authorizing the
execution and delivery of the German Guaranty and the German Security Agreement
and identifying the officer(s) authorized to execute, deliver and take all other
actions required under the German Guaranty and the German Security Agreement,
and providing specimen signatures of such officers;
(j) a copy of the articles of incorporation of Borrower and all
amendments and supplements thereto, filed with the Secretary of State of the
State of Nevada, each certified by the Nevada Secretary of State as being a true
and correct copy thereof;
(k) the Bylaws of Borrower and all amendments and supplements
thereto, certified by the Secretary or an Assistant Secretary as being a true
and correct copy thereof;
(l) a certificate of the Secretary of State of Nevada as to legal
existence and good standing of Borrower in such State;
(m) a certificate of the Secretary of State of Massachusetts as to
good standing of Borrower in such State;
(n) a certificate of the State of Nevada and Massachusetts state
taxing authorities as to the tax good standing of Borrower;
(o) an opinion addressed to it from Coleman & Rhine LLP, counsel to
Borrower, substantially in the form of Exhibit F-1 hereto;
(p) an opinion addressed to it from Rechtsanwalte Hartmann und
Partner, special German counsel to Guarantor, substantially in the form of
Exhibit F-2 hereto;
10.
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(q) such other documents, and completion of such other matters, as
counsel for Lender may deem necessary or appropriate; and
(r) the representations and warranties contained in Section IV
shall be true and accurate in all material respects on and as of the date hereof
(except to the extent that such representations and warranties expressly relate
to an earlier date), and no Default shall have occurred and be continuing, or
would result from such Loan.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and to make the
Loan hereunder, Borrower represents and warrants to Lender that:
4.1 Organization and Qualification. Borrower and each of its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated and (c) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do business in each
jurisdiction where the nature of its properties or business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect.
4.2 Corporate Authority. (a) The execution, delivery and performance of
this Agreement, the Note, and each other Loan Document to which Borrower is a
party and the transactions contemplated hereby are within the corporate power
and authority of Borrower and have been authorized by all necessary corporate
proceedings, and do not and will not (i) require any consent or approval of the
stockholders of Borrower other than what has been obtained, (ii) contravene any
provision of the charter documents or by-laws of Borrower or any law, rule or
regulation applicable to Borrower, (iii) contravene any provision of, or
constitute an event of default or event that, but for the requirement that time
elapse or notice be given, or both, would constitute an event of default under,
any other agreement, instrument, order or undertaking binding on Borrower, other
than such as have been waived in writing or (iv) result in or require the
imposition of any Encumbrance on any of the properties, assets or rights of
Borrower other than Permitted Encumbrances.
(b) The execution, delivery and performance of the German Guaranty, the
German Security Agreement, and each other Loan Document to which Guarantor is a
party and the transactions contemplated hereby are within the corporate power
and authority of Guarantor and have been authorized by all necessary corporate
proceedings, and do not and will not (i) require any consent or approval of the
stockholders of Borrower other than what has been obtained, (ii) contravene any
provision of the charter documents or by-laws of Guarantor or any law, rule or
regulation applicable to Guarantor, (iii) contravene any provision of, or
constitute an event of default or event that, but for the requirement that time
elapse or notice be given, or both, would constitute an event of default under,
any other agreement, instrument, order or undertaking binding on Guarantor,
other than such as have been waived in writing or (iv) result in or require the
imposition of any Encumbrance on any of the properties, assets or rights of
Guarantor other than Permitted Encumbrances.
11.
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4.3 Valid Obligations. This Agreement, the Note, and each other Loan
Document to which Borrower or Guarantor is a party, and all of their respective
terms and provisions are the legal, valid and binding obligations of Borrower
and Guarantor, respectively, enforceable in accordance with their respective
terms except as limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally, and except
as the remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
4.4 Consents or Approvals. The execution, delivery and performance of
this Agreement, the Note, and each other Loan Document, and the transactions
contemplated herein do not require any approval or consent of, or filing or
registration with, any governmental or other agency or authority, or any other
party, other than such consents as have been obtained in writing.
4.5 Title to Properties; Absence of Encumbrances. Each of Borrower and
its Subsidiaries has good and marketable title to all of the Collateral, and all
of the properties, assets and rights of every name and nature now purported to
be owned by it, including, without limitation, such properties, assets and
rights as are reflected in the financial statements referred to in Section 4.6
(except such properties, assets or rights as have been disposed of in the
ordinary course of business since the date thereof), free from all Encumbrances
except Permitted Encumbrances or those Encumbrances disclosed in Schedule 4.5
hereto, and, except as so disclosed, free from all defects of title that might
have a Material Adverse Effect.
4.6 Financial Statements. Borrower has heretofore delivered to Lender
its audited consolidated balance sheet as of December 31, 1995, and its
consolidated statements of income, changes in stockholders' equity and cash flow
for the Fiscal Year then ended, and related footnotes. All such financial
statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods specified and
present fairly the financial position of Borrower and its Subsidiaries as of
such date and the results of the operations of Borrower and its Subsidiaries for
such period. There are no liabilities, contingent or otherwise, not disclosed in
such financial statements that involve a material amount.
4.7 Changes. Since the date of the financial statements referred to in
Section 4.6, there have been no changes in the properties, operations, profits,
assets, liabilities, financial condition, business or prospects of Borrower or
any of its Subsidiaries other than changes in the ordinary course of business,
the effect of which has not, in the aggregate, had a Material Adverse Effect.
4.8 Defaults. Except as disclosed in Schedule 4.8, as of the date of
this Agreement, no Default exists.
4.9 Taxes. Borrower and each Subsidiary have filed all federal, state
and other tax returns or extensions required to be filed, and all taxes,
assessments and other governmental charges due from Borrower and each Subsidiary
have been fully paid. Borrower and each Subsidiary have established on their
books reserves adequate for the payment of all federal, state and other tax
liabilities.
4.10 Litigation. Except as set forth on Schedule 4.10 hereto, there is
no litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of Borrower's or any Subsidiary's officers, threatened, against
Borrower or any Subsidiary that, if adversely determined, could result in a
material judgment not fully covered by insurance, could result in a forfeiture
of all or any substantial part of the property of Borrower or its Subsidiaries,
or could otherwise have a Material Adverse Effect.
12.
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4.11 Subsidiaries. As of the date of this Agreement, all the
Subsidiaries of Borrower are listed on Schedule 4.11 hereto. Borrower or a
Subsidiary of Borrower is the owner, free and clear of all liens and
encumbrances, of all of the issued and outstanding stock of each Subsidiary.
4.12 Compliance with ERISA. Borrower and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under Title IV of ERISA; and no
"prohibited transaction" or "reportable event" (as such terms are defined in
ERISA) has occurred with respect to any Plan.
4.13 Environmental Matters. (a) Borrower and each of its Subsidiaries
have obtained all permits, licenses and other authorizations which are required
under all Environmental Laws, except to the extent failure to have any such
permit, license or authorization would not have a Material Adverse Effect.
Borrower and each of its Subsidiaries are in compliance with the terms and
conditions of all such permits, licenses and authorizations, and are also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a Material Adverse Effect.
(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by Borrower or any of its Subsidiaries to have any permit, license or
authorization required in connection with the conduct of its business or with
respect to any Environmental Laws, including, without limitation, Environmental
Laws relating to the generation, treatment, storage, recycling, transportation,
disposal or release of any Hazardous Materials.
(c) Neither Borrower nor any of its Subsidiaries nor, to the
best knowledge of Borrower, any previous owner, tenant, occupant or user of any
property owned, leased or used by Borrower or any of its Subsidiaries has (i)
engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or illegal,
accidental or intentional) of any Hazardous Materials on, under, in or about
such property, except to the extent commonly used in day-to-day operations of
such property and in such case only in compliance with all Environmental Laws,
or (ii) transported any Hazardous Materials to, from or across such property
except to the extent commonly used in day-to-day operations of such property
and, in such case, in compliance with, all Environmental Laws; nor to the best
knowledge of Borrower have any Hazardous Materials migrated from other
properties upon, about or beneath such property, nor, to the best knowledge of
Borrower, are any Hazardous Materials presently constructed, deposited, stored
or otherwise located on, under, in or about such property except to the extent
commonly used in day-to-day operations of such property and, in such case, in
compliance with, all Environmental Laws.
4.14 Trademarks, Patents, Copyrights and Licenses. Each of Borrower and
Guarantor possesses and owns all necessary trademarks, trademark licenses,
copyrights, copyright licenses, Patents, and Patent Licenses which are material
to the conduct of its business as now operated. Schedule 4.14
13.
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contains a true and complete list of all trademarks, trademark licenses,
copyrights, copyright licenses, Patents, and Patent Licenses in which Borrower
or Guarantor has any right, title or interest.
4.15 Name; Location of Chief Executive Office, Principal Place of
Business and Collateral. Except as disclosed in Schedule 4.15, neither Borrower
nor Guarantor has done business under any name other than that specified on the
signature page hereof or the German Guaranty, as the case may be. The chief
executive office, principal place of business, and the place where Borrower and
Guarantor maintains their records concerning the collateral (as defined in the
German Security Agreement, the "Collateral") are presently located at the
addresses set forth on Schedule 4.15. The Collateral is presently located at the
addresses set forth on Schedule 4.15.
4.16 Capitalization.
(a) The authorized capital stock of Borrower consists of
100,000,000 shares of Common Stock, of which 31,310,284 shares are issued and
outstanding. Attached hereto as Exhibit J is a copy of Borrower's shareholder
list which contain a true and correct list of all holders of 2% or more of the
equity securities of Borrower on a fully diluted basis (including, without
limitation, all convertible debt, options, and warrants and other securities) of
Borrower on the date of this Agreement. Of the outstanding shares of Common
Stock, no shares were subject to vesting restrictions, as of November 27, 1996,
pursuant to employee stock purchase agreements entered into by and between
Borrower and various employees of Borrower. Borrower has reserved 1,727,683 and
1,382,648 shares of its Common Stock for issuance upon conversion of
Indebtedness under the Existing Loan Documents and exercise of the Warrant,
respectively. All issued and outstanding shares of capital stock have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with applicable federal and state securities laws. The
Warrant, when issued in accordance with the terms of this Agreement, shall be
duly and validly issued, and the shares of Common Stock issuable under the
Warrant, when issued in accordance with the terms of the Warrant and this
Agreement, shall be duly authorized, validly issued, fully paid and
nonassessable.
(b) Except as set forth in this Agreement and the schedules
hereto, there are no options, warrants, conversion privileges or rights, written
or oral, presently outstanding to purchase or otherwise acquire any authorized
but unissued shares of Borrower's capital stock or other securities of Borrower.
SECTION V
AFFIRMATIVE COVENANTS
So long as any Loan or other Obligation under the Loan Documents (other
than the Convertible Debenture and the Debt Conversion Agreement) remains
outstanding, Borrower covenants as follows:
5.1 Financial Statements and other Reporting Requirements. Borrower
shall furnish to Lender:
(a) as soon as available to Borrower, but in any event within
one hundred and twenty (120) days after the end of each Fiscal Year, a
consolidated and consolidating balance sheet as of the end of, and a related
consolidated and consolidating statement of income, changes in stockholders'
equity and cash flow for, such year, audited and certified by Mottle McGrath
Braney & Flynn, PC (or other
14.
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independent certified public accountants reasonably acceptable to Lender) in the
case of such consolidated statements, and certified by the chief financial
officer in the case of such consolidating statements;
(b) as soon as available to Borrower, but in any event within
forty-five (45) days after the end of each quarter, except the last fiscal
quarter of the fiscal year which shall be within 120 days of the end of such
quarter, a consolidated and consolidating balance sheet as of the end of, and a
related consolidated and consolidating statement of income for, the period then
ended, certified by the chief financial officer of Borrower but subject,
however, to normal, recurring year-end adjustments that shall not in the
aggregate be material in amount;
(c) as soon as available to Borrower, but in any event within
forty-five (45) days after the end of each month, except the last month of the
fiscal year which shall be within 120 days of the end of such month, a
consolidated and consolidating balance sheet as of the end of, and a related
consolidated and consolidating statement of income and cashflow for, the period
then ended, certified by the chief financial officer of Borrower but subject,
however, to normal, recurring year-end adjustments that shall not in the
aggregate be material in amount;
(d) together with each delivery of financial statements
pursuant to Section 5.1(a) or (b), a certificate of the chief financial officer
in the form of Exhibit G:
(i) stating that to such officer's knowledge, based
on a reasonable examination sufficient to enable him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred,
whether it is continuing and the steps being taken by such Borrower with respect
to such Default or Event of Default;
(ii) setting forth as at the end of such Fiscal
Quarter or Fiscal Year, as the case may be, the calculations required to
establish whether or not such Borrower was in compliance with the financial
covenants applicable to it set forth in Section VII hereof as at the end of each
respective period; and
(iii) stating that to such officer's knowledge, all
representations and warranties contained in this Agreement and the other Loan
Documents are true, correct and complete in all material respects except as
otherwise disclosed therein; that neither Borrower nor Guarantor is in violation
of any of the covenants contained in this Agreement and the other Loan
Documents.
(e) as soon as available to Borrower, but in any event within
forty-five (45) days after the end of each Fiscal Year, the annual forecasts of
Borrower, including three-year projections broken down by quarter for the first
of the three years; as soon as available to Borrower, any revisions to such
forecasts;
(f) as soon as available to Borrower, but in any event no
later than December 1 of each Fiscal Year, the annual budget of Borrower; as
soon as available to Borrower, any revisions to such annual budget;
(g) as soon as available to Borrower, but in any event within
forty-five (45) days after the end of each quarter, a summary of changes in the
capital structure and, as soon as available to Borrower after the end of each
month where there are material changes to the capital structure, a summary of
any such changes;
15.
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(h) promptly after the receipt thereof by Borrower, copies of
any reports submitted to Borrower by independent public accountants in
connection with any interim review of the accounts of Borrower made by such
accountants;
(i) promptly after the same are available, copies of all Board
of Directors meeting packages, proxy statements, financial statements and
reports as Borrower shall send to its directors or stockholders or as Borrower
may file with the Securities and Exchange Commission or any governmental
authority at any time having jurisdiction over Borrower or its Subsidiaries;
(j) if and when Borrower gives or is required to give notice
to the PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to the PBGC;
(k) promptly upon becoming aware of the existence of any
condition or event that constitutes a Default, written notice thereof specifying
the nature and duration thereof and the action being or proposed to be taken
with respect thereto;
(l) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened in writing against Borrower or any of its Subsidiaries of which it
has notice, the outcome of which might reasonably have a materially adverse
effect on the assets, business or prospects of Borrower or Borrower and its
Subsidiaries on a consolidated basis, written notice thereof and the action
being or proposed to be taken with respect thereto;
(m) promptly upon becoming aware of any investigative
proceedings by a governmental agency or authority commenced or threatened
against Borrower or any of its Subsidiaries regarding any potential violation of
Environmental Laws or any spill, release, discharge or disposal of any Hazardous
Material, written notice thereof and the action being or proposed to be taken
with respect thereto;
(n) from time to time, such other financial data and
information about Borrower or its Subsidiaries as Lender may reasonably request;
and
(o) upon Lender's request, and no less frequently than once
per calendar quarter, deliver to Lender an updated list of all Patents,
trademarks, copyrights and licenses not previously disclosed to Lender in which
Borrower then has any right, title or interest.
5.2 Conduct of Business. Each of Borrower and its Subsidiaries shall:
(a) duly observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets, and shall maintain and keep in full
force and effect all licenses and permits necessary in any material respect to
the proper conduct of its business;
(b) maintain its corporate existence; and
(c) remain engaged substantially in the business of the
manufacture of optical fiber, pre-forms, and monitoring systems and ancillary
products.
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5.3 Maintenance and Insurance. Except as provided in Schedule 5.3,
Borrower and each of its Subsidiaries shall maintain the Collateral and its
properties in good repair, working order and condition as required for the
normal conduct of its business. Borrower and each of its Subsidiaries shall at
all times maintain liability and casualty insurance with financially sound and
reputable insurers in such amounts as the officers of Borrower in the exercise
of their reasonable judgment deem to be adequate. In the event of failure to
provide and maintain insurance as herein provided, Lender may, at its option,
provide such insurance and charge the amount thereof to the account of Borrower
or any of its Subsidiaries with Lender. Borrower shall furnish to Lender
certificates or other evidence satisfactory to Lender of compliance with the
foregoing insurance provisions.
5.4 Taxes. Borrower shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or any of its Subsidiaries
or its or their properties on or prior to the time when they become due;
provided that this covenant shall not apply to any tax, assessment or charge
that is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are being
maintained in accordance with generally accepted accounting principles if no
lien shall have been filed to secure such tax, assessment or charge.
5.5 Inspection by Lender. Borrower shall permit Lender or its
designees, at any reasonable time and reasonable frequency, and upon reasonable
notice (or if a Default shall have occurred and is continuing, at any time and
without prior notice), to (i) visit and inspect the properties of Borrower and
its Subsidiaries, (ii) examine and make copies of and take abstracts from the
books and records of Borrower and its Subsidiaries, (iii) conduct periodic
audits of the Collateral, and (iv) discuss the affairs, finances and accounts of
Borrower and its Subsidiaries with their appropriate officers, employees and
accountants. In handling such information Lender shall exercise the same degree
of care that it exercises with respect to its own proprietary information of the
same types to maintain the confidentiality of any non-public information thereby
received or received pursuant to Sections 5.1 except that disclosure of such
information may be made (i) to the subsidiaries of Lender or AMP Affiliates in
connection with their present or prospective business relations with Borrower,
(ii) to prospective transferees, assignees or purchasers, permitted under
Section 9.8, of an interest in the Loan who execute a confidentiality agreement
reasonably acceptable to Borrower, and (iii) as required by law, regulation,
rule or order, subpoena, judicial order or similar order.
5.6 Maintenance of Books and Records. Each of Borrower and its
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with generally
accepted accounting principles consistently applied and applicable law.
5.7 ALT. If ALT does not remain cash neutral to Borrower on an
operating basis, Borrower will look to divest ALT in a commercially reasonable
manner.
5.8 Composition of Board of Directors. Borrower's Board of Directors
shall consist of seven directors, (a) three of whom shall be "inside" directors
nominated by the current board of directors of Borrower and who, initially,
shall be Dr. Mohd Aslami, Mr. Chuck DeLuca, and Mr. Hans Moeller, (b) one of
whom shall be nominated by Lender, and (c) three of whom shall be designated as
"outside" directors (i.e. directors who are not members of the management of
Borrower or any affiliate of Borrower) nominated and acceptable to the other
four, one of whom shall be M. Mahud Awan, all to be elected by Borrower's
shareholders. Borrower shall hold meetings of its Board of Directors no less
frequently than quarterly and shall distribute to each director promptly, and in
any event within three (3) weeks after the date of each meeting, copies of the
minutes of such meeting and of any reports or other materials
17.
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distributed at such meeting to the directors. Mr. Steven Phillips may attend
meetings of the Board of Directors in an advisory capacity.
5.9 Proceeds of Berliner Bank Loan. The proceeds of the Berliner Bank
Loan shall be used to purchase not less than $2,000,000 of upgrades to existing
equipment or additional equipment, upon which Lender shall have a first
priority, perfected security interest, except to the extent that Lender agrees
to subordinate its security interest pursuant to the terms and conditions of the
German Security Agreement.
5.10 Post-closing covenant. Within ten calendar days after the Closing
Date, Borrower shall provide Lender with an English translation of the list of
Collateral.
5.11 Further Assurances. At any time and from time to time Borrower
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further instruments and take such further action as may reasonably be requested
by Lender to effect the purposes of this Agreement, the Note, and the other Loan
Documents, including without limitation, to establish and maintain a perfected
first priority security interest in the Collateral.
SECTION VI
NEGATIVE COVENANTS
So long as the Loan or any other Obligation under the Loan Documents
(other than the Convertible Debenture and the Debt Conversion Agreement) remains
outstanding, Borrower covenants as follows:
6.1 Indebtedness. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any
Indebtedness other than the following:
(a) Indebtedness of Borrower or any of its Subsidiaries to
Lender or any AMP Affiliate;
(b) Indebtedness existing as of the date of this Agreement and
specifically disclosed on Schedule 4.5 hereto or in the financial statements
referred to in Section 4.6;
(c) Indebtedness secured by Permitted Encumbrances; and
(d) other Indebtedness of Borrower or any of its Subsidiaries
consistent with Borrower's Mission Statement and which does not have a Material
Adverse Effect.
6.2 Contingent Liabilities. Neither Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or remain liable with
respect to any Guaranties other than the following:
(a) Guaranties in favor of Lender or any of its affiliates;
(b) Guaranties existing on the date of this Agreement and
disclosed on Schedule 4.5 hereto or in the financial statements referred to in
Section 4.6;
(c) Guaranties resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business; and
18.
<PAGE>
(d) Guaranties with respect to surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money or which
are consistent with Borrower's Mission Statement) not exceeding in the aggregate
at any time $100,000.
6.3 Sale and Leaseback. Neither Borrower nor any of its Subsidiaries
shall enter into any arrangement, directly or indirectly, whereby it shall sell
or transfer all or substantially all property owned by it in order to lease such
property or lease other property that Borrower or any such Subsidiary intends to
use for substantially the same purpose as the property being sold or
transferred.
6.4 Encumbrances. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("Encumbrances"), or assign or otherwise convey any right to
receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("Permitted Encumbrances"):
(a) Encumbrances in favor of Lender or any of its affiliates;
(b) Encumbrances existing as of the date of this Agreement and
specifically disclosed in Schedule 4.5 hereto;
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in
default or liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance of
bids, tenders, contracts (other than for the payment of money); and statutory
obligations incidental to the conduct of its business and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;
(e) judgment liens that shall not have been in existence for a
period longer than 30 days after the creation thereof or, if a stay of execution
shall have been obtained, for a period longer than 30 days after the expiration
of such stay;
(f) rights of lessors under capital leases;
(g) Subordinated Liens on the Collateral to the extent
permitted under the German Security Agreement;
(h) Encumbrances in respect of any purchase money obligations
for tangible property used in its business that at any time shall not exceed
$100,000 in the aggregate unless otherwise consistent with the Mission
Statement, provided that any such Encumbrances shall not extend to the
Collateral or to property and assets of Borrower or any such Subsidiary not
financed by such a purchase money obligation; and
19.
<PAGE>
(i) easements, rights of way, restrictions and other similar
charges or Encumbrances relating to real property and not interfering in a
material way with the ordinary conduct of its business.
6.5 Merger; Consolidation; Sale or Lease of Assets; Change in Line of
Business. Neither Borrower nor any of its Subsidiaries shall sell, lease or
otherwise dispose of assets or properties, other than sales of inventory in the
ordinary course of business and sales of worn and obsolete equipment; or
liquidate, merge or consolidate into or with any other person or entity,
provided that any Subsidiary of Borrower, other than Guarantor, may merge or
consolidate into or with (i) Borrower if no Default has occurred and is
continuing or would result from such merger and if Borrower is the surviving
company, or (ii) any other wholly-owned Subsidiary of Borrower; or change its
line of business in any material respect from that set forth in Section 5.2(c).
6.6 Equity Distributions. Borrower shall not pay any dividends on any
class of its capital stock or make any other distribution or payment on account
of or in redemption, retirement or purchase of such capital stock; provided that
this Section shall not apply to (i) the issuance, delivery or distribution by
Borrower of shares of its common stock pro rata to its existing shareholders and
(ii) the purchase or redemption by Borrower of its capital stock with the
proceeds of the issuance of additional shares of capital stock.
6.7 Investments. Neither Borrower nor any of its Subsidiaries shall
make or maintain any Investments other than (i) existing Investments in
Subsidiaries, (ii) Qualified Investments, or (iii) Investments which are
consistent with Borrower's Mission Statement and which do not have a Material
Adverse Effect.
6.8 Capital Expenditures. Neither Borrower nor any of its Subsidiaries
shall make or incur any Capital Expenditures in any Fiscal Year in excess of the
amount included for such purposes in the annual budget, and any revisions
thereof, as approved by Borrower's Board of Directors.
6.9 ERISA. Neither Borrower nor any member of the Controlled Group
shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code, (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived, or (iii) terminate any Plan in a manner that could result in the
imposition of a lien or encumbrance on the assets of Borrower or any of its
Subsidiaries pursuant to Section 4068 of ERISA.
6.10 Loans or Advances to ALT. Neither Borrower nor any subsidiary
shall use the proceeds of the Loan to make loans or advances to ALT, except to
the extent that money borrowed by Borrower from ALT in connection with the
Recent ALT Financing shall be repaid to ALT.
6.11 Collateral Coverage. Neither Borrower nor Guarantor shall permit
the aggregate book value of the Collateral upon which Lender has a first
priority perfected Lien, to equal an amount which is less than 125% of the sum
of (a) the aggregate outstanding principal amount of the Loan and (b) the
aggregate accrued but unpaid interest on the Loan.
6.12 Change in Key Management. Neither Borrower nor Guarantor shall
permit any changes in key management, except as approved by Borrower's or
Guarantor's Board of Directors, respectively.
6.13 Transactions with Affiliates. Borrower shall not, and shall not
permit any of Borrower's Subsidiaries to, enter into or be a party to any
agreement or transaction with any Affiliate of Borrower, unless (i) consistent
with Borrower's Mission Statement or (ii) in the ordinary course of and pursuant
to
20.
<PAGE>
the reasonable requirements of Borrower's or Borrower's Subsidiaries' business,
and, in each case, upon fair and reasonable terms that are approved by
Borrower's Board of Directors, and no less favorable to such Borrower or
Borrower's Subsidiary than would obtain in a comparable arm's length transaction
with a Person not an Affiliate of Borrower of equal bargaining power.
6.14 No Amendment or Waiver of Charter Documents. Borrower shall not
amend, alter, repeal or terminate, and shall not permit any Subsidiary to amend,
alter, repeal or terminate, its respective Certificate of Incorporation (or
comparable charter documents) without the prior written consent of Lender if the
effect of such amendment, alteration, repeal, or termination is adverse to the
interests of the Lender, as determined by Lender in its sole discretion.
SECTION VII
FINANCIAL COVENANTS
So long as the Loan or any other Obligation under the Loan Documents
(other than the Convertible Debenture and the Debt Conversion Agreement) remains
outstanding, Borrower covenants as follows, tested annually on the last day of
each fiscal year of Borrower, beginning December 31, 1997:
7.1 Minimum Assets to Equity. Borrower shall maintain a ratio of Total
Assets to Equity of at least 4.0 to 1.0
7.2 Maximum Total Liabilities to Equity. Borrower shall maintain a
ratio of Total Liabilities to Equity of not more than 3.5 to 1.0.
7.3 Maximum Long Term Debt to Equity. Borrower shall maintain a ratio
of Long Term Debt to Equity of not more than 3.0 to 1.0
7.4 Minimum Current Ratio. Borrower shall maintain a ratio of Current
Assets to Current Liabilities of at least 1.0 to 1.0.
SECTION VIII
DEFAULTS
8.1 Events of Default. There shall be an Event of Default hereunder if
any of the following events occurs:
(a) Borrower shall fail to pay when due (i) any amount of
principal of the Loan, or (ii) any amount of interest thereon or any fees or
expenses payable hereunder or under the Note and such failure shall continue for
three (3) business days after written notice of such default is given by Lender
to Borrower; or
(b) Borrower shall fail to perform any term, covenant or
agreement contained in Sections 5.1(j), 5.3, 5.5, 5.9, 6.1 through 6.14, or 7.1
through 7.4; or
21.
<PAGE>
(c) Borrower or Guarantor shall fail to perform any term,
covenant or agreement (other than in respect of Sections 8.1(a) and (b) hereof)
contained in this Agreement, any other Loan Document, or any other agreement
between Borrower and Lender or Guarantor and Lender, as the case may be, and
such default shall continue for twenty (20) days after written notice of such
default is given by Lender to Borrower and Guarantor; or
(d) any representation or warranty of Borrower or Guarantor
made in this Agreement, the Note or in any other Loan Document or any other
documents or agreements executed in connection with the transactions
contemplated by this Agreement or in any certificate delivered hereunder shall
prove to have been false in any material respect upon the date when made or
deemed to have been made; or
(e) there shall occur any material adverse change in the
assets, liabilities, financial condition, or business of Borrower, Guarantor, or
Borrower and its Subsidiaries, taken as a whole; or
(f) Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligations for borrowed
monies or advances, or for the use of real or personal property, or fail to
observe or perform any term, covenant or agreement evidencing or securing such
obligations for borrowed monies or advances, all in excess of $100,000, or
relating to such use of real or personal property, the result of which failure
is to permit the holder or holders of such Indebtedness to cause such
Indebtedness to become due prior to its stated maturity upon delivery of
required notice, if any; or
(g) Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal Bankruptcy Code (as
now or hereafter in effect), (v) take any action or commence any case or
proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors, (vi) fail to contest in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
under the Federal Bankruptcy Code or other law, (vii) take any action under the
laws of its jurisdiction of incorporation or organization similar to any of the
foregoing, or (viii) take any corporate action for the purpose of effecting any
of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of Borrower or any of its Subsidiaries in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets, or (iii) similar relief in respect
of it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law providing for
the relief of debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of 30 days; or an order for relief shall
be entered in an involuntary case under the Federal Bankruptcy Code, against
Borrower or such Subsidiary; or action under the laws of the jurisdiction of
incorporation or organization of Borrower or any of its Subsidiaries similar to
any of the foregoing shall be taken with respect to Borrower or such Subsidiary
and shall continue unstayed and in effect for any period of 30 days; or
(i) a judgment or order for the payment of money shall be
entered against Borrower or any of its Subsidiaries by any court, or a warrant
of attachment or execution or similar process shall be issued or levied against
property of Borrower or such Subsidiary, that in the aggregate exceeds $100,000
22.
<PAGE>
in value and such judgment, order, warrant or process shall continue
undischarged or unstayed for 30 days; or
(j) a material breach by Borrower under the Purchase
Agreement; or
(k) any Change in Control shall have occurred; or
(l) Lender's nominee to the Board of Directors, if any, should
fail to be elected to the Board of Directors of Borrower; or
(m) at least a majority of the Board of Directors should fail
to be "Outside Directors" (as defined in the Voting Agreement).
8.2 Remedies. Upon the occurrence of an Event of Default described in
Sections 8.1(g) and (h), immediately and automatically, and upon the occurrence
of any other Event of Default, at any time thereafter while such Event of
Default is continuing, at Lender's election, without notice of election and
without demand:
(a) the unpaid principal amount of the Loan together with
accrued interest and all other Obligations shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived; and
(b) Lender may exercise any and all rights it has under this
Agreement, the Note, any other Loan Document, or any other documents or
agreements executed in connection herewith, or at law or in equity, and proceed
to protect and enforce Lender's rights by any action at law, in equity or other
appropriate proceeding.
(c) Without notice to Borrower, set off and apply to the
Obligations any and all indebtedness at any time owing to or for the credit or
the account of Borrower.
SECTION IX
MISCELLANEOUS
9.1 Notices. Unless otherwise specified herein, all notices hereunder
to any party hereto shall be in writing and shall be deemed to have been given
when delivered by hand, when properly deposited in the mails postage prepaid,
when sent by telex, answerback received, or electronic facsimile transmission,
or when delivered to the overnight courier, addressed to such party at its
address indicated below:
If to Borrower, at
FiberCore, Inc.
--------------------
--------------------
--------------------
Phone: (508) 347-7744
Fax: (508) 347-2778
with a copy to:
23.
<PAGE>
Coleman & Rhine
1120 Avenue of the Americas
New York, N.Y. 10036-6700
Phone: (212) 840-3330
Fax: (212) 840-3744
Attention: Bruce S. Coleman, Esq.
If to Lender, at
AMP Incorporated
470 Friendship Road
M/S 176-034
Harrisburg, PA 17111
Phone: (717) 592-6651
Fax: (717) 592-6655
or at any other address specified by such party in writing.
9.2 Expenses. Borrower will pay within 30 days of demand all reasonable
expenses of Lender in connection with (a) the waiver or amendment of this
Agreement, the Note, the Loan Documents, or other documents executed in
connection therewith, (b) or the default or collection of the Loan or other
Obligations under the Loan Documents, or default, collection in connection with
Lender's exercise, preservation or enforcement of any of its rights, remedies or
options thereunder, including, without limitation, reasonable fees of outside
legal counsel, accounting, consulting, brokerage or other similar professional
fees or expenses, and any fees or expenses associated with any travel or other
costs relating to any appraisals or examinations conducted in connection with
the Obligations or any collateral therefor, and the amount of all such expenses
shall, until paid, bear interest at the rate applicable to principal hereunder
(including any default rate).
9.3 Set-Off. Regardless of the adequacy of any collateral or other
means of obtaining repayment of the Obligations, any sums due from Lender to
Borrower may, at any time and from time to time after the occurrence of an Event
of Default hereunder, without notice to Borrower or compliance with any other
condition precedent now or hereafter imposed by statute, rule of law, or
otherwise (all of which are hereby expressly waived) be set off, appropriated,
and applied by Lender against any and all obligations of Borrower to Lender or
any of its affiliates in such manner as Lender in its sole discretion may
determine, and Borrower hereby grants Lender a continuing security interest in
such sums for the payment and performance of all such obligations.
9.4 Term of Agreement. This Agreement shall continue in force and
effect so long as the Loan or any Obligation under the Loan Documents (other
than the Convertible Debenture and the Debt Conversion Agreement) shall be
outstanding.
9.5 No Waivers. No failure or delay by Lender in exercising any right,
power or privilege hereunder or under the Note or under any other documents or
agreements executed in connection herewith shall operate as a waiver thereof;
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein and in the Note provided are cumulative and not
exclusive of any rights or remedies otherwise provided by agreement or law.
24.
<PAGE>
9.6 Governing Law. THIS AGREEMENT, THE GERMAN GUARANTY, AND THE NOTE
SHALL BE DEEMED TO BE CONTRACTS MADE UNDER SEAL AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF NEW YORK (WITHOUT GIVING EFFECT TO
ANY CONFLICTS OF LAWS PROVISIONS CONTAINED THEREIN); PROVIDED, HOWEVER, THAT THE
GERMAN SECURITY AGREEMENT SHALL BE GOVERNED BY THE LAWS OF GERMANY.
9.7 Amendments. Neither this Agreement, the Note, any other Loan
Document, nor any provision hereof or thereof may be amended, waived, discharged
or terminated except by a written instrument signed by Lender and, in the case
of amendments, by Borrower.
9.8 Binding Effect of Agreement. This Agreement shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors
and assigns; provided that Borrower may not assign or transfer its rights or
obligations hereunder. Lender may sell, transfer or grant participations in the
Note to any AMP Affiliate of Lender without the prior written consent of
Borrower, and Borrower agrees that any transferee or participant shall be
entitled to the benefits of this Agreement to the same extent as if such
transferee or participant were Lender hereunder; provided that notwithstanding
any such transfer or participation, Borrower may, for all purposes of this
Agreement, treat Lender as the person entitled to exercise all rights hereunder
and under the Note and to receive all payments with respect thereto.
9.9 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
9.10 Partial Invalidity. The invalidity or unenforceability of any one
or more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining portions of it.
9.11 Captions. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
9.12 Arbitration. Any dispute that cannot be settled amicably by
mediation will be heard, settled and decided under the Commercial Rules of the
American Arbitration Association by three arbitrators chosen in accordance with
such Rules. Service of any matters in reference to such arbitration will be
given in the manner described in Section 9.1. Such arbitration will be conducted
in New York, New York. The award in such arbitration will be final and
enforceable in any court of competent jurisdiction. The costs of arbitration
will be paid as directed by the arbitrators.
9.13 Entire Agreement. This Agreement, the Note and the documents and
agreements executed in connection herewith constitute the final agreement of the
parties hereto and supersede any prior agreement or understanding, written or
oral, with respect to the matters contained herein and therein.
25.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
Borrower: FIBERCORE, INC.
By: /s/ Mohd Aslami
-------------------------
Name: Mohd Aslami
Title: Chairman and CEO
Lender: AMP INCORPORATED
By: /s/ James E. Marley
-------------------------
Name: James E. Marley
Title: Chairman of the Board
26.
<PAGE>
EXHIBITS
EXHIBIT A - Form of Promissory Note
EXHIBIT B - Form of Warrant
EXHIBIT C - Intentionally omitted.
EXHIBIT D - Form of German Guaranty
EXHIBIT E - Form of German Security Agreement
EXHIBIT F - Form of Opinion of Counsel to Lender
EXHIBIT G - Form of Compliance Certificate
EXHIBIT H - Borrower's Mission Statement
EXHIBIT I - Form of Voting Agreement
EXHIBIT J - Capitalization Table
EXHIBIT K - Berliner Bank Loan Documents
EXHIBIT L - German Government Grant Documents
SCHEDULES
SCHEDULE 4.5 - Indebtedness; Encumbrances
SCHEDULE 4.8 - Defaults
SCHEDULE 4.10 - Litigation
SCHEDULE 4.11 - Subsidiaries
SCHEDULE 4.14 - Trademarks, Trademark Licenses, Patents,
Patent Licenses, Copyrights, and Copyright
Licenses
SCHEDULE 4.15 - Borrower's Trade Names; Location of
Collateral
SCHEDULE 5.3 - Maintenance and Insurance
i
<PAGE>
SCHEDULE 4.5
INDEBTEDNESS; ENCUMBRANCES
ALL EQUIPMENT AND PATENTS PURCHASED FROM SICO QUARZSCHMELZE JENA GMBH ("SICO")
COULD REVERT TO SICO IN THE EVENT THE COMPANY MOVES OUT OF THE JENA FACILITY
PRIOR TO THE YEAR 2001.
ALL OTHER EQUIPMENT AND PATENTS ARE SUBJECT TO THE SECURITY INTEREST OF AMP
INCORPORATED, UNDER THIS LOAN AGREEMENT AND A PREVIOUS LOAN AGREEMENT DATED
APRIL 17, 1995.
ii.
<PAGE>
SCHEDULE 4.8
INDEBTEDNESS; ENCUMBRANCES
NONE
iii.
<PAGE>
SCHEDULE 4.10
LITIGATION
Litigation against FiberCore, Inc.
None
Litigation against Subsidiaries
1. COIA GmbH v. Fibercore Glasfaser Jena GmbH
iv.
<PAGE>
SCHEDULE 4.11
SUBSIDIARIES
Automated Light Technologies (Delaware)
Fibercore Glasfaser Jena GmbH (Germany)
FiberCore Mid East Ltd. (Cayman Islands)
Infoglass Incorporated (Delaware)
v.
<PAGE>
SCHEDULE 4.15
SCHEDULE OF BORROWER'S TRADE NAMES AND LOCATION OF COLLATERAL
THE BORROWER HAS BEEN PREVIOUSLY KNOWN BY THE NAMES FIBERCORE INCORPORATED AND
VENTURECAP, INC.
THE COLLATERAL IS LOCATED AT THE JENA FACILITY IN JENA, GERMANY.
THE ADDRESS OF THE JENA FACILITY IS
FiberCore Jena GmbH
Goschwitzer Str. 20, D-07745
Jena
vi.
<PAGE>
SCHEDULE 5.13
SCHEDULE OF EXCEPTIONS TO MAINTENANCE AND INSURANCE
NONE
vii.
FIBERCORE, INC.
TERM PROMISSORY NOTE
November 27, 1996
US$3,000,000 New York, New York
For value received, the undersigned hereby promises to pay to AMP
Incorporated, a Pennsylvania corporation ("Lender"), or order, at the office of
Lender at 470 Friendship Road, M/S 176-034, Harrisburg, Pennsylvania 17111, the
principal amount of THREE MILLION UNITED STATES DOLLARS (US$3,000,000) or such
lesser amount as shall equal the principal amount outstanding hereunder,
together with accrued and unpaid interest thereon, payable on the dates and in
the manner set forth in the Agreement (defined below.)
Overdue payments of principal (whether at stated maturity, by
acceleration or otherwise), and, to the extent permitted by law, overdue
interest, shall bear interest, payable on demand in immediately available funds,
at a rate per annum equal to two percent (2%) above the rate that would
otherwise be applicable to principal hereunder.
This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain Term Loan Agreement dated as of
November 27, 1996 by and between the undersigned and Lender (herein, as the same
may from time to time be amended or extended, referred to as the "Agreement"),
but neither this reference to the Agreement nor any provision thereof shall
affect or impair the absolute and unconditional obligation of the undersigned
maker of this Note to pay the principal of and interest on this Note as herein
provided. Capitalized terms not otherwise defined herein have the meanings given
to such terms in the Agreement.
As provided in the Agreement, this Note is supported by a German
Guaranty, which German Guaranty is secured by certain personal property of the
Guarantor.
In case an Event of Default (as defined in the Agreement) shall occur,
the aggregate unpaid principal of and accrued interest on this Note shall become
or may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The undersigned may at its option prepay all or any part of the
principal of this Note before maturity upon the terms provided in the Agreement.
The undersigned maker hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
THIS INSTRUMENT SHALL HAVE THE EFFECT OF AN INSTRUMENT EXECUTED UNDER
SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW
YORK (WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS CONTAINED
THEREIN).
1.
<PAGE>
LENDER FIBERCORE, INC.
By: /s/ James E. Marley By: /s/ Mohd Aslami
----------------------- ----------------------
Name: James E. Marley Name: Mohd Aslami
---------------------- ----------------------
Title: Chairman of the Board Title: Chairman and CEO
----------------------- -------------------
2.
AMENDMENT NO. 1
TO CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
This Amendment No. 1 to Convertible Debenture Purchase Agreement
("Amendment") is entered into as of November 27, 1996, by and between FiberCore,
Inc., a Nevada corporation (the "Borrower") having its chief executive office at
174 Charleston Road, Sturbridge, MA 01566 and AMP INCORPORATED, a Pennsylvania
corporation (the "Lender"), having an office at 470 Friendship Road, M/S
176-034, Harrisburg, Pennsylvania 17111.
RECITALS OF FACT.
A. Borrower and FiberCore Incorporated, a Nevada corporation ("Old
FiberCore"), previously entered into that certain Convertible Debenture Purchase
Agreement, dated as of April 17, 1995 (the "Purchase Agreement"), pursuant which
Borrower issued to Lender that certain Convertible Debenture dated as of April
17, 1995, in the original principal amount of $5,000,000, secured by that
certain Collateral Assignment, Patent Mortgage and Security Agreement, dated as
of April 17, 1995, made by Old FiberCore in favor of Lender (collectively, the
"Existing Loan Documents").
B. On July 18, 1995, Old FiberCore merged into Venturecap, Inc., a
Nevada corporation ("Vencap"), with Vencap (i.e. Borrower) as the surviving
corporation (the "Merger"). Simultaneously with the consummation of the Merger,
Vencap changed its name to "FiberCore, Inc."
C. Borrower assumed the obligations of Old FiberCore, including without
limitation, the obligations under the Existing Loan Documents, by operation of
law in the Merger.
D. The aggregate principal amount outstanding under the Existing Loan
Documents is $5,000,000 (the "Existing Loan") and the aggregate accrued interest
on the Existing Loan as of the date hereof is $541,883.55 with interest
currently accruing at a rate of $898.97 per day ("Accrued Interest").
E. This Amendment sets forth the manner in which a portion of the
indebtedness owed by Borrower to Lender shall be converted into equity of
Lender.
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. PARTIAL CONVERSION OF THE EXISTING LOAN. Lender agrees to convert
$3,000,000 of the Existing Loan and $540,984.58 of Accrued Interest into
3,058,833 shares of Common Stock of Borrower (the "Shares").
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2. ISSUANCE OF STOCK CERTIFICATES. Upon execution of this Agreement,
Borrower shall issue to Lender (i) a stock certificate representing the Shares
and (ii) a new convertible debenture in the form of Exhibit A hereto (the "New
Debenture").
3. REAFFIRMATION OF CONVERTIBLE DEBENTURE PURCHASE AGREEMENT. Borrower
hereby affirms that there will remain outstanding, after partial conversion of
the Existing Loan pursuant to Section 1 above, $2,000,000 of principal and
$898.97 of accrued interest as of the date hereof (with interest currently
accruing at the rate of $898.97 per day), which indebtedness shall be evidenced
by the New Debenture and shall be subject to the terms and conditions of the
Existing Loan Documents, as amended hereby.
4. BORROWER'S REPRESENTATIONS AND WARRANTIES. In order to induce the
Lender to enter into this Amendment in the manner provided herein, Borrower
represents and warrants to the Lender that the following statements are true,
and correct and complete:
a. Authorization of Agreements. The execution and delivery of
this Amendment and the performance of the Purchase Agreement, as amended, have
been duly authorized by all necessary corporate action on the part of Borrower.
b. Incorporation of Representations and Warranties From
Purchase Agreement. The representations and warranties contained in Section 3 of
the Purchase Agreement are and will be true and correct in all material respects
on and as of the date hereof to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true and correct in all
material respects on and as of such earlier date.
c. Absence of Default. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would constitute a default under the Purchase Agreement.
5. REAFFIRMATION OF SECURITY INTEREST. That certain Collateral
Assignment, Patent Mortgage and Security Agreement, made as of April 17, 1995,
by Old FiberCore in favor of Lender (the "Security Agreement") shall remain in
full force and effect and is hereby ratified and confirmed by Borrower. Exhibit
B hereto contains a true and complete list of all patents and patent
applications of Borrower as of the date hereof, domestic and foreign. With
limitation of the terms and conditions of the Security Agreement, Borrower
hereby agrees from time to time to file any and all necessary or desirable (i)
Uniform Commercial Code filings and
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(ii) filings or recordations with the United States Patent and Trademark Office
or any other government agency, in order to perfect or maintain the perfection
and first priority of Lender's security interest in the "Collateral" as defined
in the Security Agreement.
6. MISCELLANEOUS.
a. Reference To And Effect On The Purchase Agreement.
i. On and after the date hereof, each reference in
the Purchase Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import in the Existing Loan Documents referring to the Purchase
Agreement, shall mean and be a reference to the Purchase Agreement, as amended
by this Amendment.
ii. Except as specifically amended by this Amendment,
the Purchase Agreement and the other Existing Loan Agreements shall remain in
full force and effect and are hereby ratified and confirmed.
iii. The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of the
Lender under the Purchase Agreement or any of the other Existing Loan
Agreements.
b. Headings. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
c. Applicable Law. The Amendment shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of the
commonwealth of Massachusetts, without regard to conflicts of laws principles.
d. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date set forth above.
Borrower: FIBERCORE, INC.
By: /s/ Mohd Aslami
-------------------------
Name: Mohd Aslami
Title: Chairman and CEO
Lender: AMP INCORPORATED
By: /s/ James E. Marley
-------------------------
Name: James E. Marley
Title: Chairman of the Board
Exhibit A - Convertible Debenture
Exhibit B - List of Patents and Patent Applications
4
SUBSIDIARY GUARANTY
This continuing Subsidiary Guaranty ("Guaranty") is made as of November
27, 1996, by FIBERCORE GLASFASER JENA GMBH, a corporation incorporated under
the laws of Germany ("Guarantor"), in favor of AMP INCORPORATED, a Pennsylvania
corporation ("Lender").
RECITALS
A. Pursuant to that certain Term Loan Agreement dated of even date
herewith (as the same may from time to time be amended, modified or
supplemented, the "Loan Agreement") by and among FiberCore, Inc., a Nevada
corporation ("Borrower") and Lender, Lender has agreed to make certain advances
of money and to extend certain financial accommodations to Borrower in the
amounts and manner set forth in the Loan Agreement (collectively, the "Loan").
B. Guarantor is a wholly-owned Subsidiary of Borrower and will obtain
substantial direct and indirect benefit from the making of the Loan by Lender to
Borrower.
C. Lender is willing to make the Loan to Borrower on and after the date
of the Loan Agreement, but only upon the condition, among others, that Guarantor
shall have executed this Guaranty and delivered same to Lender.
D. In order to induce, and in consideration of the agreement of Lender
to make the Loan to Borrower, Guarantor is willing to execute and deliver this
Guaranty guaranteeing the full payment and performance by Borrower of all of its
Obligations under the Loan Agreement and each of the other Loan Documents (other
than the Debt Conversion Agreement and the Convertible Debenture) (collectively,
the "Loan Obligations").
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Guarantor hereby
represents, warrants, covenants and agrees as follows:
1. Definitions. All capitalized terms used but not defined herein shall
have the meanings given to them in the Loan Agreement. Guarantor hereby
acknowledges having received a copy of the Loan Agreement.
2. Guaranty.
2.1 Guaranty. In consideration of the foregoing, Guarantor
hereby irrevocably, absolutely and unconditionally guarantees to Lender the
prompt and complete payment when due (whether by stated maturity, by
acceleration or otherwise) of all of the Loan Obligations, together with the
prompt payment of all expenses, including reasonable attorneys' fees, incidental
to the collection of the Loan Obligations and the enforcement or protection of
1.
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Lender's security interest in the collateral described in the German Security
Agreement (the "Collateral") and the prompt performance of all of Borrower's
Loan Obligations. (The Loan Obligations and all other obligations and covenants
to be performed by Guarantor under this Guaranty shall hereinafter be
collectively referred to as the "Guaranty Obligations.")
2.2 Expenses. Guarantor agrees to pay all expenses incurred by
Lender in connection with the enforcement of Lender's rights under this
Guaranty, including, without limitation, reasonable attorneys' fees and legal
expenses.
2.3 Joint and Several Liability. The obligations of Guarantor
hereunder shall be joint and several with the obligations of any others who may
execute any guaranty respecting the Loan Obligations, notwithstanding any
relationship or contract of co-obligation by or among such guarantors. Lender's
enforcement of the Guaranty Obligations is not conditioned upon Lender obtaining
from any other person a guaranty of all or any part of the Loan Obligations.
2.4 Separate Obligations. The Guaranty Obligations of
Guarantor arising hereunder are independent of and separate from any and all
obligations of Borrower to Lender arising under the Loan Agreement and the other
Loan Documents.
3. Payments. All payments to be made by Guarantor to Lenders hereunder
shall be made in lawful money of the United States of America, in immediately
available funds, addressed to Lender at the address set forth in the Loan
Agreement (or such other address as Lender may hereafter specify to the
Guarantor) and shall be accompanied by a notice from Guarantor stating that such
payments are made under this Guaranty.
4. Absolute Guaranty. Guarantor agrees that the liability hereunder
shall be the immediate and direct obligation of Guarantor and shall not be
contingent upon Lender's exercise or enforcement of any remedy it may have
against Borrower or any other person, or against the Collateral or any security
for the Guaranty Obligations. To the fullest extent permitted by law and without
limiting the generality of the foregoing, the Guaranty Obligations shall remain
in full force and effect without regard to and shall not be impaired or affected
by, nor shall Guarantor be exonerated or discharged by, any of the following
events:
(a) Insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, death,
liquidation, winding up or dissolution of Borrower, Guarantor or any other
guarantor of the Loan Obligations;
(b) Any limitation, discharge, or cessation of the liability
of Borrower, Guarantor or any other guarantor for the Loan Obligations due to
any statute, regulation, or rule of law, or any invalidity or unenforceability
in whole or in part of the documents evidencing the Loan Obligations or any
other guaranty of the Loan Obligations;
(c) Any merger, acquisition, consolidation or change in
structure of Borrower, Guarantor or any other guarantor of the Loan Obligations
or any sale, lease, transfer, or other
2.
<PAGE>
disposition of any or all of the assets or shares of Borrower, Guarantor or any
other guarantor of the Loan Obligations;
(d) Any assignment or other transfer, in whole or in part, of
Lender's interests in and rights under this Guaranty, the Loan Agreement or any
of the other Loan Documents, including, without limitation, Lender's right to
receive payment or performance of the Loan Obligations or the Guaranty
Obligations, as the case may be, or any assignment or other transfer, in whole
or in part, of Lender's interest in and to the Collateral securing the Loan
Obligations or any security for the Guaranty Obligations;
(e) Any claim, defense, counterclaim, or set-off, other than
that of payment not yet being due or of prior performance, that Borrower,
Guarantor or any other guarantor of the Loan Obligations may have or assert,
including, but not limited to, any defense of incapacity or lack of corporate or
other authority to execute any documents relating to the Loan Obligations, the
Collateral securing the Loan Obligations or any security for the Guaranty
Obligations;
(f) Lender's amendment, modification, renewal, extension,
renunciation or cancellation of any documents or agreements relating to the Loan
Agreement, the Loan Obligations, the Collateral securing the Loan Obligations or
any security for the Guaranty Obligations, or Lender's exchange, release, or
waiver of any Collateral securing the Loan Obligations, or of any security for
the Guaranty Obligations;
(g) Lender's exercise or nonexercise of any power, right or
remedy with respect to the, the Collateral securing the Loan Obligations, the
Guaranty Obligations or any security for the Guaranty Obligations, including,
but not limited to, Lender's compromise, release, settlement or waiver with or
of Borrower, Guarantor (except in its capacity as Guarantor respecting the
Guaranty Obligations) or any other Person;
(h) Lender's vote, claim, distribution, election, acceptance,
action or inaction in any bankruptcy case related to the Loan Obligations, the
Collateral securing the Loan Obligations, the Guaranty Obligations or any
security for the Guaranty Obligations; and
(i) Any impairment or invalidity of the Collateral securing
the Loan Obligations or any security for the Guaranty Obligations, or any
failure to perfect any of Lender's liens thereon or therein.
5. Representations and Warranties. Guarantor hereby represents and
warrants to Lender and agrees that each of said warranties and representations
shall be deemed to survive until full and complete and indefeasible payment and
performance of the Loan Obligations and shall apply anew to each borrowing under
the Loan Agreement:
(a) Guarantor is a corporation duly organized and validly
existing in good standing under the laws of Germany and is duly qualified and
licensed as a foreign corporation, authorized to do business in each
jurisdiction within the United States where its ownership of
3.
<PAGE>
property or conduct of business requires such qualification and the failure to
so qualify would have a Material Adverse Effect, and in each jurisdiction within
the United States where Guarantor maintains an office; Guarantor has the
corporate power and authority, rights and franchises to own its property and
assets and to carry on its business as now conducted; Guarantor has the
corporate power and authority to execute, deliver and perform the terms of the
Loan Documents to which it is a party and all other instruments and documents to
which it is a party contemplated hereby or thereby.
(b) The execution, delivery and performance by Guarantor of
this Guaranty (i) are within Guarantor's powers and have been duly authorized by
all necessary action; (ii) do not contravene Guarantor's charter documents or
any law or any contractual restriction binding on or affecting Guarantor or by
which Guarantor's property may be affected; (iii) do not require any
authorization or approval or other action by, or any notice to or filing with,
any governmental authority or any other person under any indenture, mortgage,
deed of trust, lease, agreement or other instrument to which Guarantor is a
party or by which Guarantor or any of its property is bound except such as have
been obtained or made; and (iv) do not, except as contemplated by the Loan
Agreement or this Guaranty, result in the imposition or creation of any lien
upon the property of Guarantor.
(c) This Guaranty and each of the Loan Documents to which
Guarantor is a party constitute the legal, valid and binding obligations of
Guarantor, enforceable against Guarantor in accordance with their respective
terms, except as the enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws relating to or affecting the rights of creditors generally and by the
application of general equitable principles.
(d) There are no material claims, actions, suits, proceedings
or other litigation pending or, to the best of Guarantor's knowledge, after due
inquiry, threatened against Guarantor or Borrower or any of their Subsidiaries
at law or in equity before any governmental agency or, to the best of
Guarantor's knowledge, after due inquiry, any material investigation by any
governmental agency of Guarantor's or Borrower's or any of their Subsidiaries'
affairs, Properties or assets. Guarantor does not have any contingent
liabilities which would, if adversely determined, have a Material Adverse Effect
and which are not provided for or disclosed in the financial statements
delivered to Lender pursuant to the Loan Agreement.
(e) The Guaranty Obligations are not subject to any offset or
defense against Lender or Borrower of any kind.
(f) The financial statements of Guarantor, as shown in the
audited consolidated financial statements of Borrower, dated as of December 31,
1995 and the company prepared consolidated financial statements of Borrower
dated as of September 30, 1996, copies of which have been furnished to Lender,
fairly present in all material respects the financial position and results of
operations for Guarantor for the periods purported to be covered thereby, all in
4.
<PAGE>
accordance with GAAP, and there has been no material adverse change in the
financial position or operations of Guarantor since the date of such financial
statements.
(g) The incurrence of Guaranty Obligations under this Guaranty
will not cause Guarantor to (i) become insolvent; (ii) be left with unreasonably
small capital for any business or transaction in which Guarantor is presently
engaged or plans to be engaged; or (iii) be unable to pay its debts as such
debts mature.
(h) All representations and warranties contained in this
Guaranty shall be true, accurate and complete in all material respects at the
time of Guarantor's execution of this Guaranty, and shall continue to be true,
accurate and complete in all material respects until the Guaranty Obligations
have been paid or otherwise satisfied in full.
6. Independent Analysis. Guarantor acknowledges that it has,
independently of and without reliance on Lender, made its own credit analysis of
Borrower and the Collateral in which a security interest has been granted to
Lender under the Loan Documents, performed its own legal review of this
Guaranty, the Loan Documents and all related filings and is not relying on
Lender with respect to any of the aforesaid items. Guarantor has established
adequate means of obtaining from Borrower on a continuing basis financial and
other information pertaining to Borrower's financial condition and the value of
the Collateral and status of Lender's lien on such property. Guarantor agrees to
keep adequately informed from such means of any facts, events or circumstances
which might in any way affect Guarantor's risks hereunder, and Guarantor further
agrees that Lender shall have no obligation to disclose to Guarantor information
or material with respect to Borrower or the Collateral acquired in the course of
Lender's relationships to Borrower. Lender makes no representation, express or
implied, with respect to the Collateral or its interest in, or the priority or
perfection of its lien on the Collateral. Guarantor acknowledges that its
obligation hereunder will not be affected by (a) Lender's failure properly to
create a lien on the Collateral, or any of it, (b) Lender's failure to create or
maintain a priority with respect to the lien created on the Collateral, or any
of it or (c) any act or omission of Lender (whether negligent or otherwise)
which adversely affects the value of the Collateral or Lender's lien thereon or
the priority of such lien.
7. Events of Default.
7.1 Events of Default. It shall be an "Event of Default"
hereunder upon the occurrence of any one or more of the following events:
(a) The occurrence and continuation of an Event of
Default under and as defined in the Loan Agreement;
(b) Any representation or warranty of Guarantor made
under this Guaranty or any statement or certificate at any time given in writing
pursuant hereto or in connection herewith shall be false, misleading or
incomplete in any material respect when made;
5.
<PAGE>
(c) Guarantor fails or neglects to perform, keep or
observe any covenant or provision of this Guaranty and the same has not been
cured to Lender's satisfaction within twenty (20) days after Guarantor shall
become aware thereof, whether by written notice from Lender or otherwise;
(d) The commencement by Guarantor of a voluntary case
under the United States or any foreign bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal, state, or foreign
bankruptcy, insolvency or similar law; or the consent by Guarantor to the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator, agent or other similar official for Guarantor for any substantial
part of its property; or the making by Guarantor of any assignment for the
benefit of creditors; or any case or proceeding is commenced by Guarantor for
its dissolution, liquidation or termination; or the taking of any action by or
on behalf of Guarantor in furtherance of any of the foregoing; or
(e) (i) The filing of a petition with a court having
jurisdiction over Guarantor to commence an involuntary case for Guarantor under
the United States or any foreign bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal, state, or foreign
bankruptcy, insolvency or similar law; or the appointment of a receiver,
liquidator, assignee, custodian, trustee, agent, sequestrator or other similar
official for Guarantor or for any substantial part of its property; or any
substantial part of Guarantor's property is subject to any levy, execution,
attachment, garnishment or temporary protective order; or the ordering of the
dissolution, liquidation or winding up of Guarantor's affairs; and (ii) in each
case set forth above, the failure to obtain the dismissal of such petition or
appointment or the continuance of such decree or order unstayed and in effect,
as the case may be, for a period of thirty (30) days from the date of such
filing, appointment, or entry of such order or decree.
7.2 Acceleration of the Obligations. Upon and after an Event
of Default hereunder, then and in either such event all or any part of the Loan
Obligations may, at the option of Lender and without demand, notice, or legal
process of any kind, be declared, and immediately shall become, due and payable.
8. Continuing Guaranty. This Guaranty shall be a continuing guaranty
and shall remain in effect until the Guaranty Obligations have been indefeasibly
paid in full, and all Guaranty Obligations have been satisfactorily performed.
Any other guarantors of all or any part of the Loan Obligations may be released
without affecting the liability of Guarantor hereunder.
9. Tolling of Statute of Limitations. Guarantor agrees that any payment
or performance of any of the Loan Obligations or Guaranty Obligations or other
acts which tolls any statute of limitations applicable to the Loan Obligations
or the Guaranty Obligations shall also toll the statute of limitations
applicable to Guarantor's liability under this Guaranty.
10. Waivers. To the fullest extent permitted by law, Guarantor hereby
expressly waives (a) diligence, presentment, demand for payment, protest,
benefit of any statute of limitations affecting Borrower's liability under the
Loan Documents or the enforcement of this
6.
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Guaranty; (b) discharge due to any disability of Borrower; (c) any defenses of
Borrower to obligations under the Loan Documents not arising under the express
terms of the Loan Documents or from a material breach thereof by Lender which
under the law has the effect of discharging Borrower from the Loan Obligations
as to which this Guaranty is sought to be enforced; (d) the benefit of any act
or omission by Lender which directly or indirectly results in or aids the
discharge of Borrower from any of the Loan Obligations by operation of law or
otherwise; (e) except as otherwise provided herein, all notices whatsoever,
including, without limitation, notice of acceptance of this Guaranty and the
incurring of the Loan Obligations; and (f) any requirement that Lender exhaust
any right, power or remedy or proceed against Borrower or any other security
for, or any other guarantor of, or any other party liable for, any of the Loan
Obligations or any portion thereof. Guarantor specifically agrees that it shall
not be necessary or required, and Guarantor shall not be entitled to require,
that Lender (i) file suit or proceed to assert or obtain a claim for personal
judgment against Borrower, for the Loan Obligations; (ii) make any effort at
collection or enforcement of the Loan Obligations from the Borrower, (iii)
foreclose against or seek to realize upon the Collateral or any other security
now or hereafter existing for the Loan Obligations, (iv) file suit or proceed to
obtain or assert a claim for personal judgment against Guarantor or any other
guarantor or other party liable for the Loan Obligations; (v) make any effort at
collection of the Loan Obligations from any such party; (vi) exercise or assert
any other right or remedy to which Lender are or may be entitled in connection
with the Loan Obligations or any security or guaranty relating thereto or
assert; or (vii) file any claim against assets of Borrower before or as a
condition of enforcing the liability of Guarantor under this Guaranty.
11. Reinstatement. Notwithstanding any provision of the Loan Agreement
to the contrary, the liability of Guarantor hereunder shall be reinstated and
revived and the rights of Lender shall continue if and to the extent that for
any reason any payment by or on behalf of Borrower is rescinded, or must be
otherwise restored by Lender, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, all as though such amount had not
been paid. The determination as to whether any such payment must be rescinded or
restored shall be made by Lender in its sole discretion; provided, however, that
if Lender chooses to contest any such matter at the request of Guarantor,
Guarantor agrees to indemnify and hold harmless Lender from all costs and
expenses (including, without limitation, reasonable attorneys' fees) of such
litigation. To the extent any payment is rescinded or restored, the Guaranty
Obligations shall be revived in full force and effect without reduction or
discharge for that payment.
12. No Waiver; Amendments. No failure on the part of Lender to
exercise, no delay in exercising and no course of dealing with respect to, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. This Guaranty may
not be amended or modified except by written agreement between Guarantor,
Lender, and no consent or waiver hereunder shall be valid unless in writing and
signed by Lender.
7.
<PAGE>
13. Compromise and Settlement. No compromise, settlement, release,
renewal, extension, indulgence, change in, waiver or modification of any of the
Loan Obligations or the release of Guarantor (except in its capacity as
Guarantor of Guaranty Obligations, by Lender) or discharge of Borrower or
Guarantor from the performance of any of their respective obligations under the
Loan Documents to which they are a party, shall release or discharge Guarantor
from this Guaranty (except in its capacity as Guarantor of Guaranty
Obligations).
14. Notice. Except as otherwise provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be delivered by hand, with receipt acknowledged, or sent by telex,
telegraph, electronic facsimile transmission, overnight delivery, or by United
States mail, registered or certified, return receipt requested, postage prepaid
and addressed to the addresses set forth on the signature pages hereto or at
such other address as may be substituted by notice given as herein provided. The
giving of any notice required hereunder may be waived in writing by the party
entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be deemed to have
been duly given or served when delivered by hand, when properly deposited in the
mails postage prepaid, when sent by telex, answerback received, or electronic
facsimile transmission, or when delivered to the telegraph company or overnight
courier, addressed to the party entitled to receive same, at its address set
forth on the signature pages hereto.
15. Entire Agreement. This Guaranty and the other Loan Documents to
which the Guarantor is a party constitute and contain the entire agreement of
the parties with respect to the matters set forth therein, and supersedes any
and all prior agreements, negotiations, correspondence, understandings and
communications among Guarantor, Lender, whether written or oral, respecting the
subject matter hereof.
16. Severability. If any provision of this Guaranty is held to be
unenforceable for any reason, it shall be adjusted, if possible, rather than
voided in order to achieve the intent of Guarantor, Lender to the extent
possible. In any event, all other provisions of this Guaranty shall be deemed
valid and enforceable to the full extent possible.
17. Subordination of Indebtedness. Any indebtedness or other obligation
of Borrower now or hereafter held by or owing to Guarantor is hereby
subordinated in time and right of payment to all Obligations of Borrower to
Lender, except as such indebtedness or other obligation is permitted to be paid
under the Loan Agreement; and such indebtedness of Borrower to Guarantor is
assigned to Lender as security for this Guaranty, and if an Event of Default has
occurred and is continuing under the Loan Agreement and if Lender so requests
shall be collected, enforced and received by Guarantor in trust for Lenders and
to be paid over to Lender on account of the Obligations of Borrower to Lender,
but without reducing or affecting in any manner the liability of Guarantor under
the other provisions of this Guaranty. Any notes now or hereafter evidencing
such indebtedness of Borrower to Guarantor shall be marked with a legend that
the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor hereby grants Lender a security interest in and to proceeds from any
such notes. Guarantor shall, and Lender is hereby authorized to, in the name of
Guarantor from time to time, execute and file financing
8.
<PAGE>
statements and continuation statements and execute such other documents and take
such other action as Lender deems necessary or appropriate to perfect, preserve
and enforce its rights hereunder.
18. Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default, Lender is hereby authorized at any time and from time to
time, without notice to Guarantor (any such notice being expressly waived by
Guarantor), to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other obligations at any
time owing by Lender or any of its affiliates to or for the credit of the
account of Guarantor against the Guaranty Obligations of Guarantor to Lender now
or hereafter existing irrespective of whether or not Lender shall have made any
demand under this Guaranty, the Loan Agreement or any of the other Loan
Documents and although such obligations may be unmatured. The rights of Lender
under this Section 18 are in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which Lender may have.
Guarantor grants to Lender a security interest in any and all such deposit
accounts as security for satisfaction of the foregoing obligations, provided
that such security interest shall not preclude Guarantor from withdrawing funds
in the ordinary course from any such account prior to the occurrence of an Event
of Default.
19. Successors and Assigns; Governing Law. This Guaranty shall be
binding upon and inure to the benefit of Guarantor, Lender and their respective
successors and assigns as permitted under Section 9.8 of the Loan Agreement,
except that Guarantor may not assign its rights hereunder or any interest herein
without the prior written consent of each Lender. This Guaranty shall be
governed by, and construed in accordance with, the laws of the State of New York
as applied to contracts made and performed entirely within the State of New York
by residents of such State.
20. Indemnity. In addition to and without limiting or impairing in any
manner whatsoever Guarantor's other obligations under this Guaranty, Guarantor
agrees to indemnify Lender and each of Lender's Affiliates for, from and against
any and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Guaranty), except
claims, losses or liabilities resulting from such Lender's or Lender's
Affiliate's gross negligence or willful misconduct.
21. Waiver of Specific Rights. GUARANTOR HEREBY IRREVOCABLY WAIVES AND
RELEASES TO THE EXTENT PERMITTED BY LAW:
(a) ANY AND ALL RIGHTS IT MAY HAVE AT ANY TIME (WHETHER
ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW, CONTRACT OR OTHERWISE) TO
REQUIRE THE MARSHALING OF ANY ASSETS OF BORROWER, WHICH RIGHT OF MARSHALING
MIGHT OTHERWISE ARISE FROM ANY SUCH PAYMENTS MADE OR OBLIGATIONS PERFORMED; AND
9.
<PAGE>
(b) ANY AND ALL RIGHTS THAT WOULD RESULT IN GUARANTOR BEING
DEEMED A "CREDITOR", UNDER THE UNITED STATES BANKRUPTCY CODE, OF THE BORROWER OR
ANY OTHER PERSON, ON ACCOUNT OF PAYMENTS MADE OR OBLIGATIONS PERFORMED BY
GUARANTOR RELATING TO THIS GUARANTY.
(c) ANY CLAIM, RIGHT OR REMEDY WHICH GUARANTOR MAY NOW HAVE OR
HEREAFTER ACQUIRE AGAINST BORROWER THAT ARISES HEREUNDER AND/OR FROM THE
PERFORMANCE BY ANY GUARANTOR HEREUNDER INCLUDING, WITHOUT LIMITATION, ANY CLAIM,
REMEDY OR RIGHT OF SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION,
INDEMNIFICATION, OR PARTICIPATION IN ANY CLAIM, RIGHT OR REMEDY OF LENDER
AGAINST BORROWER OR ANY SECURITY WHICH LENDER NOW HAVE OR HEREAFTER ACQUIRES,
WHETHER OR NOT SUCH CLAIM, RIGHT OR REMEDY ARISES IN EQUITY, UNDER CONTRACT, BY
STATUTE, UNDER COMMON LAW OR OTHERWISE.
IF ANY AMOUNT SHALL BE PAID TO GUARANTOR IN VIOLATION OF THE PRECEDING SENTENCES
AND THE GUARANTY OBLIGATIONS SHALL NOT HAVE BEEN PAID IN FULL, SUCH AMOUNT SHALL
BE DEEMED TO HAVE BEEN PAID TO GUARANTOR FOR THE BENEFIT OF, AND HELD IN TRUST
FOR THE BENEFIT OF, LENDER AND SHALL FORTHWITH BE PAID TO LENDER TO BE CREDITED
AND APPLIED UPON THE GUARANTY OBLIGATIONS, WHETHER MATURED OR UNMATURED, IN
ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT.
10.
<PAGE>
IN WITNESS WHEREOf, the parties hereto have executed and delivered this
Guaranty as of the date first written above.
GUARANTOR: FIBERCORE GLASFASER JENA GMBH
By: /s/ Mohd Aslami
----------------------------
Name: Mohd Aslami
---------------------------
Title: Chairman and CEO
--------------------------
Accepted and Acknowledged by:
LENDER AMP INCORPORATED
By: /s/ James E. Marley
----------------------------
Name: James E. Marley
---------------------------
Title: Chairman of the Board
--------------------------
11.
SECURITY INTEREST AGREEMENT
Between FiberCore Glasfaser Jena GmbH (hereinafter "FiberCore")and AMP
Incorporated (hereinafter "AMP").
1. FiberCore transfers title to current and future assets to AMP in
consideration of securing the loan for a capital investment granted from AMP to
FiberCore, Inc. in the amount of US$3,000,000 up to 125% of said amount.
2. FiberCore guarantees that it is, without limitations, entitled to dispose of
the assets and that no third party rights are in existence with regard to said
assets. The transfer of title will comprise with priority of the latest acquired
machinery and equipment.
3. If banks or other creditors shall request a security interest, FiberCore
guarantees that AMP's security interest will always have first ranking during
the term of this agreement.
4. AMP provides FiberCore the free of charge use of the assets relating to this
agreement. FiberCore provides insurance coverage for such assets on its own
expense against all risks.
5. This agreement remains in force in the event of a change of the shareholders
of FiberCore or any other changes in the company's legal structure.
6. AMP and FiberCore shall terminate this agreement without limitations if:
a) both parties agree to a termination; or
b) the loan, including interest, is completely paid back
to AMP.
<PAGE>
AMP can terminate this agreement upon its own choice if AMP can sell FiberCore,
Inc. stock in the equivalent of US$3,000,000 plus an annual interest rate of
10%.
7. If any provision of this agreement is considered to be invalid all other
provisions remain unaffected.
8. Venue is Wiesbaden.
FiberCore Glasfaser Jena GMBH
By:/s/ Michael J. Beecher
---------------------------
Michael J. Beecher
FiberCore, Inc.
By:/s/ Michael J. Beecher
---------------------------
Michael J. Beecher
AMP Incorporated
By:/s/ James E. Marley
---------------------------
James E. Marley
Chairman of the Board
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT is made on the 27th day of November,
1996, by FIBERCORE, INC., a Nevada corporation, having its chief executive
office at 174 Charlton Road, P.O. Box 206, Sturbridge, MA 01566 ("Grantor"), in
favor of AMP INCORPORATED, a Pennsylvania corporation, having its chief
executive office at 470 Friendship Road, M/S 176-034, Harrisburg, PA 17111
("Secured Party").
WHEREAS, pursuant to that certain Convertible Debenture Purchase
Agreement dated April 17, 1995 (as the same may be amended, modified or
supplemented from time to time, the "Purchase Agreement") by and between Grantor
and Secured Party, Secured Party has agreed to make certain advances of money
and to extend certain financial accommodations to Grantor in the amounts and
manner set forth in the Purchase Agreement (collectively, the "Debt"). Secured
Party is willing to extend the Debt to Grantor, but only upon the condition,
among others, that Grantor shall assign to Secured Party, for the benefit of
Secured Party, certain patent rights to secure the obligations of Grantor under
the Purchase Agreement.
WHEREAS, pursuant to the terms of the Collateral Assignment, Patent
Mortgage and Security Agreement dated as of April 17, 1995 (the "Security
Agreement") which is hereby incorporated by reference, Grantor has granted to
Grantor a security interest in all of Grantor's entire and exclusive right,
title and interest, whether presently existing or hereafter arising or acquired,
in, to and under all of the Grantor's Collateral (as defined in the Purchase
Agreement).
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, and intending to be legally bound, as collateral
security for the prompt and complete payment when due of its obligations under
the Loan Agreement and the Notes, Grantor hereby represents, warrants, covenants
and agrees as follows:
1. Unless otherwise defined herein, the terms defined in the
Purchase Agreement are used herein as therein defined.
2. To secure its obligations under the Purchase Agreement,
Grantor does hereby mortgage and pledge to Secured Party, and
grant to Secured Party a security interest in, all of
Grantor's right, title and interest in, to and under its
Patents, Patent Licenses whether now or hereafter owned and
including without limitation each Patent and Patent
application listed on Schedules A, B, C and D hereto,
including without limitation all proceeds thereof (such as, by
way of example but not by way of limitation, license royalties
and proceeds of infringement suits), the right to sue for
past, present and future infringements, all rights
corresponding thereto throughout the world and all re-issues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof (the "Collateral"). The security
interest granted hereby shall be and remain a first and prior
security interest in all of the Collateral.
1.
<PAGE>
This security interest is granted in conjunction with the security
interest granted to Secured Party under the Security Agreement. The rights and
remedies of Secured Party with respect to the security interest granted hereby
are in addition to those set forth in the Security Agreement and the other Loan
Documents, and those which are now or hereafter available to Secured Party as a
matter of law or equity. Each right, power and remedy of Secured Party provided
for herein or in the Security Agreement or the Purchase Agreement or any of the
other Loan Documents, or now or hereafter existing at law or in equity shall be
cumulative and concurrent and shall be in addition to every right, power or
remedy provided for herein and the exercise by Secured Party of any one or more
of the rights, powers or remedies provided for in this Patent Security
Agreement, the Security Agreement or the Purchase Agreement or any of the other
Loan Documents, or now or hereafter existing at law or in equity, shall not
preclude the simultaneous or later exercise by any person, including Secured
Party, of any or all other rights, powers or remedies.
Following the termination of the Purchase Agreement in accordance with
its terms and full payment and satisfaction under the Loan Documents, the
security interest in Patents, Patent Licenses, Patent applications and any and
all financing statements filed on behalf of Secured Party will be terminated,
and Secured Party will execute such instruments as may be reasonably requested
to evidence such termination, which shall be without warranty by or recourse to
Secured Party, and shall be at the expense of Grantor.
2.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Patent Security
Agreement to be duly executed by its officers thereunto duly authorized as of
the date first written above.
GRANTOR FIBERCORE, INC.
By: /s/ Mohd Aslami
---------------------
Name: Mohd Aslami
-------------------
Title: Chairman and CEO
------------------
Accepted and acknowledged by:
AMP INCORPORATED, AS SECURED PARTY
By: /s/ James E. Marley
---------------------------
Name: James E. Marley
--------------------------
Title: Chairman of the Board
-------------------------
3.
<PAGE>
SCHEDULE A
ISSUED U.S. PATENTS
<TABLE>
<CAPTION>
Patent Title Assignment Owner of Author/ Issue Comments
------ ----- ---------- --------- ------- ----- --------
No. History Record Inventor Date
--- ------- ------ -------- ----
<S> <C> <C> <C> <C> <C>
4596589 Method for producing Reassignment: Fibercore, Inc. Perry, Gregory 6/24/86
single mode fiber 11-08-93 (signed)
preform 10-11-94 (recorded)
Assignor: Perry G.
Assignee: Fibercore
04-17-95 (signed)
04-24-95 (recorded)
Assignor: Fibercore
Assignee: AMP Inc.
4,480,251 Apparatus to monitor Norscan Instr Ltd to Automated Light McNaughton, 10/30/84
electrical cables, Automated Light Technologies, Inc. John P.
including splice joints Technologies, Inc. to Domenco,
and the like, for the Connecticut Innovations Wayne E.
ingress of moisture Incorporated and Vokey, David E
Connecticut Development
Authority
5,077,526 Cable Failure Detection Automated Light Automated Light Vokey, David E. 12/31/91
System Technologies, Inc. Technologies, Inc. Sontag, Kenneth
4,947,469 Resistive Fault Location Automated Light Automated Light Vokey, David E. 08/07/90
Method and Device for Technologies, Inc. to Technologies, Inc. Sontag, Kenneth
use on electrical cables Connecticut Innovations Chamberlain,
Incorporated and John C.
Connecticut Development LaVallee,
Authority Ronald L.
</TABLE>
1.
<PAGE>
<TABLE>
<CAPTION>
Patent Title Assignment Owner of Author/ Issue Comments
------ ----- ---------- --------- ------- ----- --------
No. History Record Inventor Date
--- ------- ------ -------- -----
<C> <C> <C> <C> <C> <C>
5,369,518 Optical Communication Automated Light Automated Light Aslami, Mohd 11/29/94
System and Method; Technolgoies Inc. Technologies, Inc. LaVallee,
Electrical Power Ronald L.
Transmission thereof
4,480,251 Apparatus to monitor Norscan Instr. Ltd. Automated Light Mcnaughton, 04/22/80
electrical cables Technologies, Inc. John
Domenco,
Wayne
Vokey, David
5410929 Devise for recycling a Fibercore Recycle Fibercore Recycle Wallace, Marcus 05/02/95
- ------- tube Systems, Inc. Systems, Inc.
</TABLE>
2.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE B
U.S. PATENT APPLICATIONS
Patent Date Title Assignment History Owner of Author/
------ ---- ----- ------------------ -------- -------
Pending No. Record Inventor
- ----------- ------ --------
<S> <C> <C> <C> <C> <C>
0004999 12/02/94 FABR of OPT Fiber Preform Fibercore, Mohd A.
utilizing rod/tape concept Inc. Aslami
0005999 Being Manufacturing process for high Fibercore, Mohd A.
researched quality vycor tubing for application Inc. Aslami
in producing optical fiber preforms
0004228 12/01/95 Method and Apparatus for Fibercore, Mohd A.
Appl # producing optical fiber preform Inc. Aslami
PCT/US95/
15685-
European
Conv.
=================== ==================== ========================================== =======================================
</TABLE>
1.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE C
ISSUED FOREIGN PATENTS
Patent No. Country Title Assignment History Owner of Author/ Issue Comments
- ---------- ------- ----- ------------------ -------- ------- ----- --------
Record Inventor Date
------ -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
GB2082406 United Apparatus to Domenco, Wayne Domenco, 06/13/84 Patent
Kingdom monitor electrical David Wayne ceased
cables, including McNaughton, John David through
splice joints and the Paul McNaught non-
like, for the ingress Vokey, David Ernest on, John payment
of moisture Paul
Vokey,
David
Ernest
CA1168707 Canada Apparatus to Norscan Instr. Ltd Domenco, 06/05/84
- ---------
monitor electrical Wayne
cables David
McNaught
on, John
Paul
Vokey,
David
Ernest
EP336036 Europe Cable Failure Vokey, David Ernest Vokey, 12/15/93
Detection System Sontag, Kenneth N. David
Ernest
</TABLE>
1.
<PAGE>
<TABLE>
<CAPTION>
Patent No. Country Title Assignment History Owner of Author/ Issue Comments
- ---------- ------- ----- ------------------ -------- ------- ----- --------
Record Inventor Date
------ -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
AT98780 Austria Cable Failure Vokey, David Ernest Vokey, 01/15/94
Detection System Sontag, Kenneth N. David
Ernest
Sontag,
Kenneth
N.
CA1317355 Canada Cable Failure Norscan Instr. Ltd. Vokey, 05/04/93
- ---------- Detection System David
Ernest
Sontag,
Kenneth
N.
DE3886380 Germany Cable Failure Vokey, David Ernest Vokey, 01/27/94
- --------- Detection System Sontag, Kenneth N. David
Ernest
Sontag,
Kenneth
N.
ES2058298 Spain Cable Failure Vokey, David Ernest Vokey, 11/01/94
- --------- Detection System Sontag, Kenneth N. David
Ernest
Sontag,
Kenneth
N.
EP327191 Europe Resistive Fault Automated Light Vokey, 05/10/95 Patent
- -------- Location Method Technologies David ceased
and use on Ernest through
electrical cables Chamberla non-
in, Jim C. payment
LaVallee,
Ronald
Sontag,
Kenneth
</TABLE>
2.
<PAGE>
<TABLE>
<CAPTION>
Patent No. Country Title Assignment History Owner of Author/ Issue Comments
- ---------- ------- ----- ------------------ -------- ------- ----- --------
Record Inventor Date
<S> <C> <C> <C> <C> <C> <C> <C>
AT122468 Austria Resistive Fault Automated Light Vokey, 05/15/95
-------- Location Method Technologies David
Ernest
Chamberla
in, Jim C.
LaVallee,
Ronald
Sontag,
Kenneth
CA1283704 Canada Resistive Fault Vokey,David E. Vokey, 04/30/91
- --------- Location Method David
Ernest
Chamberla
in, Jim C.
LaVallee,
Ronald
Sontag,
Kenneth
DE68922503 Germany Resistive Fault Automated Light Vokey, 06/14/95
- ---------- Location Method Technologies, Inc. David
Ernest
Chamberla
in, Jim C.
LaVallee,
Ronald
Sontag,
Kenneth
</TABLE>
3.
<PAGE>
<TABLE>
<CAPTION>
Patent No. Country Title Assignment History Owner of Author/ Issue Comments
- ---------- ------- ----- ------------------ -------- ------- ----- --------
Record Inventor Date
------ -------- ----
<S> <C> <C> <C> <C> <C> <C>
GB8800081 United Resistive Fault Automated Light Vokey, 02/10/88
- --------- Kingdom Location Method Technologies, Inc. David
Ernest
Chamberla
in, Jim C.
LaVallee,
Ronald
Sontag,
Kenneth
AU9458523 Australia Optical Automated Light Aslami, 07/19/94
- --------- Communication Technologies I Mohd
System and Method LaVallee,
Ronald
WO9415415 World I.P. Optical Automated Light Aslami, 07/07/94
- --------- Organization Communication Technologies I Mohd
System and Method LaVallee,
Ronald
WO9616911 World I.P. Making a single Fibercore Inc. Aslami, 06/06/96 Patent
- --------- Organization mode fibre preform M.A. ceased
Perry, through
G.A. non-
payment
EP716047 Europe Making a single Fibercore, Inc. Aslami, 10/09/96
--------- mode fibre preform M.A.
Perry,
G.A.
AU9645957 Austria Making a single Fibercore, Inc. Aslami, 06/19/96
- ---------- mode fibre preform M.A.
Perry,
G.A.
=============================== ===================== ===================== ========= =========== ============ ==================
</TABLE>
4.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE D
FOREIGN PATENT APPLICATIONS
Patent Pending Date Country Title Assignment Owner of Author/
- -------------- ---- ------- ----- ---------- -------- -------
No. History Record Inventor
--- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
236767/89 Japan Resistive Fault Location
---------- Method
9616911 India Method and Apparatus
------- for producing optical
fiber preform
716047 Europe Method and Apparatus
------ for producing optical
fiber preform
0004056 12/07/95 India Method and Apparatus Mohd. A.
Application # for producing optical Aslami
1616/MAS/95 fiber preforms
0336036 12/15/93 Spain Cable Failure Detection
United Kingdom System
Italy
9645957 AU Method and Apparatus
-------- for producing optical
fiber preforms.
- ---------------------------- ---------------------- ------------------------- ------------- --------------- -------------------
</TABLE>
1.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE A MINIMUM OF
1,382,648 SHARES OF COMMON STOCK OF
FIBERCORE, INC.
---------------
(Void after November 27, 2001)
This certifies that AMP Incorporated (the "Holder"), or its assigns,
for value received, is entitled to purchase from FiberCore, Inc., a Nevada
corporation (the "Company"), having a place of business at 174 Charlton Road,
Sturbridge, MA 01566, a number of fully paid and nonassess able shares of the
Company's Common Stock ("Common Stock") determined in accordance with Section 3
hereof, at a purchase price per share determined in accordance with Section 3
hereof (the "Stock Purchase Price") at any time or from time to time up to and
including 5:00 p.m. (Eastern time) on November 27, 2001 (the "Expiration Date"),
upon surrender to the Company at its principal office (or at such other location
as the Company may advise the Holder in writing) of this Warrant properly
endorsed with the Form of Subscription attached hereto duly filled in and signed
and, if applicable, upon payment in cash or by check of the aggregate Stock
Purchase Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Stock
Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided in Section 3 of this Warrant. The Common Stock to be
issued upon exercise of this Warrant will be authorized prior to the date
hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 General. This Warrant is exercisable at the option of the
holder of record hereof, at any time or from time to time, up to the Expiration
Date for all or any part of the shares of Common Stock (but not for a fraction
of a share) which may be purchased hereunder. The Company agrees that the shares
of Common Stock purchased under this Warrant shall be and are deemed to be
issued to the Holder hereof as the record owner of such shares as of the close
of business on the date on which (i) this Warrant shall have been surrendered,
properly endorsed, (ii) the completed, executed Form of Subscription shall have
been delivered and (iii) payment made for such shares. Certificates for the
shares of Common Stock so purchased, together with any other securities or
property to which the Holder hereof is entitled upon such exercise, shall be
delivered to the Holder hereof by the Company at the Company's expense within a
reasonable
1.
<PAGE>
time after the rights represented by this Warrant have been so exercised. In
case of a purchase of less than all the shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time. Each stock certificate so delivered shall be in such
denominations of Common Stock as may be reasonably requested by the Holder
hereof and shall be registered in the name of such Holder.
1.2 Net Issue Exercise. Notwithstanding any provisions herein
to the contrary, if the fair market value of one share of the Company's Common
Stock is greater than the Stock Purchase Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Form of
Subscription and notice of such election in which event the Company shall issue
to the Holder a number of shares of Common Stock computed using the following
formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at
the date of such calculation)
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation)
B = Stock Purchase Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company's Board of Directors in good faith;
provided, however, that in the event the Company makes an initial public
offering of its Common Stock the fair market value per share shall be the
closing price per share as quoted on the Nasdaq National Market on the business
day preceding exercise of the Warrant.
2. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the
2.
<PAGE>
Company will at all times have authorized and reserved, for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant,
a sufficient number of shares of authorized but unissued Common Stock, or other
securities and property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all such action as may
be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed; provided, however, that the Company shall not be required to effect a
registration under Federal or State securities laws with respect to such
exercise.
3. Number of Shares; Stock Purchase Price and Adjustment. This Warrant
shall be exercisable for the number of shares equal to the number resulting from
the division of $2,000,000 by the Stock Purchase Price. The Stock Purchase Price
shall initially be set at one dollar, forty-four cents and sixty-five hundredths
of one cent ($1.4465) and the Stock Purchase Price and the number of shares
purchasable upon the exercise of this Warrant shall thereafter be subject to
adjustment from time to time upon the occurrence of certain events described in
this Section 3. Upon each adjustment of the Stock Purchase Price, the Holder of
this Warrant shall thereafter be entitled to purchase, at the Stock Purchase
Price resulting from such adjustment, the number of shares obtained by dividing
two million dollars ($2,000,000) by the Stock Purchase Price resulting from such
adjustment.
3.1 Price Target. If the closing price of the Company's Common
Stock as quoted on the NASDAQ National Market during the first two (2) years
subsequent to the date hereof does not equal or exceed $2.1697 (as adjusted for
stock splits, stock dividends or other recapitalization pursuant to this Section
3) for a period of thirty (30) consecutive trading days within which period the
Holder is not restricted from selling the Common Stock issuable upon exercise of
this Warrant by any federal or state securities laws or by contract with the
Company, then the Stock Purchase Price shall be adjusted effective as of the
second anniversary of the date hereof by multiplying $1.4465 by a fraction the
denominator of which is 2.1697 and the numerator of which is the average closing
price per share of the Company's Common Stock as quoted on the NASDAQ National
Market during the thirty (30) trading days preceding the second anniversary of
the date hereof; provided however that the Stock Purchase Price as adjusted
pursuant to this Section 3.1 shall not be less than $0.7232 per share (as
adjusted for stock splits, stock dividends or other recapitalization pursuant to
this Section 3). Notwithstanding the foregoing, in lieu of an adjustment of the
Stock Purchase Price pursuant to this Section 3.1, the Company may offer to
purchase the Warrant and any shares of Common Stock purchased hereunder on the
second anniversary of the date hereof for a purchase price of one million
($1,000,000) dollars; provided, however, that the Holder shall have the right
not sell the Warrant and any shares of Common Stock purchased hereunder to the
Company, but if the Holder exercises such right, then there shall be no
adjustment to the Stock Purchase Price under this Section 3.1.
3.2 Subdivision or Combination of Stock. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Stock
3.
<PAGE>
Purchase Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the Stock Purchase Price in effect immediately prior to such combination shall
be proportionately increased.
3.3 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment (including, without limitation, payment in the form of past
services rendered) therefor,
(A) Common Stock or any shares of stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution,
(B) any cash paid or payable otherwise than as a cash
dividend, or
(C) Common Stock or additional stock or other
securities or property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate rearrangement,
(other than (i) shares of Common Stock issued as a stock split, adjustments in
respect of which shall be covered by the terms of Section 3.2 above or (ii) an
event for which adjustment is otherwise made pursuant to Section 3.4 below),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (B) and (C) above) which such Holder would
hold on the date of such exercise had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
3.4 Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the Holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented
4.
<PAGE>
hereby; provided, however, that in the event the value of the stock, securities
or other assets or property (determined in good faith by the Board of Directors
of the Company) issuable or payable with respect to one share of the Common
Stock of the Company immediately theretofore purchas able and receivable upon
the exercise of the rights represented hereby is in excess of the Stock Purchase
Price hereof effective at the time of the merger and securities received in such
reor ganization, if any, are publicly traded, then this Warrant shall expire
unless exercised prior to the reorganization. In any reorganization described
above, appropriate provision shall be made with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Stock Purchase
Price and of the number of shares purchasable and receivable upon the exercise
of this Warrant) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The Company will not effect any such consolida tion,
merger or sale unless, prior to the consummation thereof, the successor
corporation (if other than the Company) resulting from such consolidation or the
corporation purchasing such assets shall assume by written instrument, executed
and mailed or delivered to the registered Holder hereof at the last address of
such Holder appearing on the books of the Company, the obligation to deliver to
such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to purchase.
3.5 Notice of Adjustment. Upon any adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice thereof
in the manner described in Section 13 below. The notice shall be signed by the
Company's chief financial officer and shall state the Stock Purchase Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
3.6 Other Notices. If at any time:
(1) the Company shall declare any cash dividend upon
its Common Stock;
(2) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other distribution
to the holders of its Common Stock;
(3) the Company shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of any class
or other rights;
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation;
5.
<PAGE>
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or
(6) there shall be an initial public offering of
Company securities;
then, in any one or more of said cases, the Company shall give, in the manner
described in Section 11 below, (a) at least thirty (30) days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or public
offering, at least thirty (30) days' prior written notice of the date when the
same shall take place; provided, however, that the Holder shall make a best
efforts attempt to respond to such notice as early as possible after the receipt
thereof. Any notice given in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto. Any
notice given in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consoli dation, merger, sale, dissolution,
liquidation, winding-up, conversion or public offering, as the case may be.
3.7 Certain Events. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the other provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under the
Warrant, the Stock Purchase Price or the application of such provisions, so as
to protect such purchase rights as aforesaid. The adjustment shall be such as
will give the Holder of the Warrant upon exercise for the same aggregate Stock
Purchase Price the total number, class and kind of shares as he would have owned
had the Warrant been exercised prior to the event and had he continued to hold
such shares until after the event requiring adjustment.
4. Demand Registration.
4.1 Subject to the conditions of this Section, if the Company
shall receive a written request from the Holder that the Company file a
registration statement under the Securities Act covering the registration of all
or part of the shares of Common Stock now or hereafter held by the Holder,
including, without limitation, the shares of Common Stock issuable pursuant to
the Warrant (collectively, the "AMP Shares"), then the Company shall, subject to
the limitations of this Section, use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of all AMP Shares that
the Holder requests to be registered.
6.
<PAGE>
4.2 If the Holder intends to distribute the AMP Shares covered
by its request by means of an underwriting, it shall so advise the Company as a
part of its request made pursuant to this Section 4 and shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Holder (which underwriter or underwriters
shall be reasonably acceptable to the Company). Notwithstanding any other
provision of this Section 4, if the underwriter advises the Company that
marketing factors require a limitation of the number of AMP Shares to be
underwritten then the Company shall so advise the Holder and the number of AMP
Shares to be underwritten will be reduced accordingly. Any AMP Shares excluded
or withdrawn from such underwriting shall be withdrawn from the registration.
4.3 The Company shall not be required to effect a registration
pursuant to this Section:
(A) prior to the Company's initial public offering
and listing of the Company's Common Stock on the Nasdaq National Market;
(B) after the Company has effected one registration
pursuant to this Section 4, and such registration has been declared or ordered
effective;
(C) during the period starting with the date of
filing of, and ending on the date one hundred eighty (180) days following the
effective date of the registration statement pertaining to the Company's initial
public offering; provided that the Company makes reasonable good faith efforts
to cause such registration statement to become effective; or
(D) if the Company shall furnish to the Holder
requesting a registration pursuant to this Section 4, a certificate signed by
the Chairman of the Board stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration to be effected at such time, in which
event the Company shall have the right to defer such filing for a period of not
more than ninety (90) days after receipt of the request of the Holder; provided
that such right to delay a request shall be exercised by the Company not more
than once in any twelve (12) month period.
5. Piggyback Registration.
5.1 General. The Company shall notify the Holder in writing at
least thirty (30) days prior to the filing of any registration statement under
the Securities Act for purposes of a public offering of securities of the
Company (including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding registration
statements relating to employee benefit plans or with respect to corporate
reorganizations or other transactions under Rule 145 of the Securities Act) and
will afford each such Holder an opportunity to include in such registration
statement all or part of the AMP Shares or any other shares of the Company's
Common Stock held by the Holder ("Registrable Securities"). If the Holder
desires to include in any such registration statement all or any part of the
Registrable Securities, it shall
7.
<PAGE>
notify the Company in writing within fifteen (15) days after the above-described
notice from the Company. Such notice shall state the intended method of
disposition of the Registrable Securities by such Holder. If the Holder decides
not to include all of the Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(A) Underwriting. If the registration statement under
which the Company gives notice under this Section 5 is for an underwritten
offering, the Company shall so advise the Holder. In such event, the right of
the Holder to be included in a registration pursuant to this Section 5 shall be
conditioned upon such Holder's participation in such underwriting, the inclusion
of such Holder's Registrable Securities in the underwriting to the extent
provided herein and the Holder entering into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Holder; and third, to any shareholder of the Company
(other than the Holder) on a pro rata basis. No such reduction shall reduce the
securities being offered by the Company for its own account to be included in
the registration and underwriting, and in no event shall the amount of
securities of the Holder included in the registration be reduced below
twenty-five percent (25%) of the total amount of securities included in such
registration, unless such offering is the initial public offering and such
registration does not include shares of any other selling shareholders, in which
event any or all of the Registrable Securities of the Holder may be excluded in
accordance with the immediately preceding sentence. In no event will shares of
any other selling shareholder be included in such registration which would
reduce the number of shares which may be included by the Holder without the
written consent of the Holder.
(B) Right to Terminate Registration. The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 5 prior to the effectiveness of such registration whether or
not any Holder has elected to include securities in such registration. The
expenses of such withdrawn registration shall be borne by the Company.
6. The registration rights granted to the Holder pursuant to Sections 4
and 5 hereof shall terminate upon the earlier of (i) ten years after the
Company's initial public offering; or (ii) when all the AMP Shares held by the
Holder can be sold pursuant to Rule 144 of the Securities Act.
7. Issue Tax. The issuance of certificates for shares of Common Stock
upon the exercise of the Warrant shall be made without charge to the Holder for
any issue tax (other than any applicable income taxes) in respect thereof;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the
8.
<PAGE>
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
8. Closing of Books. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Common Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.
9. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the Stock Purchase Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.
10. Warrants Transferable. Subject to compliance with applicable
federal and state securities laws, this Warrant and all rights hereunder are
transferable to an Affiliate (defined below) of the Holder, in whole or in part,
without charge to the Holder hereof (except for transfer taxes), upon surrender
of this Warrant properly endorsed. For purposes of this Warrant, "Affiliate"
means with respect to any person, (a) each person that, directly or indirectly,
owns or controls, whether beneficially or as a trustee, guardian or other
fiduciary, [twenty percent (20.0%)] or more of the stock having ordinary voting
power in the election of directors of such person, (b) each person that
controls, is controlled by or is under common control with such person or any
Affiliate of such person or (c) each of such person's officers, directors, joint
venturers and partners. For the purpose of this definition, "control" of a
person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder
hereof, when this Warrant shall have been so endorsed, may be treated by the
Company, at the Company's option, and all other persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Company any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered owner hereof
as the owner for all purposes.
10.1 Financial Information. The Company will furnish the
following information to the Holder for so long as he or it is a holder of this
Warrant or a new warrant or warrants (in the case of a purchase of less than all
shares which may be purchased under this Warrant pursuant to Section 1.1):
9.
<PAGE>
(A) As soon as practicable after the end of each
year, and in any event within one hundred twenty (120) days thereafter, a
consolidated balance sheet of the Company and its subsidiaries, if any, as of
the end of such year, and a consolidated statement of income and a consolidated
statement of changes in financial position of the Company and its subsidiaries,
if any, for such year, prepared in accordance with generally accepted accounting
principles and setting forth in each case in comparative form the figures for
the previous year, all in reasonable detail and with an audit opinion thereon
from existing or other independent public accountants of recognized regional or
national standing selected by the Company.
(B) As soon as practicable after the end of each
fiscal quarter of the Company, and in any event within forty-five (45) days
thereafter, a consolidated balance sheet of the Company and its subsidiaries, if
any, as at the end of such fiscal quarter, and a consolidated statement of
income of the Company and its subsidiaries, if any, for such fiscal quarter, and
for the current fiscal year to date, in each case setting forth in comparative
form the Company's and its subsidiaries', if any, consolidated balance sheets
and consolidated statements of income for the corresponding periods (as prepared
pursuant to subparagraph 10.1(A)), prepared in accordance with generally
accepted accounting principles, all in reasonable detail and certified, subject
to changes resulting from year-end audit adjustments, by the principal financial
officer of the Company; provided, however, that any financial statements
provided hereunder need not contain any footnotes.
11. Rights and Obligations Survive Exercise of Warrant. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, referred to in
Sections 3, 4, 5, 6 and 12, shall survive the exercise of this Warrant.
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, having specified next day
delivery, with written verification of receipt. All communications shall be sent
to the Company and to the Holder at the address set forth below or at such other
address as the Company or Holder may designate by ten (10) days advance written
notice to the other party hereto.
14. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger or consolidation. All of the
obligations of the Company relating to the Common Stock issuable upon the
exercise of this Warrant shall survive
10.
<PAGE>
the exercise and termination of this Warrant. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof.
15. Descriptive Headings and Governing Law. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York.
16. Lost Warrants. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
17. Fractional Shares. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.
11.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 27th day of November,
1996.
FIBERCORE, INC.
a Nevada corporation
/s/ Mohd Aslami
-------------------------------------
Mohd A. Aslami
President and Chief Executive Officer
ATTEST:
/s/ Charles DeLuca
- ---------------------------
Charles DeLuca, Secretary
12.
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
_________________, 19___
FiberCore, Inc.
Ladies and Gentlemen:
o The undersigned hereby elects to exercise the warrant issued by
FiberCore, Inc. (the "Company") and dated November 27, 1996 (the
"Warrant") and to purchase thereunder shares of the Common Stock of the
Company (the "Shares") at a purchase price of _____________________
(______) per share or an aggregate purchase price of
__________________________________ Dollars ($__________) (the "Purchase
Price").
o The undersigned hereby elects to surrender _______________________
percent (____%) of the value of the Warrant pursuant to the provisions
of Section 1.2 of the Warrant in payment of the purchase price for
___________________ shares of Common Stock of the Company upon exercise
of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer
or on a net issuance basis as described in Section 1 of the Warrant. The
undersigned also makes the representations set forth on the attached Exhibit B
of the Warrant.
Very truly yours,
---------------------------
By
-------------------------
Title
---------------------
THIS DEBENTURE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS DEBENTURE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING THIS DEBENTURE AND/OR SUCH SECURITIES, OR THE
HOLDER FURNISHES AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER STATE LAW.
FIBERCORE, INC.
Amended and Restated Convertible Debenture
$2,000,000 Dated as of April 17, 1995
1. OBLIGATION. FOR VALUE RECEIVED, FiberCore, Inc., a Nevada
corporation (the "Corporation"), hereby promises to pay to AMP INCORPORATED (the
"Holder"), on April 17, 2005 the principal sum of Two Million Dollars
($2,000,000), together with interest on such principal sum from the date hereof
until payment in full of the principal computed as set forth below. Interest
shall be due at maturity and shall be computed by adding simple interest at the
Applicable Rate for each Interest Period. The first Interest Period shall
commence on the date hereof and end on June 30, 1995. Each successive Interest
Period shall commence on the first day of the calendar quarter (i.e., January 1,
April 1, July 1, and October 1) and end on the last day of such calendar
quarter; provided however, the final Interest Period shall end on the date of
payment in full of the principal sum hereof. The Applicable Rate for each
Interest Period shall be determined by adding 1% to the London Interbank Offered
Rate (LIBOR) for three month deposits as quoted in The Wall Street Journal dated
the business day immediately preceding the commencement of such Interest Period.
2. PREPAYMENT. Upon not less than 30 days prior written notice to the
Holder, the Corporation may prepay this Debenture at any time and from time to
time, in whole or in part without penalty by payment of the principal sum to be
prepaid together with interest on such sum to the date of such prepayment. The
Corporation shall be required to prepay the entire principal sum and accrued
interest of this Debenture upon not less than thirty day's notice from the
Holder demanding such prepayment, which notice may be given only after the right
of conversion of this Debenture terminates pursuant to the fifth sentence of
Section 3 hereof.
3. CONVERSION. All outstanding principal and accrued interest on this
Debenture is convertible, at the option of the Holder, at any time into fully
paid and nonassessable shares of the Corporation's Common Stock at the
conversion rate (the "Conversion Rate") of $1.15762 per share. Any such
conversion shall be in the minimum amount of $1,000,000 and integral multiples
of $250,000; provided, however, the final conversion may be for all of the
remaining principal and accrued interest. Any partial conversion of this
Debenture shall be deemed a conversion of
1.
<PAGE>
the principal sum hereof until the entire principal amount is converted.
Thereafter, any conversion shall be of accrued interest. If the Corporation is
the issuer of securities to be sold by it under an effective registration
statement pursuant to the Securities Act of 1933, as amended, the Corporation
will provide no less than ten days prior notice thereof to the Holder and all
conversion rights hereunder will terminate upon the closing of the sale by the
Corporation of the securities covered by said registration statement unless the
Holder shall have converted this Debenture before said date. In the event the
Common Stock is split, subdivided or combined, the Conversion Rate thereafter in
effect shall be appropriately adjusted by the Corporation to provide the Holder
with the number of shares of Common Stock upon conversion such Holder would have
received on such split, subdivision or combination if it had converted this
Debenture immediately prior thereto. In the event the Common Stock is
reclassified or the Corporation merges or combines with another entity in a
transaction in which the holders of Common Stock receive securities or other
consideration in respect of such Common Stock, the Holder shall be entitled
after such event to convert this Debenture into the kind and type of securities
it would have received had the Holder converted this Debenture immediately prior
to such event.
4. GUARANTEED VALUE. Notwithstanding anything herein to the contrary,
if the closing price of the Corporation's Common Stock as quoted on the Nasdaq
National Market during the first two (2) years subsequent to the date hereof
does not equal or exceed $1.7364 (as adjusted for stock splits, stock dividends
or other recapitalization events) for a period of thirty (30) consecutive
trading days within which period the Holder is not restricted from selling the
Common Stock issuable upon conversion of the Debenture by any federal or state
securities laws or by contract with the Corporation, then effective on the
second anniversary hereof, an additional number of shares of the Corporation's
Common Stock shall be issued to the Holder and an adjustment shall be made in
the Conversion Rate for the outstanding balance of the debenture such that the
total number of shares (i) issued upon partial conversion of that certain
Convertible Debenture, dated as of April 17, 1995 (i.e. 3,058,833 shares), (ii)
held by the Holder as a result of the conversion or partial conversion of this
Debenture, and (iii) issuable to Holder upon conversion of the outstanding
principal balance and accrued interest under this Debenture, would have a market
value (based on the average closing price of the Corporation's shares of Common
Stock during the last thirty (30) trading days preceding the second anniversary
hereof) equal to $7,500,000; provided, however that not more than 6,478,810
shares of the Corporation's Common Stock (as adjusted for stock splits, stock
dividends or other recapitalization events) will be issued or issuable to the
Holder as a result of the conversion of this Debenture and this Section 4. In
the alternative, the Corporation may satisfy this guaranty on the second
anniversary hereof by offering or arranging for its designee to offer to
purchase from the Holder the converted shares and the outstanding balance of
this debenture, including accrued interest, for $7,500,000, reduced pro rata for
any intervening sales of shares by the Holder. Such offer to purchase shall be
for cash only or other immediately available funds.
5. SURRENDER AND CANCELLATION OF DEBENTURE. Upon written notice of a
conversion by the Holder together with delivery of this Debenture to the
Corporation or its transfer agent, the applicable amount of outstanding
principal and accrued interest on this Debenture shall be converted. The
Corporation shall not be obligated to issue certificates evidencing the shares
of the securities issuable upon such conversion unless this Debenture is
2.
<PAGE>
either delivered to the Corporation or its transfer agent, or the Holder
notifies the Corporation or its transfer agent that this Debenture has been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with this Debenture. The Corporation shall, as soon as practicable
after such delivery, or such agreement and indemnification, issue and deliver at
such office to the Holder of this Debenture, a certificate for the securities to
which the Holder shall be entitled. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of closing of the
transaction causing conversion or the date of receipt of written notice by the
Corporation from the Holder causing conversion. The person entitled to receive
the securities issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such securities on such date.
6. COLLATERAL. This Debenture is issued to the Holder pursuant to a
Convertible Debenture Purchase Agreement dated as of April 17, 1995, as amended
November 27, 1996 (as amended, supplemented, or restated from time to time, the
"Purchase Agreement") and amends and restates in its entirety that certain
convertible debenture dated as of April 17, 1995, in the original principal
amount of $5,000,000. As of November 25, 1996, $5,393.82 of interest has accrued
and remains unpaid hereunder (with interest currently accruing at a rate of
$898.97 per day). Pursuant to the Purchase Agreement, this Debenture is secured
by certain collateral.
7. DEBENTURE CONFERS NO RIGHTS AS SHAREHOLDER. The Holder shall not
have any rights as a shareholder of the Corporation with regard to the shares
issuable hereunder prior to actual conversion hereunder.
8. WAIVERS. The Corporation hereby waives presentment, demand for
performance, notice of non-performance, protest, notice of protest and notice of
dishonor. No delay on the part of Holder in exercising any right hereunder shall
operate as a waiver of such right or any other right.
9. ASSIGNMENT. The Holder shall not assign this Debenture without the
prior written consent of the Corporation which consent shall not be withheld
except for valid business reasons.
3.
<PAGE>
10. APPLICABLE LAW. This Debenture shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts applicable to
contracts between Massachusetts residents entered into and to be performed
entirely within the State of Massachusetts.
FIBERCORE, INC.
By: /s/ Mohd Aslami
-----------------
Mohd Aslami
President
4.
FIBERCORE INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into this
27th day of November, 1996, by and among FIBERCORE, INC., a Nevada corporation
(the "Company"), AMP INCORPORATED, a Pennsylvania corporation ("AMP"), and Mohd
Aslami, Charles DeLuca and Dr. M. Mahmud Awan (the "Key Shareholders").
RECITAL
WHEREAS, AMP and each of the Key Shareholders hold shares of the
capital stock of the Company; and
WHEREAS, AMP and the Key Shareholders desire to provide for the future
voting of their shares of the Company's capital stock as set forth below;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
VOTING
1.1 AMP and the Key Shareholders each agree to hold all shares
of voting capital stock of the Company (including but not limited to all shares
of Common Stock issued upon exercise of Warrants) registered in their respective
names or beneficially owned by them as of the date hereof, and any and all other
securities of the Company legally or beneficially, directly or indirectly,
acquired by AMP and each of the Key Shareholders after the date hereof
(hereinafter collectively referred to as the "Shares") subject to, and to vote
the Shares in accordance with, the provisions of this Agreement.
1.2 The Company, AMP and the Key Shareholders shall consult
each other and shall vote their respective shares of the Company's voting stock
to elect the Board of Directors of the Company (the "Board") which shall consist
of: (i) one (1) nominee of AMP, (ii) three (3) nominees of the Key Shareholders,
initially to be Mohd Aslami, Charles DeLuca, and Hans Moeller, and (iii) three
(3) nominees mutually acceptable to AMP and the Key Shareholders, one of whom
shall be Dr. M. Mahmud Awan. If AMP opts not to nominate a director, the seventh
nominee shall be mutually acceptable to AMP and the Key Shareholders and shall
qualify as an "Outside Director" as defined below.
1.3 Directors who are not employees of or consultants to the
Company, except for Dr. M. Mahmud Awan, shall be defined as "Outside Directors."
The nominee of AMP shall
1.
<PAGE>
be deemed to be an Outside Director. At all times, the majority of the Board
shall consist of Outside Directors. If the number of directors on the Board
shall be increased or decreased from seven (7) directors, each of the Company,
AMP and the Key Shareholders agree to increase or decrease the number of Outside
Directors so that the majority of the Board continues to consist of Outside
Directors, provided however, that any change in the number of directors shall
not interfere with AMP's right to nominate a director.
1.4 Should an Outside Director resign, die, decide not to
stand for election or be removed, each of the Company, AMP and the Key
Shareholders agree to vote their shares for the election of a new Outside
Director.
1.5 Except as provided by this Agreement, AMP and each Key
Shareholder shall exercise the full rights of a shareholder with respect to the
Shares.
ARTICLE II
COVENANTS
2.1 At its option, AMP may elect not to nominate a
representative to the Board pursuant to Section 1.2. If AMP elects not to
appoint a nominee to the Board, the Company agrees to grant AMP the right to
have an observer at all meetings of the Board and such observer shall be
entitled to receive all notices of meetings and all information provided to the
Board including notices of actions by written consent.
2.2 Except for the AMP nominee, if any, or in the alternative
Dr. M. Mahmud Awan, each of the Outside Directors shall have been elected to the
Board for a three year term within three months of the date hereof. The AMP
nominee, if any, or in the alternative Dr. M. Mahmud Awan, shall be elected to
an initial one year term and shall be elected to a three (3) year term
thereafter.
2.3 The number of seats on the Board shall not be increased
above seven (7) without the written consent of AMP.
2.4 The Company shall maintain a classified and staggered
Board, with each director serving for a term of three years, except for the
first election after the date hereof. At such election Hans Moeller and the
nominee of AMP, if any, or if AMP chooses not to nominate a director, then Dr.
M. Mahmud Awan, shall be elected to an initial one year term ("Class I"); Mohd
Aslami and Charles DeLuca shall be elected to an initial two year term ("Class
II") and the three mutually acceptable Outside Directors sahll be elected to an
initial three year term ("Class III"). Following their initial terms, directors
shall thereafter be elected to three year terms.
2.
<PAGE>
ARTICLE III
TERMINATION
3.1 This Agreement shall continue in full force and effect
from the date hereof through the earliest of the following dates, on which it
shall terminate in its entirety:
(a) the date of the closing of an underwritten public
offering of the Company's Common Stock pursuant to a registration statement
filed with, and declared effective under the Securities Act of 1933, as amended,
covering the offer and sale of the Common Stock and raising net proceeds to the
Company of at least $5,000,000; or
(b) the date as of which AMP and the Key Shareholders
hereto terminate this Agreement by mutual written consent; or
(c) the date on which all Obligations of the Company
under that certain Term Loan Agreement, dated as of November 27, 1996, by and
between AMP and the Company, have been paid in full.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Each Key Shareholder represents and warrants to AMP that
it (a) owns the Shares free and clear of liens or encumbrances, and has not,
prior to or on the date of this Agreement, executed or delivered any proxy or
entered into any other voting agreement or similar arrangement other than one
which has expired or terminated prior to the date hereof, and (b) it has full
power and capacity to execute, deliver and perform this Agreement, which has
been duly executed and delivered by, and evidences the valid and binding
obligation of such Key Shareholder, enforceable in accordance with its terms.
ARTICLE V
MISCELLANEOUS
5.1 The parties hereto hereby declare that it is impossible to
measure in money the damages that will accrue to a party hereto or to their
heirs, personal representatives or assigns by reason of a failure to perform any
of the obligations under this Agreement and agree that the terms of this
Agreement shall be specifically enforceable. If any party hereto or his heirs,
personal representatives or assigns institutes any action or proceeding to
specifically enforce the provisions hereof, any person against whom such action
or proceeding is brought hereby waives the claim or defense therein that such
party or such personal representative has an adequate remedy at law, and such
person shall not offer in any such action or proceeding the claim or defense
that such remedy at law exists.
3.
<PAGE>
5.2 This Agreement, and the rights of the parties hereto,
shall be governed by and construed in accordance with the laws of the State of
New York as such laws apply to agreements among New York residents made and to
be performed entirely within the State of New York.
5.3 This Agreement may be amended only by an instrument in
writing signed by the Company, AMP and a majority in interest of the Key
Shareholders.
5.4 If any provision of this Agreement is held to be invalid
or unenforceable, the validity and enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
5.5 This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors, assigns,
administrators, executors and other legal representatives.
5.6 In the event that subsequent to the date of this Agreement
any shares or other securities (other than any shares or securities of another
corporation issued to the Company's shareholders pursuant to a plan of merger)
are issued on, or in exchange for, any of the Shares by reason of any stock
dividend, stock split, consolidation of shares, reclassification or
consolidation involving the Company, such shares or securities shall be deemed
to be Shares, as the case may be, for purposes of this Agreement.
5.7 This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.
5.8 No waivers of any breach of this Agreement extended by any
party hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
5.9 In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party shall be entitled
to all reasonable out-of-pocket costs and expenses of maintaining such suit or
action, including reasonable attorneys' fees.
5.10 In the event that, at any time after the date of this
Agreement, any further action is necessary or desirable in order to carry out
the purposes of this Agreement, the parties hereto agree to take all such lawful
and necessary action.
5.11 The Company and AMP each agree to use their best efforts
to ensure that the rights given to the parties hereunder are effective and that
the parties enjoy the benefits thereof. Such actions include, without
limitation, the use of the Company's and AMP's best efforts to cause the
nomination and election of the Directors as provided in Article I. The Company
and AMP will not, by any voluntary action, avoid or seek to avoid the observance
or
4.
<PAGE>
performance of any of the terms to be performed hereunder by the Company or AMP,
but will at all times in good faith assist in the carrying out of all of the
provisions of this Agreement.
5.12 Should the provisions of this Voting Agreement be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and, to the extent permitted by law, are irrevocable
for the term of this Voting Agreement.
5.13 The voting of shares pursuant to this Voting Agreement
may be effected in person, by proxy, by written consent, or in any other manner
permitted by applicable law.
5.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY:
FIBERCORE, INC., AMP INCORPORATED,
a Nevada corporation a Pennsylvania corporation
By:/s/ Mohd Aslami By:/s/ James E. Marley
-------------------------- ----------------------------
Mohd Aslami James E. Marley
Chief Executive Officer Its: Chairman of the Board
---------------------------
KEY SHAREHOLDERS:
/s/ Mohd Aslami
- ----------------------------
MOHD ASLAMI
/s/ Charles DeLuca
- ----------------------------
CHARLES DELUCA
/s/ M. Mahmud Awan
- ----------------------------
DR. M. MAHMUD AWAN
VOTING AGREEMENT
6.
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is entered into between AMP Incorporate, a
Pennsylvania corporation, with its principal place of business in Harrisburg,
PA, on behalf of itself and its subsidiaries and affiliates ("AMP"), and
FiberCore, Inc., a Nevada corporation, with its headquarters in Sturbridge, MA
("Seller"). An affiliate of AMP is an entity in which AMP has a controlling
interest.
The background of this Agreement is as follows:
A. Seller manufactures and sells glass optical fiber for fiber optic cable.
B. AMP purchases fiber optic cable from third parties and intends to
manufacture fiber optic cable.
C. AMP wants to purchase glass optical fiber from Seller, and Seller wants to
sell glass optical fiber to AMP.
In consideration of the mutual promises and obligations set forth in this
Agreement and intending to be legally bound, AMP and Seller agree as follows:
SECTION I
SCOPE
A. This Agreement and its exhibits incorporate all the terms and conditions
agreed upon by AMP and Seller for the purchase of the glass optical fiber
described in the attached Exhibit A ("Product(s)").
B. As to AMP, this Agreement will apply to Product purchased directly by AMP
or a subsidiary or affiliate of AMP via a Purchase Order (as defined below)
or to Products that have been incorporated into fiber optic cable
subsequently purchased by AMP from a third party. As to third parties,
Seller will separately negotiate prices and terms and conditions of sale
with third parties for all Products purchased by third parties.
SECTION II
PURCHASE PERIOD
The initial term of this Agreement will be from the latest signature date to
December 31, 2000. Unless AMP provides Seller with a written notice o f its
intent not to renew this Agreement at least 6 months prior to the end of the
initial term, this Agreement will be automatically renewed for an additional
five year term. After the second five year term, either party can terminate this
Agreement for any reason, either with or without cause, by
<PAGE>
giving the other party six months prior written notice. For any such nonrenewal
or termination, each parts will be liable to the other party as described in
Section X.
SECTION III
PRICING
A. The initial prices for the products and the discounts during 1996 are
described in Exhibit A.
B. The prices can be adjusted as described in Exhibit A if the combined price
for all the raw materials described in Exhibit A change by more than 7% and
if the party requesting an adjustment provides the other party with 60 days
prior written notice.
C. On January 1st and July 1st of each calendar year, either party can request
that the prices for the Products be adjusted. The revised prices will be
the higher of Seller's then-current prices for the Products given to
customers who order Products at the highest volumes (the "High Volume
Price") less the discount described in Section III, or Seller's
manufacturing material, labor and overhead costs plus 15%, but in no event
will the revised prices be more than the High Volume Price. The High Volume
Price must be equal to or lower than the lowest bona fide long-term price
charged by a major supplier of fiber for purchases at the highest volumes.
No price change will take effect prior to 30 days after the parties have
signed a new Exhibit A reflecting the price change.
D. No price increase will apply to any Purchase Order which is received by
Seller prior to the effective date of any price increase and which is
scheduled for delivery within 2 months of the effective date of any price
increase. If, after the effective date of any price increase, AMP makes any
addition or other change to a Purchase Order that would otherwise be priced
at the old price, then that Purchase Order will be priced at the new price.
If AMP needs a longer price protection period, then Seller will negotiate
such periods with AMP on a case-by-case basis.
E. If Seller sells any product identical or substantially similar to a Product
to any other customer at a lower price for the same or less quantity than
the price then in effect under this Agreement, then the price under this
Agreement will be reduced to the lower price for all comparable quantities
under outstanding Purchase Orders and subsequent Purchase Orders as long as
the lower price to the other customer continues to be offered.
F. Seller will pay rebates to AMP for all Products purchased and paid for by
third parties that are incorporated into fiber optic cable that is
subsequently purchased by AMP during the term of this Agreement.
1. The rebate will be calculated by multiplying the quantities of Product
so incorporated and purchased by the discount described in Exhibit A
from
<PAGE>
the then-current price for purchases by AMP. If Seller grants a
discount to induce a third party fiber optic cable manufacturer to
purchase Products, then the discount described in Exhibit A on fiber
optic cable that is subsequently purchased by AMP from such third
party, but in no event will the discount to AMP be reduced by more
than 30%.
2. Seller will estimate the amount of the rebate each month and remit
such amount to AMP within 30 days after the end of each month. Seller
and AMP will meet at the end of each calendar quarter to review AMP's
records relating the quantities of fiber optic cable purchased from
various third parties and Seller's records relating to the quantities
of fiber sold to various third parties and to reconcile the amount of
the rebate during that calendar quarter. If the amount remitted by
Seller is less than the reconciled amount, then Seller will promptly
pay the amount of the shortfall to AMP. If the amount remitted by
Seller is greater than the reconciled amount, then AMP will promptly
pay the amount of the overage to Seller. Each party will have the
right, at its own expense, to audit such records of the other party by
an independent auditor once a calendar quarter by providing 10 days
prior written notice. AMP will waive the first $1200 in rebates in
exchange for a reasonable amount of mechanical samples.
SECTION IV
QUANTITY AND DELIVERY
A. On January 1st and July 1st of each calendar year, AMP will provide Seller
with a forecast of its requirements for Products from Seller for both
direct purchases by AMP and purchases of fiber optic cable by AMP from
third parties for the following 2 calendar years. AMP can increase its
forecast by 25% at any time by providing Seller with 1 year's prior written
notice, and Seller will obtain or maintain the capacity to meet such
additional forecasted amounts. Any quantity so forecasted by AMP are good
faith estimates only.
B. If Seller has capacity to manufacture glass optical fiber that is not
already being used to meet AMP's forecasted requirements for both direct
purchases by AMP and purchases of fiber optic cable by AMP from third
parties or to meet the requirements of another customer of Seller (i.e.,
additional capacity), then Seller will make such capacity available to AMP
if requested by AMP in writing.
C. AMP is Seller's preferred customer. In the event that demand for Products
by Seller's customers exceeds Seller's ability to meet such demand, Seller
will first meet AMP's Purchase Orders (as described in Section IV.E.), and
AMP's forecasted requirements (as described in Section IV.A.), subject to
Seller's rights
<PAGE>
to contract with other customers to supply products using capacity not
otherwise committed to or reserved for AMP under this Agreement.
D. Except for 1996, AMP intends to purchase at least 50% of its global
requirements for glass optical fiber during the initial term from Seller,
either via direct purchases by Purchase Orders or via purchases of fiber
optic cable by AMP from third parties; subject, however, to Seller
substantially meeting all of its material obligations under this Agreement,
including, but not limited to, Seller's pricing, delivery, quality and
intellectual property obligations; and further subject to the willingness
of customers of AMP to purchase products containing glass optical fiber
from Seller. Beginning on July 1, 1997, on January 1st and July 1st of each
calendar year, AMP will provide Seller with a report describing AMP's total
purchases of glass optical fiber from all suppliers during the previous 6
months. Subject to Seller substantially meeting all of its material
obligations under this Agreement, including, but not limited to, Seller's
pricing, delivery, quality and intellectual property obligations, and
further subject to the willingness of customers of AMP to purchase products
containing glass optical fiber from Seller, if AMP's actual purchases of
Products from Seller are less than 50% of AMP's total purchases of glass
optical fiber from all suppliers, then, as Seller's sole and exclusive
remedies. Seller can either terminate this Agreement by providing AMP with
90 days prior written notice or reduce the amount of the discount described
in Section III for the previous 6 month period (i.e., January 1st to June
30th or July 1st to December 31st) by 50%. On purchases of Products during
the previous 6 month period, either directly from Seller or via purchases
of fiber optic cable by AMP from third parties for which AMP received a
rebate, AMP will reimburse Seller for the amount of the reduction.
Notwithstanding anything in this Section to the contrary, in no event will
the remedies of this Section or any other remedies of Seller apply if AMP's
actual purchases of Products from Seller are less than 50% of AMP's total
purchases of glass optical fiber from all suppliers because AMP's demand
for glass optical fiber exceeds the forecasts described in Section IV.A.,
and if Seller does not have the capacity to meet such increased demand and,
if such increased demand is due to an acquisition, AMP is no longer subject
to contractual purchase obligations to third parties for glass optical
fiber arising from the acquisition.
E. Purchases will be authorized only upon issuance by AMP of a purchase order
("Purchase Order(s)"). At the beginning of each calendar quarter, AMP will
provide Seller with a Purchase Order for Products to be delivered to AMP
during the next 6 months. AMP may, without cost or liability, at any time
reschedule delivery within each 6 month period provided that delivery is
taken during the 6 month period.
F. Purchase Orders may be provided by AMP via electronic data interchange
(EDI), facsimile or United States mail.
<PAGE>
G. The Lead Time for Product is shown in the attached Exhibit A. The elapsed
time beginning when AMP places a Purchase Order and ending when the Product
contained in that Purchase Order is received at the proper AMP location is
the "Lead Time." Proper scheduling requires any delivery time to include
the Lead Time.
H. Purchase Orders will state AMP's required delivery time for Products. Time
and rate of delivery are of the essence for all purchases made under this
Agreement. For Product to be considered on time, it must be shipped so as
to arrive within the delivery window requested by AMP, currently +5 days
early/-0 days late, under normal shipping circumstances. Seller will be
responsible for extraordinary freight costs in the event that such costs
are incurred by Seller to ensure Product is received by AMP per the
delivery time in the event Seller does not satisfy the above shipping
requirements.
I. All shipments will be made F.O.B. Seller's factory. AMP shall assume title
and responsibility for Product once it leaves Seller's factory and shall be
responsible for all freight, insurance and handling charges.
SECTION V
PAYMENT
AMP will issue payment no later than 30 days from the date of receipt of a
correct Seller's invoice for Product or services accepted by AMP.
SECTION VI
SELLER TESTING, STANDARDS AND QUALITY
A. Seller will test and inspect all Product according to the quality control
procedures described in the attached Exhibit B to ensure conformance to the
specifications described in Exhibit B ("Specifications"). Seller will
provide the quality control records and test data for each Product in
electronic form with shipment.
B. Seller agrees to bar code per AMP Specification ______utilizing Code 3 of 9
symbology in the Automotive Industry Action Group (AIAG) format on all
product packaging and parts as appropriate.
C. Seller agrees to participate in AMP's assessment of Seller's quality
management system by completing a self-assessment compiled and administered
by a third party consultant hired by AMP. The cost of the assessment will
be born in part by Seller and in part by AMP, provided that the annual cost
for such assessment does not exceed $5,000.
<PAGE>
SECTION VII
INSPECTION BY AMP
A. All Product is subject to acceptance by AMP. Product may be inspected and
tested by AMP for conformance to the requirements of this Agreement and any
Purchase Order prior to acceptance, but such inspection and testing will
not relieve Seller of its obligation to delivery Product in conformance to
such requirements. If Product fails to meet such requirements, then AMP, at
its option, may reject such Product or require its prompt repair or
replacement, all at Seller's expense.
B. In the event Product does not conform to such requirements, then Seller
will have 45 days from the date non-complying Product is returned to
Seller's plant to correct the deficiency. If the deficiency is not
corrected, then AMP will have the option to cancel the Purchase Order, but
only as to the affected Product.
C. Certain Product is designated as Certified Product which is not required to
be inspected and tested by AMP upon receipt at an AMP receiving location
according to AMP Specifications 102-33, 102-37 or their equivalents.
Certified Product is accepted by AMP upon receipt of the Certified Product
at the AMP receiving location. Acceptance is subject to revocation if the
Product is found to be nonconforming upon attempted use in AMP's
manufacturing process. Once discovered, any Certified Product found to be
nonconforming would be subject to inspection and/or testing by AMP
according to procedures documented in AMP specification 102-1391.
SECTION VIII
WARRANTY
Seller warrants all Product as described in the attached Exhibit C.
SECTION IX
CHANGES
AMP may, by providing 90 days written notice, make reasonable changes, within
the scope of this Agreement and any Purchase Order, regarding, but not limited
to, specifications, designs, drawings, methods of shipment, packaging and/or
place of delivery. Seller may not make such changes to any of the processes,
material, testing or location of manufacture, without first obtaining the
express written consent of AMP. If any changes cause changes in cost of or time
required for Seller's performance under this Agreement or a Purchase Order, the
parties will agree in writing to an equitable adjustment in the price (subject
to Section III) and/or delivery schedule.
<PAGE>
SECTION X
TERMINATION
A. In addition to any other remedies available to AMP in law or equity, AMP
may terminate this Agreement under the following circumstances.
1. Seller fails to supply Products as warranted or that meet the
Specifications, and fails to cure such breach within 45 days after
receiving a written notice from AMP.
2. Seller's lot acceptance or received on time percentages for Product
falls below those called for in Section 5.1 of AMP Specification
102.47 (Rev. F, updated 03/17/95), and is not corrected as provided by
the specification. Seller acknowledges receipt of the specification.
Measurement of this performance will be in accord with the
specification, and Seller will have 6 months to bring its performance
to the stated acceptable level after notice as provided in Section 5.2
of the specification. The percentages stated in Section 5.1 of the
specification for 1993 will be applicable through 1996.
3. Upon 120 days prior written notice if AMP no longer needs the
Products.
4. Seller otherwise materially breaches this Agreement and does not cure
the breach within 90 days after Receipt of a notice describing the
breach.
B. AMP's sole liability to Seller for such termination will be:
1. Any unpaid balance due Seller for Product ordered, delivered and
accepted by AMP prior to Seller's Receipt (as defined below) of the
termination notice; and
2. The price for Product scheduled for delivery within 90 days of
Seller's Receipt of the termination notice, provided that such Product
is in production on such date, except that AMP will only be obligated
to pay for conforming Product so delivered and accepted by AMP.
C. In addition to any other remedies available to Seller in law or equity,
Seller may terminate this Agreement if AMP materially breaches this
Agreement and does not cure the breach within 90 days after Receipt of a
notice describing the breach.
D. Seller may terminate this Agreement as described in Section IV.D.
E. Seller's sole liability to AMP for either such termination will be:
<PAGE>
1. Delivery to AMP of all Product ordered and for Purchase Orders
subsequently placed related to firm commitments made by AMP to its
customers for fiber optic cable prior to the date of termination
except if this Agreement is terminated as a result of AMP's
non-payment to Seller for Products sold to AMP; and
2. Delivery to AMP of all AMP-owned prints and property and any
confidential information at AMP's expense and in accordance with AMP's
instructions.
F. Either party may terminate this Agreement without liability upon written
notice if the other party files a voluntary petition in bankruptcy; or
makes an assignment for the benefit of creditors; or a receiver, trustee
and bankruptcy or similar officer is appointed to take charge of all or
part of the other party's assets/property; or the other party is adjudged
bankrupt.
G. For purpose of this Section, "Receipt" is defined as follows:
1. For facsimile, the date the sending party faxes the Notice to the
receiving party;
2. For express courier, the date the express courier company delivers the
Termination Notice to the receiving party.
H. Neither party shall be entitled to consequential or liquidated damages.
SECTION XI
COMPLIANCE WITH LAWS, INDEMNIFICATION AND INSURANCE
A. Seller hereby agrees that all services, Products, and processes covered
hereby will be manufactured and furnished by Seller in accordance with and
will conform to all applicable federal, state and local laws or regulation.
Seller will, and hereby does, indemnify and hold harmless AMP, its
officers, directors, employees and agents from all claims, demands, suits
or actions, environmentally related or otherwise, of any nature whatsoever,
including reasonable attorney's fees and expenses, arising from Seller's
performance of any specified, required or requested services for, or the
furnishing of Product to AMP. Seller agrees to defend AMP, at AMP's request
against any such claim, demand or suit.
B. Seller agrees to maintain, at its own expense, a policy or policies of
comprehensive general liability insurance with vendor's and product
endorsements naming AMP as an additional insured with a combined single
limit of at least $1,000,000. All such policies will provide that the
coverage will not be
<PAGE>
terminated without at least 30 days prior written notice to AMP.
Certificates of insurance will be furnished to AMP upon request.
C. Notwithstanding any other terms and conditions in this Agreement or any
other document, the following terms and conditions will apply with regard
to Seller's environmental responsibilities:
1. Seller acknowledges that it is solely responsible for compliance with
all federal, state and local environmental laws, regulations,
ordinances and other requirements which apply or may apply to its
operations, including such operations as are necessary to provide the
Product covered by this Agreement and any Purchase Order issued
pursuant to this Agreement. Seller's responsibility includes but is
not limited to, where applicable, ensuring the proper handling and
disposal of any hazardous or toxic substances or wastes and other
waste materials under the Resource Conservation and Recover Act
("RCRA"), 42 U.S.C. Section 9601 et seq., any implementing regulations
and analogous state laws and regulations arising from the other
party's use, handling or disposal of hazardous and/or toxic substances
or other waste materials related to the Products, or arising from the
other party's alleged noncompliance with any federal, state or local
environmental laws, regulations, ordinances, licenses, permits, or
other requirements whatsoever, or arising from any claim that the
other party's improper use, handling or disposal of hazardous or toxic
substances or other materials related to the Products has resulted in
personal injury or property damage to any third party.
2. For the purpose of monitoring Seller's compliance with the terms of
this Agreement, Seller hereby authorizes AMP to perform a compliance
review, including a tour of Seller's facility, at any time upon
reasonable notice to Seller.
SECTION XIII
AMP CONFIDENTIAL INFORMATION
Seller understands and agrees that it will forever hold and protect in strict
confidence on behalf of itself and its employees, all confidential information
derived from AMP or its subsidiaries and affiliates participating in the
Agreement. Seller will at AMP's request immediately return all documents
received by Seller during the duration of this Agreement along with any copies.
If Seller wants to provide AMP with confidential information, then AMP will only
be obligated to hold such information in confidence if Seller and AMP enter into
a separate confidentiality agreement.
<PAGE>
SECTION XIII
INTELLECTUAL PROPERTY AND INFRINGEMENT
A. Any design and development of Product or processes relating to Product
which AMP provides to Seller or for which AMP pays Seller to perform will
be the property of AMP.
B. Seller and AMP will negotiate in good faith an agreement for Seller to
provide product preforms and technical and manufacturing assistance to AMP
in drawing the preforms. C. Seller warrants that any Product which it
designed or developed will be delivered free of the rightful claim of any
third person by way of infringement of any patent or misappropriation of
any trade secret; provided, however, that the representation set forth in
this Section will not apply to Product manufactured in accordance with
specifications originated by AMP or its customer.
D. Subject to Section XIII.F. below, Seller will defend, at the Seller's
expense, every suit or claim for infringement or misappropriation related
to Product designed or developed by Seller brought against AMP or any
customer of AMP. Seller will indemnify, defend and save AMP and its
customers harmless from all liability, loss or expense, including costs of
settlement after obtaining Seller's written consent and reasonable
attorney's fees, resulting from any claim that AMP; or any customer's use,
possession, sales or resale of any Product or part thereof infringes any
patent, or is a misappropriation of any trade secret or other proprietary
right covering the Product or any part thereof. Each party agrees to notify
the other promptly of any matter in respect to which the foregoing
indemnity may apply and of which the notifying party has knowledge. If so
notified, Seller will, without limitation, defend those actions or pay any
fees awarded against AMP in any action or claim provided AMP will give
Seller an opportunity to elect to take over, settle or defend any such
claim, action or suit through counsel selected by Seller and under its sole
direction, and at its sole expense and provided that in the event that the
Seller elect to take over, defend of settle same, AMP will make available
to Seller all defenses against any such claim, action, suit or proceeding
known to or available to AMP. It is understood that either party is free to
waive the right to seek indemnification from the other, in which event the
party waiving the right of indemnification may select its own legal
counsel.
E. If a Product designed or developed by Seller is held to constitute an
infringement or misappropriation, then Seller will, at its own expense,
either procure for AMP the right to continue using the Product or part
thereof, or replace it with a non-infringing Product or part or modify the
Product or part so that it becomes non-infringing, or, if neither of the
foregoing alternatives is reasonably available
<PAGE>
despite Seller's best efforts, refund the purchase price and freight costs
of such Product or part.
F. The foregoing provision as to indemnity by Seller to AMP will not apply if:
(a) the Product delivered by Seller to AMP is manufactured in accordance
with designs and/or specifications and/or intellectual property supplied by
AMP, in which case AMP agrees to indemnify Seller to the same extent that
Seller has agreed to indemnify AMP hereunder; or (b) the Product delivered
by Seller to AMP is subsequently modified or augmented by AMP without the
written consent of Seller in a manner which creates an infringement or
intellectual property violation which did not previously exist.
G. SECTION XIV
COOPERATIVE ADVERTISING
Seller and AMP will negotiate in good faith an agreement for Seller to provide
AMP with a cooperative advertising fund based on a percentage of purchases of
Product by AMP. Any such agreement shall insure that any advertising derived
from the advertising fund highlights Seller as the supplier of the Product in a
manner acceptable to Seller.
SECTION XV
PUBLICITY
A. Seller may not disclose, advertise or publish information about the
Agreement without the prior written consent of AMP, which shall not be
unreasonably withheld or delayed. AMP's prior written consent will not be
required when a disclosure about the Agreement is required by law.
B. Seller will, within 10 working days after Receipt a notice from AMP, grant
reasonable access to its facilities during normal business hours to AMP and
its customers and provide such data relating to a particular Product to AMP
and its customers as AMP will reasonably request to demonstrate Seller's
manufacturing and other capabilities to AMP's customers.
SECTION XVI
NOTICES
A. Any notices required or permitted to be given must be in writing and
delivered in person, set by express courier, or via facsimile to the
address set forth below. Notices will be effective upon Receipt, as defined
in Section X.
If to AMP:
<PAGE>
If to Seller:
SECTION XVII
OTHER PROVISIONS
A. Seller may not assign the Agreement or any Purchase Order or any part
thereof without first obtaining the express written consent of AMP.
B. Force Majeure. Neither party to this Agreement will be liable for its
failure to perform any of its obligations hereunder during any period in
which such performance is delayed by fire, flood, war, embargo, strike,
riot, or the intervention of any government authority, provided that the
party suffering such delay immediately notifies the other party of the
delay.
C. AMP and Seller understand and contemplate that their relationship as
described in this Agreement will be solely that of supplier and purchaser.
The parties acknowledge that other contracts describe other aspects of the
relationship between the parties. Nothing in the Agreement is intended or
will be construed to create any partnership, joint venture, joint
enterprise or other similar joint relationship, nor will either part be
deemed to be an employee, agent or legal representative of the other for
any purpose whatsoever. Neither party will have any authority, whether
express, implied or apparent to assume or create any obligations for, on
behalf of, in the name of, or for the benefit of the other.
D. The terms, provisions, representations and warranties contained in this
Agreement will survive expiration or earlier termination of this Agreement
notwithstanding delivery, acceptance of or payment for the Product ordered
pursuant to this Agreement.
E. Seller agrees to provide to AMP notice of an information regarding any
transaction which result in a change of control of Seller's business,
including details of the transaction and any conditions placed on the
transaction. For purposes of this paragraph "transaction" is construed
broadly and includes, without limitation, sales, mergers, acquisitions, and
devises.
F. This Agreement will be interpreted and governed in all respects by the laws
of the Commonwealth of Pennsylvania without regard to its principles of
conflict of law.
G. Any dispute that cannot be settled amicably by mediation will be heard,
settled and decided under the Commercial Rules of the American Arbitration
Association by three arbitrators chose in accordance with such Rules.
Service of any matters in reference to such arbitration will be given in
the manner described in Section
<PAGE>
XVI. Such arbitration will be conducted in New York, New York. The award in
such arbitration will be final and enforceable in any court of
competent jurisdiction. The costs of arbitration will be paid as
directed by the arbitrators.
H. If a conflict arises between any of the terms in the following documents,
the order of precedence will be: (1) this Agreement; (2) terms and
conditions on the face of any Purchase Order issued pursuant to this
Agreement; and (3) terms and conditions on the reverse side of any Purchase
Order issued pursuant to this Agreement.
I. The failure of either party to enforce any breaches of a provision of this
Agreement will not be construed as waiving subsequent breaches of the same
or any other provision of this Agreement. No such failure will be deemed to
be an amendment to this Agreement.
J. This Agreement constitutes the entire Agreement between the parties
relating to the purchase of fiber. NO modification will be valid unless set
forth in writing and signed by the parties, except as otherwise provided
herein. Both parties acknowledge that this agreement is the complete and
exclusive agreement of the parties which supersedes all prior written
proposals, negotiations and/or communications between the parties relating
to this Agreement. This Agreement may be executed in duplicate, each of
which will be deemed an original.
The authorized representatives of the parties have executed this Agreement
intending to be legally bound.
AMP Incorporated, on behalf of itself FiberCore, Inc.
and its subsidiaries and affiliates
BY: BY: /s/
------------------------------ ------------------------------
Title: Title: Chairman, CEO
---------------------------
Date: Date: July 29, 1996
----------------------------
<PAGE>
EXHIBIT A
PRICES AND DISCOUNTS
<PAGE>
EXHIBIT A
DISCOUNTS AND PROJECTED VOLUMES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Year Proj. AMP Fiber Proj. FC Proj. MM SM
Cable Sales Portion Share Purchases Discount Discount
$MM % % $MM % %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 15 15
- ------------------------------------------------------------------------------------------------------------
1997 18 50 44 4.7 20 20
- ------------------------------------------------------------------------------------------------------------
1998 34 50 60 10 20 20
- ------------------------------------------------------------------------------------------------------------
1999 54 50 70 19 25 20
- ------------------------------------------------------------------------------------------------------------
2000 77 50 80 31 25 20
- ------------------------------------------------------------------------------------------------------------
Total: 64
- ------------------------------------------------------------------------------------------------------------
</TABLE>
If AMP elects, it can purchase 3.5 meters of single mode fiber for every meter
of multimode fiber waved. Such an election must be made per the purchase order
procedure.
INITIAL PRICES
(NET)
Product Type Price $/KM
1 UK 62.5 micron core 160
2 FDDI 155
3
4
MATERIAL PRICE ADJUSTMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Units Cost Cost
Per Per Per
Material Meter Unit Meter
- -------- ----- ---- -----
Initial Cost
- ------------
Substrate tubes
Silicon Tetrachloride
Germanium Tetracholoride
Hydrogen
Oxygen
Helium ______ _____ ______
New Cost
Substrate tubes
Silicon Tetrachloride
Germanium Tetracholoride
Hydrogen
Oxygen
Helium ______ _____ _____
Adjustment (New Cost less Initial Cost) _____
</TABLE>
Datum: 06.09.1996
Telefon: 310-93072
Unser Zeichen: FKB III/FP/Tiede
34.tie.ficore
Darlehensvertrag
Die
Fiber Core. Inc.
Charlton Road 174
01566 Sturbridge / MA / U S A
- - nachsteend Kreditnehmer sowie Beteiligungsgeber gennant -
und die
B E R L I N E R B A N K A G
- - nachstehend Bank gennant -
vereinbaren gema(BETA) Antragstellung Die Einraumung eines zweckgebundenen
Darle-hens aus dem Beteiligungsfonds (Ost) der Kreditanstalt fur Wiederaufbau
in Hohe von DM 7.700.000,--
(in Worten: Deutsche Mark sieben Millionen siebenhunderttausend)
met einem Auszahlungskurs von 100 %. Die Mittel sind in voller Hohe vom
Be-teiligungsgeber an die
Firma Fiber Core Glasfaser Jena GmbH
Goschwitzer Str. 20
07745 Jena
- nachstehend Beteiligungsnehmer gennant -
weiterzuleiten.
Die beigefugten "Allgemeinen Geschaftsbedingungen: und die "Bedingungen fur den
KfW-Beteiligungsfonds (Ost) bei Bankendurchleitung in der Fassung 08/95" stellen
einen wesentlichen Bestandteil dieses Darlehensvertrages dar.
<PAGE>
Verwendungszweck
1. Der Beteiligungsgeber darf das Darlehen nur zur 100 %igen Finanzierung
einer von ihm zu ubernehmenden Beteiligung von TDM 7.700 an der Firma Fiber
Core Glasfaser Jena GmbH einsetzen.
2. Die dem Beteiligungsnehmer zuflie(beta)enden Mittel durfen nur zur Starkung
seiner Eigenkapitalbaisis verwendet werden, um die Finanzierung der
folgenden Ma(beta)nahmen sicherzustellen:
Investitionsort: 07745 Jena
Finanzierung von:
Gewerblichen Baukosten: DM 2.600.000,--
Maschinen: DM 7.260.000,--
Einrichtungen: DM 50.000,--
Sonstigem: DM 90.000,--
DM 10.000.000,--
Die den Darlehensbetrag ubersteigenden Aufwendungen werden aus Zuschussen aus
der Gemeinschaftsaufgabe in Hohe von DM 2.300.000,-- finanziert.
Die mit diesen Mitteln finanzierten Investitionen dienen ausschlie(beta)lich der
Nutzung durch den Beteiligungsnehmer.
Auszahlung/Gebuhren
Wegen der Zweckbindung des Kredites darf die Kreditvaluta erst abgerufen werden,
wenn die Einzahlung laut Darlehens - bzw. Beteiligungsvertrag fallig ist. Die
Auszahlung des Darlehens erfolgt in Uberweisungsverfahren nach Bereitstellung
der Darlehensmittel durch die Kreditanstalt fur Wiederaufbau, wenn alle
Darlehensbedingungen erfullt sind. Besichtigung vor Ort behalt die Bank sich
vor.
Das Darlehen halt die Bank bis zum 11.09.1996 kostenfrei bereit. Danach wird fur
die nicht in Anspruch genommenen Betrage bis zur Auszahlung eine
Bereitstellungsprovision von 0,25 % pro Monat von der Kreditanstalt fur
Wiederaufbau breechnet, die vom Kreditnehmer zu tragen ist.
<PAGE>
Voraussetzung fur die Darlehensgewahrung ist der Nachweis der
Gesamtfinanzierung. Daruber hinaus mussen folgende
Auflagen/Auszahlungsvoraussetzungen erfullt werden:
1. Der zwischen Beteiligungsgeber und Beteiligungsnehmer geschlossene
Beteiligungsvertrag ist der Kreditanstalt fur Wiederaufbau vor
Auszahlung des Darlehens vorzulegen.
2. Die Beteiligung wird dem Beteiligungsnehmer vom Beteiligungsgeber als
Darlehen mit Rangrucktritt zur Verfugung gestellt.
3. Die vom Beteiligungsgeber und vom Beteiligungsnehmer unterzeichnete
Subventionserklarung fur den KfW-Beteiligungsfonds (Ost) ist der Bank
vor Auszahlung einzureichen.
4. Ein Liability/Equity-Ratio der Fiber Core Glasfaser Jena GmbH von
nicht gro(beta)er als 4 durch die Muttergesellschaft mu(beta)
gewahrleistet sein.
5. Die vom Wirtschaftsprufer testierte Bilanz 1995 und die konsolidierte
Bilanz der Fiber Core Inc., die eine angemessene
Eigenkapitalausstattung von ca. 20% bestatigen mu(beta), sind der Bank
einzureichen.
6. Die vom Wirtschaftsprufer testierte Bilanz 1995 der Fiber Core
Glasfaser jena GmbH, die eine Eigenkapitalbasis von mind. 25 %
bestatigen mu(beta), ist der Bank vorzulegen.
7. Eine Kopie des langfristigen Lieferabkommens zwischen der Fiber Core
Glasfaser Jena GmbH und der Firma AMP Inc. Ist der Bank einzureichen.
Aus den einzureichenden Unterlagen durfen sich sowohl fur die Bank als auch fur
die Kreditanstalt fur Wiederaufbau keine Bedenken eregeben.
Verzinsung
Das Darlehen ist vom Tage der Auszahlung durch die Kreditanstalt fur
Wiederaufbau mit 6,25 % p.a. zu verzinsen.
Die Zinsen und Bereitstellungsprovision werden jeweils vierteljahrilich
nachtraglich zum 31. Marz, 30. Juni, 30. September und 30. Dezember einies jeden
Jahres fallig und werden dem laufenden Konto des Kreditnehmers belastet.
Des weiteren ist hiermit vereinbart, da(beta) das zwischen Beteiligungsgeber und
Beteiligungsnehmer zu vereinbarende Beteiligungsentgelt den vorgenannten
Zinssatz um mind. 0,5 % p.a. ubersteigen mu(beta).
<PAGE>
Ruckzahlung
Der Kredit ist am 30.09.2006 zuruckzuzahlen.
Sicherheiten
Fur alle bestehenden, kunftigen und bedingten Anspruche, die der Bank mit ihren
samtlichen in- und auslandischen Geschaftsstellen gegen den Kreditnehmer aus der
bankma(beta)igen Geschaftsverbindung zustehen, haften samtliche bei ihr
unterhaltenen Guthaben und Depotwerte des Kreditnehmres als Pfand.
Weitere gesondert vereinbarte Sicherheiten sind auf Anlage S aufgefuhrt und
gelten als Bestandteil dieses Vertrages.
Alle Sicherheiten fur sonstige Darlehen des Kreditnehmers dienen nachrangig auch
fur dieses Kreditengagement als Sicherheit.
Sonstiges
Die Bank ist berechtigt, jederzeit die bestimmungsma(beta)ige Verwendung des
Darlehens und die bestellten Sicherheiten zu uberprufen sowie Einblick in die
wirtschaftlichen Verhaltnisse des Kreditnehmers zu nemen. Die Prufungsrechte
kann die Bank auf Dritte ubertragen. Etwa damit zusammenhangende Kosten und/oder
Gebuhren gehen zu Lasten des Kreditnehmers.
Fur die Dauer des Darlehensverhaltnisses gilt als vereinbart, da(beta) sowohl
der Beteiligungsgeber als auch der Beteiligungsnehmer die Bank uber seine
wirtschaftlichen Verhaltnisse in ausreichendem Ma(beta)e informieren.
Insbesondere sind jeweils unaufgefordert nach Fertigstellung - spatestens jedoch
sechs Monate nach Abschul(beta) des Geschaftsjahres - die Jahresabschlusse zur
vertraulichen Kenntnisnahme einzureichen, die mit einer Stellungnahme der Bank
der Kreditanstalt fur Wiederaufbau zuzuleiten sind. Daruber hinaus wird die
monatliche Einreichung von Geschaftsberichten beider Unternahmen vereinbart.
Der Kreditnehmer ist jederzeit berechtigt, gema(beta) den "Bedingungen fur den
KfW-Beteiligungsfonds (Ost) bei Bankendurchleitung in der Fassung 08/95", das
Darlehen zuruckzuzahlen.
Anderungen beim Unternehmen des Kreditnehmers, die die wirtschaftlichen
Grundlagen nachhaltig beeinflussen, wie z.B. Standortverlegung, Eroffnung von
Filialbetrieben, Anderung der Gesellschaftsform, Anderung von
Beteiligungsverhaltnissen, sind der Bank unverzuglich anzuzeigen.
Der Bank steht das Recht zu, den Darlehensvertrag aus wichtigem Grund vorzeitig
zu kundigen. Einzelheiten sind in Ziffer 11 der "Bedingungen fur den KfW-
<PAGE>
Beteiligungsfonds (Ost) bei Bankendurchleitung in der Fassuing 08/95" und Ziffer
19 der "Allgemeinen Geschaftsbedingungen" der Berliner Bank AG geregelt.
Erfullungsort fur beide Teile ist die kontofuhrende Stelle der Berliner Bank
Aktiengesellschaft. Als Gerichtsstand gilt das Amtsgericht Charlottenburg bzw.
Das Landgericht Berlin als vereinbart.
Die Abruffrist fur Darlehensteile endet mit dem 12.08.1997.
Es ist hiermit vereinbart, da(beta) Vermogensverschiebungen zugunsten des
Beteiligungsgebers nicht zulassig sind. Au(beta)erdem hat der Beteiligungsgeber
den Beteiligungsnehmer nicht zu fur diesen nachteiligen Geschaften oder
Zahlungen zu veranlassen, die den Regeln eines ordnungsgema(beta)en
Geschaftsbetriebes oder gesetzlichen Bestimmungen widersprechen oder die im Fall
des Konkurses des Beteiligungsnehmers oder aus sonstigen Gruden anfechtbar sind.
Sollten Bestimmungen dieses vertrages ganz oder teilweise rechtsunwirksam sein
oder werden, so beruhrt dies nicht die Wirksamkeit der ubrigen
Vertragsbestimmungen. Etwaige unwirksame Regelungen sollen durch die den
wirtschaftlichen Zielsetzungen am nachsten kommenden Regelungen ersetzt werden.
Die Voraussetzung der Kreditgewahrung ergeben sich aus der am 08.12.1995 im
Bundesanzeiger Nr. 231 veroffentlichten Richtlinie des Bundesministers fur
Wirtschaft uber die Vergabe von Refinanzierungsdarlehen an Beteiligungsgeber
gema(beta) ss. 7a des Fordergebietsgesetzes vom 10.Oktober 1995.
Sept. 26, den Jena Berlin, den 06.09.1996
1996
B E R L I N E R B A N K
/S/ Aktiengesellschaft
----------------------------
Kreditnehmer
Anlagen
<PAGE>
Essential Terms and Conditions of Loan Contract between FiberCore, Inc. And
Berliner Bank AG dated September 6, 1996.
* * *
Loan Amount DM 7.700.000 payable 100%, for the specific investment use as
applied for.
The funds are to be transferred in full to FCJ.
The "general business terms" and the "terms for the KfW-participation fund
(East) 08/95" form a part of the loan agreement.
Purpose of Use
1) 100% for financing the investment in FCJ.
2) The funds are solely for FCJ's equity strengthening to finance the
following in Jena:
Construction 2.600.000 DM
Machinery 7.260.000 DM
Furnishings 50.000 DM
Misc. 90.000 DM
10.000.000 DM
Expenditures exceeding the loan amount will be financed from the state grant.
The investments financed with these funds serve exclusively the use by F.C.J.
Payment/Fees
Funds will be released when all conditions are fulfilled.
The loan is being held available free of charge till September 11, 1996.
Afterwards KfW will charge a commitment fee of 0.25% per month for funds not
released.
The loan is conditioned on proof of secured total financing for the project. In
addition, these requirements have to be met:
1) The participation contract between FCI and FCJ has been submitted to
KfW.
2) The loan transferred by FCI to FCJ ranks secondary to FCJ's other
creditors.
3) The subsidy statement signed by FCI and FCJ has been submitted to BBk
(To follow).
4) FCJ's liability/equity ratio 4 maximum.
<PAGE>
5) Presentation of audited 1995 consolidated FCI financials showing a
minimum equity base of approx. 20%.
6) Presentation of audited 1995 FCJ financials showing a minimum equity
base of 25%.
7) Presentation of the long-term FCJ/AMP supply agreement.
Neither BBk nor KfW must have any reservations about the documents to be
furnished.
Interest Payment
Effective the day of loan release, KfW will charge 6.25% p.a.
Interest charges and the commitment fees are payable per March 31, June 30,
September 30 and December 30, and will be charged to FCJ's account.
FCJ pays FCI 0.5% annually.
Repayment of Loan
The loan is to be repaid on September 30, 2006.
Collateral's
FCI's credits and deposits in worldwide accounts with the Berliner Bank and its
subsidiary offices serve as collateral against present and future claims by the
bank.
All security interest pledges by FCI for other loans also serve as secondary
collateral to this loan.
Miscellaneous
The bank is entitled to examine the use of the loan at any time and to audit the
company's performance. Investigations can be entrusted to third parties at the
borrower's expense.
In addition to annual financials reports, the bank requires monthly business
reports from FCI and FCJ. The bank will forward such reports with a commentary
to KfW.
The loan can be repaid early (See KfW terms).
Changes in the companies which may affect their economic conditions
substantially (e.g. location, new subsidiaries, corporate/ownership, etc.) must
be announced immediately.
The total loan pay-out must have occurred on August 12, 1997.
Asset shifts in favor of the borrower are not permissible. Besides, the borrower
must not induce FCJ to transact business or payments which are disadvantageous
to FCJ or which
<PAGE>
conflict with the rules of proper company management or with legal regulations
or which could be contested in the event of FCI's bankruptcy or for any other
reasons.
Appendix S to this loan contract:
Bank Guarantee DM 3.850.000
Any fees for the above or for documentation required will be at borrower's
expense.
EXH10-48
"TRANSLATION OF GERMAN GRANT"
Thuringia Ministry for Economics and Infrastructure
The Minister (governor)
Date: 12-30-95
Receiver of Grant:
FiberCore Glasfaser Jena GmbH.
Goschwitzer, 07745 Jena
Grant Notification about the granting of investment funds for the industrial
community from reserves
o Of the community program (GA) "Improvement of the regional
economic infrastructure"
o Of the European Fund for regional development/EFRE
Project No. 25163181
Ladies and Gentlemen:
Your application of June 19, 1995, received on June 19, 1995, and your
specifications of November 28, 1995, received on November 30, 1995, have been
approved on the basis of the 24th frame - plan and the Thuringia action
meetings.
You receive an investment contribution in the amount of up to
DM - 2.300.000
(In words: two million three hundred thousand German marks)
The approved contribution was determined on the basis of the grant rules
effective for the 23rd frame - plan. The balance to the 24th frame - plan will
be formulated and approved once the EU (European Union) approves the frame -
plan announced on March 16, 1995.
After EU's confirming the 24th frame - plan and fulfilling the forms under
VI.al., you will receive an amended grant notification for the added amount.
<PAGE>
Summary of other significant points:
o The grant is purpose - bound for the manufacture of optical
fibers and preforms.
o The release of the funds is effected upon presentation of paid
invoices for equipment or work as specified in the grant
application.
o Amounts which are not called within the originally specified time
period, must be advised latest October 31 for approval of
transfer to the subsequent year.
o The grant is 23% of the investment project approved to the
supported by the grant. All such grant investments are to be
satisfied.
o The grant must be repaid immediately if the project is not
realized, if it is terminated or the company is sold or goes
bankrupt.
o The proper use of the project funds must annually be certified by
company's auditors.
o The shareholder, i.e. FiberCore, Inc. is obligated to repay the
grant if the investment project does not materialize, as planned
or any terms of the grant notification are infringed upon.
o After release of the entire grant, the company has three years to
prove that more than 50% of sales represent sales of optical
fibers and preforms.
o At the end of the investment, the company is obligated to provide
for 40 permanent jobs and one trainer work place for a time span
of five years.
o No used equipment is allowed to be included in the investments
paid for the grant.
o The immaterial goods (e.g. software) contained in the investments
must be capitalized in full.
<PAGE>
THURINGER
MINISTERIUM FUR WIRTSCHAFT UND INFRASTRUKTUR
DER MINISTER
Datum: 30.12.95
Reg. Nr. WEG 0144a/95
Bearbeiter: Herr Hofmann
Telefon: 0365/4370718
Art: 3
Zuwendungsempfanger:
FiberCore Glasfaser Jena GmbH
Goschwitzer Str. 20
07745 Jena
Z u w e n d u n g s b e s c h e i d
uber die Gewahrung von Investitionszuschussen fur die gewerbliche Wirtschaft aus
Mitteln - der Gemeinschaftsaufgabe (GA) "Verbesserung der regionalen
Wirtschaftsstruktur" - der Europaischen Fonds fur regionale Entwicklung - EFRE -
Projektnummer: 2576 3787
Sehr geehrte Damen und Herren,
Ihr Antrag vom 19.06.1995, eingegangen am 19.06.1995, und Ihre Prazisierung vom
28.11.1995, eingegangen am 30.11.1995, wurden auf der Basis des 24. Rahmenplanes
und der Thuringer Durchfuhrungsbestimmungen bewilligt.
Sie erhalten einen Investitionszuschu(beta) in Hobe bis zu
2.300.000, - DM
(in Worten: Zwei Millionen dreihunderttausend Deutsche Mark).
Der bewilligte Investitionszuschu(beta) wurde auf der Basis der Fordersatze des
23. Rahmenplanes ermittelt.
Der Differenzbetrag zum 24. Rahmenplan in noch zu ermittelnder Hohe wird
gewahrt, wenn die EU dem am 16.3.95 veroffentlichten Rahmenplan zustimmt.
<PAGE>
Nach der EU-Bestatigung des 24. Rahmenplanes und Erfullung der unter VI.al.
genannten Bedingungen wird Ihnen mit Anderungsbescheid der Differenzbetrag zum
24. Rahmenplan gewahrt.
I. Haushaltsvorschriften
Die Zuwendung ist an bestimmte Haushaltsvorschriften gebunden.
Sie wird gema(beta) ss.ss. 23, 44 und 44 a der Landeshaushaltsordnung/LHO (lt.
Gesetz- und Verordnungsblatt fur das Land Thuringen Nr. 2 vom 8.2.91) sowie den
sonstigen haushaltsrechtlichen Bestimmungen bewilligt. Dem Zuwendungsbescheid
liegen die beigefugten Allgemeinen Nebenbestimmungen fur Zuwendungen zur
Projektforderung (ANBest-P) zugrunde, die Bestandteil dieses Bescheides sind.
II. Zweckbindung
Der Zuschu(beta) ist zweckgebunden fur die
Errichtung einer Betriebsstatte in 07745 Jena zur Herstellung von
Lichtleitfasern und Preformen
als Mitfinanzierung - wie im Antrag angegeben - zu verwenden.
Die zeitliche Durchfuhrung (Bewilligungszeitraum) beginnt lt. Antrag am
19.06.1995 und endet am 31.12.1996. Fur Wirtschaftsguter, die danach angeschafft
oder hergestellt werden, wird kein Zuschu(beta) gewart.
Der Zuschu(beta) steht wie folgt zur Verfugung:
Zuschusse (oder Teile davon) durfen nach Bestandskraft des Bescheides abgerufen
werden.
Die Zuschusse konnen nur in dem Haushaltsjahr abgerufen werden, in dem diese
bereitgestellt sind. Der Abruf der Mittel hat im laufenden jahr bis spatestens
31. Oktober zu erfolgen. Der Abruf von Zuschussen kann nur auf bereits bezahlte
Rechnungen gema(beta) bewilligtem Fordersatz anteilma(beta)ig erfolgen.
Zur Erleichterung der Finanzierung konnen Zuschusse an die vorhabenbegleitende
Hausbank abgetreten werden,
- - wenn der Zuwendungsempfanger von der Hausbank ausschlie(beta)lich zur
Erfullung des Zuwendungszweckes gema(beta) Zuwendungsbeschheid einen
Vorfinanziewrungskredit erhalt und
- - die Durchfuhrung des Vorhabens nach wie vor gewahrleistet ist.
Die Abtretung des Zuschusses kann jeweils nur in Hohe der vorgelegten Rechnungen
in Anspruch genommen werden.
<PAGE>
Der Pkt. 1.4. der Allgemeinen Nebenbestimmungen findet fur die Gewahrung von
Zuschussen aus der Gemeinschaftsaufgabe und aus dem EFRE keine Anwendung.
Zuschusse, die im bereitgestellten Jahr nicht benotigt werden, sind bis
spatestens 31. Oktober zur Ubertragung is das neue Haushaltsjar schriftlich beim
Thuringer Ministerium fur Wirtschaft and Infrastruktur (TMWI) anzumelden.
Es besteht kein Rechtsanspruch auf Ubertragung im jeweiligen Haushaltsjahr nicht
abgerufener Mittel.
Ein Ruckzahlungsanspruch nach Nr. 8 ANBest-P ist mit seiner Entstehung fallig
und vom Zeitpunkt der Auszahlung bzw. Entstehung an mit 6 v.H. (Jahreszins) zu
verzinsen. Die Ruckzahlungsverpflichtung tritt auch dann ein, wenn die
Voraussetzungen fur den Ruckforderungsanspruch auf Grunden beruhen, die der
Zuwendungsempfanger nicht zu vertreten hat.
Die Zuschu(beta)mittel sind mit Formblart gema(beta) Anlage 2fach abzurufen.
Zuruckzuzalende Zuschu(beta)betrage sind bis 30. November des jeweiligen
Haushaltsjahres auf das Konto der Staatshauptkasse Thuringen unter Angabe des
Verwendungszweckes 0702-GA zu uberweisen:
LZB Weimar Konto-Nr. 820 01500 Bankleitzahl 820 000 00
Fur nach dem 30. November zuruckgezahlte Zuschu(beta)etrage verliert der
Zuschu(beta)empfanger den Rectsanspruc auf Neueinstellung der Haushaltsmittel in
den Folgejahren. Die Ruckzahlung ist der Thuringer Aufbaubank (TAB) 2fac
schriftlich anzuzeigen.
Anschrift:
Thuringer Aufbaubank
PF 129
99 003 Erfurt
III. Investitions - und Finanzierungsplan
Die Zuschu(beta)mittel sind entsprechend dem nachfolgenden verbindlichen
Investitions - und Finanzierungsplan zu verwenden (Ziffer 1 ANBest-P):
<PAGE>
1. Investitionsplan
1. Grundstuck -, - DM
2. Bauliche Investitionen 2.600.000, - DM
3. Maschinen und Einrichtungen 7.310.000, - DM
4. Immaterielle Wirtscaftsguter 90.000, - DM
Gesamt 10.000.000, - DM
2. Finanzierungsplan
1. Eigenmittel 4.050.000, - DM
2. Investitionszulage 711.500, - DM
3. Investitionszuschu(beta) 2.300.000, - DM
4. Sonstige Fremdmittel 2.938.500, - DM
- -------------------------------------------------------------------------------
Gesamt 10.000.000, - DM
- --------------------------------------------------------------------------------
Anderungen nach Ziffer 1.2 ANBest-P des Investitions - bzw. Finanzierungsplanes,
die eine Verschiebung der Einzelanteile um mehr als 20% bezogen auf die
Gesamtinvestitionssumme beinhalten, bedurfen der vorherigen Zustimmung.
Entsprechende Antrage sind schriftlich an die TAB zu stellen.
Der Zuschu(beta) in Hobe von 2.300.000, - DM betragt 23.00% der forderfaigen
Investitionen in Hohe von 10.000.000, - DM. Alle bezuschu(beta)ten Investitionen
(einschl. Eigenleistungen) sind zu aktivieren (bauliche Leistungen sowie
Maschinen und Einrichtungen im Sacanlagevermogen).
Folgende Positionen des Antrages konnten nicht berucksichtigt werden:
- - entfallt
Die gewerberechtlicen, baurechtlichen, wasserrechtlichen und sonstigen
umweltwirksamen Auflagen sind zu beachten.
IV. Widerruf
Erganzend zu Ziffer 8 der Allgemeinen Nebenbestimmungen fur Zuwendungen zur
Projektforderung ANBest-P) gelten folgende Regelungen:
Der Zuschu(beta) ist insbesondere dann unverzuglich zuruckzuzahlen, wenn der
Betrieb oder ein Teil des Betriebes, fur den der Zuschu(beta) bestimmt ist, ab
Zuschu(beta)bewilligung bzw. Innerhalb des Uberwachungszeitraumes
- seine Tatigkeit nicht aufnimmt;
- nicht der eigenbetrieblichen gewerblichen Nutzung zugefuhrt,
- eingestellt,
- stillgelegt,
<PAGE>
- anderen Personen ubertragen (z.B. durch Verkauf, Versteigerung) oder
zur Nutzung (Pacht, Miete) uberlassen oder
- der Foderzweck auf andere Weise entfallt oder nicht erreicht wird.
Entsprechendes gilt, wenn gegen den Zuwendungsempfanger das
- Zwangsvollstreckungsverfahren
- Zwangsversteigerungsverfahren
- gerichtliche Vergleichsverfahren
- Konkursverfahren
beantragt oder eroffnet wird.
V. Verwendungsnachweis
Wegen des von Ihnen vorzulegenden Verwendungsnachweises wird auf Ziffer 6
ANBest-P verwiesen. Der Verwendungsnachhweis ist der TAB in 2facher Ausfertigung
(Muster s.Anlage) vorzulegen.
Mit dem Verwendungsnachweis ist die Best:atigung eines Wirtschaftsprufers
(Wirtschaftsprufungsgesellschaft) vorzulegen, mit der die sachliche Richtigkeit
des Verwendungsnachweises unter Beachtung der Allgemeinen Nebenbestimmungen fur
Zuwendungen zur Projektforderung (ANBest-P) bestatigt wird.
Zuwendungsemptanger, die ihren Jahresabschlu(beta) nicht durch einen
Wirtschaftsprufer prufen lassen, legen eine entsprechhende Bestatigung des
Steuerberaters oder Steuerbevollmachtigten vor.
Auf das Subventionsgesetz (SubvG) vom 29. Juli 1976 (BGB1. I, Seite 2037) weise
ich besonders hin. Die in Ihrem Antrag enthaltenen Angaben, die diesem Bescheid
zugrundeliegenden Bestimmungen sowie die in ss. 4 SubvG genannten Umstande, die
fur die Bewilligung, Gewahrung, Ruckforderung und Weitergewahrung oder das
Belassen dieser Zuwendung ma(beta)geblich sind, sind subventionserheblichhe
Tatsachen im Sinne des ss. 264 des Strafgesetzbuches.
Alle subventionserheblichen Tatbestande sind gema(beta) ss. 3 SubvG dem TMWI
unverzulich mitzuteilen.
<PAGE>
VI. Besondere Nebenbedingungen/Auflagen
a) Besondere Haftungsbedingungen/Vorbedingungen
a1. Die Bewilligung gilt unter dem Vorbehalt, da(beta) bis
30.04.1996 folgende Unterlagen - Durchfinanzierungsbestatigung
der investitionsbegleitenden Bank, - Handelsregisterauszug der
Fiber Core Inc., Sturbridge, MA 01566, USA, - Bilanz 1994 der
Fiber Core Inc., Sturbridge, MA 01566, USA
der TAB vorgelegt werden. Wird dieser Termin nicht eingehalten, so wird
der vorliegende Zuwendungsbescheid ganz oder teilweise mit Wirkung fur
die Zukunft oder die Vergangenheit widerrufen, unabhangig davon, ob der
Zuwendungsempfanger die Nichtvorlage selbst verschuldet hat oder dies
curch Dritte verursacht wurde. Der Widerruf ist unter diesen
Bedingungen auch dann moglich, wenn mit der Investition bereits
begonnen wurde.
a2. Neben dem Zuwendungsempfanger hat sich der Gesellschafter,
Firma Fiber Core Inc., Sturbridge, MA 01566, USA,
personlich und unter Verzicht auf die Einrede der Vorausklage als
Gesamtschhuldner zu verpflichten, den bewilligten
Investitionszuschu(beta) zuruckzuzahlen, wenn der mit der Forderung
beabsichtigte Zuwendungszweck innerhalb der Zweckbindungsfrist nicht
erreicht wird oder gegen die Allgemeinen Nebenbestimmungen fur
Zuwendungen zur Projektforderung (AnBest-P) versto(beta)en und nach
diesen Bestimmungen eine Ruckforderung des Zuschusses erforderlich wird
(s. Anlage).
a3. Vor Auszahlung der 1. Zuschu(beta)rate fur die baulichen Investitionen
(Faserziehturm) ist der Thuringer Aufbaubank die Baugenehmigung
vorzulegen.
b) Sonstige Bedingungen/Auflagen
Die Nichterfullung einer der nachstehend aufgefurten Bedingungen/Auflagen kann
die Ruckforderung der in Anspruc genommenenen Investitionszuschusse ganz oder
teilweise zur Folge haben.
b1. Der Investitionszuschu(beta) wird unter der besonderen Bedingung
bereitgestellt, da(beta) innerhalb von 3 Jahren nach vollstandiger
Auszahlung des Investitionszuschusses nachzuweisen ist, da(beta) mehr
als 50% des Gesamtumsatzes aus der Herstellung von Lichtleitfasern und
Prefprmen erzielt wurden.
b2. Fur die Zuwendung wird eine Zweckbindungsfrist von 3 Jahren festgelegt.
Diese beginnt mit der Auszahlung des letzten Teilbetrages des
Zuschusses, jedoch spatestens mit dem im Antrag ausgewiesenen
Investitionsende (Ende des Beweilligungszeitraumes).
<PAGE>
b3. Mit dem Abschlu(beta) der Investition am 31.12.1996 mussen 40
Dauerarbeitsplatze und 1 Ausbildungsplatz geschaffen und fur eine
Uberwachungszeit von mindestens 5 Jahren nach Abschlu(beta) des
Investitionsvorhabens tatsachlich besetzt oder zumindest dauerhaft auf
dem Arbeitsmarkt angeboten werden.
b4. Durch die Inanspruchnahme weiterer offentlicher Finanzierungshhilfen
darf der Subventionswert von 35% (einschlie(beta)lich
Sonderabschreibungen) nicht uberschritten werden.
b5. In der geforderten Investitionssumme durfen keine gebrauchten
Wirtschaftsguter enthalten sein.
b6. Mit den nachtraglich geltend gemachten Investitionen (Mehrkosten in
Hohe von 1.100.00, - DM) darf vor Eingang des Erganzungsantrages am
30.11.1995 nicht begonnen worden sein.
b7. Soweit in den veranschlagten Kosten immaterielle Wirtschaftsguter (z.B.
Software) enthalten sind, sind diese in voller Hoe zu aktivieren. Sie
mussen mindestens 3 Jare im Betrieb des Erwerbers verbleiben und durfen
nicht von vebundenen oder sonst wirtschaftlich, rechtlich oder
personell verflochtenen Unternehmen erworben werden.
Rechtsbehelfsbelehrung
Gegen diesen Bescheid konnen Sie Klage erheben. Die Klage mussen Sie innerhalb
eines Monats nach Bekanntgabe dieses Bescheids beim
Verwaltungsgericht Gera
Hainstra(beta)e 21
07 545 Gera
schriftlich oder zur Niederschrift des Urkundsbeamten der Geschaftsstelle dieses
Gerichts erheben.
In der Klage mussen Sie den Klager, den Beklagten (Freistaat Thuringen) und den
Streitgegenstand bezeichmen. Ferner sollen Sie einen bestimmten Antrag stellen
und die zur Begrundung dienenden Tatsachen und Beweismittel angeben. Der
Klageschrift sollen Sie diesen Bescheid beifugen (in Urschrift, Abschrift oder
in Ablichtung), ferner zwei Abschriften oder Ablichtungen der klageschrift fur
die ubrigen Beteiligten.
<PAGE>
Mit freundlichen Gru(beta)en
________________________
Franz Schuster
Anlagen zum Zuwendungsbeschheid
- - Abrufantrag
- - Einverstandniserklarung (mit 1. Mittelabruf einzureichen)
- - Allgemeine Nebenbestimmungen fur Zuwendungen zur Projektforderung
ANBest-P
- - Zusatzliche Rahmenbedingungen fur Investitionszuschusse
- - Verwendungsnachweise
- - Offentlich-rechtlicher Schuldbeitritt
<PAGE>
Fiber Core Glasfaser Jena GmbH 30.8.3.001342912
Goschwitzer Stra(beta)e 20 Frau Gorgens
342-1328
07745 Jena
Gewahrung eines Investitionszuschusses aus Mittein der Gemeinschaftsaufgabe
"Verbesserung der regionalen Wi8rtschaftsstruktur"
hier: Zuwendungsbescheid: 25163181 vom 30.12.1995
Anderungsbescheid: A 820 vom 13.05.1996
Reg. -Nr.: WEG 144 a/95
HUL: 892 83/223
Sehr geehrte Damen und Herren,
in vorbezeichneter Sache ergeht folgender
Anderungsbescheid (A 527/96)
1. Der Zuwendungsbescheid 25163181 in Hohe von 2.300.000, -DM wird um
1.700.000, - DM auf 4.000.000, - DM wie foigt geandert:
2. Der mit dem Zuwendungsbescheid 25163181 bereitgestellte
Investitionszuschu(beta) wird gema(beta) Punkt 1 wie folgt abgeandert:
- Investitionszuschu(beta) aus der Gemeinschaftsaufgabe "Verbesserung
der regionalen Wirtschaftsstruktur" 1996 wird von 0 DM um 850o.000, -
DM auf 850.000, - DM erhoht.
- Investitionszuschu(beta) aus dem Europaischen Fonds fur regionale
Entwicklung 1996 wird von 0 DM um 850.000, - Dm auf 850.000, - DM
erhoht.
3. Der mit dem Zuwendungsbeschheid 25163181 ubergebene offentlichrechtliche
Schuldbeitritt uber 2.300.000, - DM wird nach Vorlage des mit dem
Anderungsbescheid nachgereichten offentlich-rechtlichen Schuldbeitritt uber
den Gesamtzuschhu(beta) in Hohe von 4.000.000, - DM fur ungultig erklart.
4. Mit der Erh:ohung des Zuschusses verringern sich im Finanzierungsplan
gema(beta) Ziffer III des Zuwendungsbeschheides die Eigenmittel
anteilma(beta)ig.
5. Der Forderansatz betragt 40% der zuschu(beta)fahigen Investition skosten.
<PAGE>
6. Folgende sonstige Bedingung wird in den Zuwendungsbescheid Pkt. VI
aufgenommen.
- b8 Ein im Investitionszuschu(beta) enthaltener Anteil in Hohe von
500.000, - DM fur die Bereitstellung von Ausbildungsplatzen wird unter
der Bedingung gewahrt, da(beta) mindestens 1 Ausbildungsplatz uber den
gesamten Uberwachungszeitraum (5 Jahre nach Abschlu(beta) der
Investition) zur Verfugung steht und besetzt wird. Wird diese
Bedingung nicht erfullt, ist dieser Anteil einschlie(beta)lich Zinsen
zuruckzuzahlen.
7. Der Zuwendungsbescheid 25163181 gilt insoweit bei im ubrigen
gleichbleibenden Bestimmungen als geandert.
Begrundung:
Siehe Hinweis im Zuwendungsbescheid Seite 1
Besondere Nehenbestimmungen/Auflagen:
Die Auszahlung einer weiteren Zuschu(beta)rate erfolgt erst nach Vorlage des
unterzeichneten offentlich-rechtlichen Schuldbeitritts Ober den gesamten
Investi-tionszuschu(beta) gema(beta) Anderungsbescheid in Hohe von 4.000.000, -
DM.
Rechtsbehelfbelehrung
Gegen diesen Bescheid konnen Sie Klage erheben. Die Klage mussen Sie innerhalb
eines Monats nach Bekanntgabe dieses Bescheids beim
Verwaltungsgericht Gera
Hainstra(beta)e 21
07545 Gera
schriftlich oder zur Niederschrift des Urkundsbeamten der Geschaftsstelle dieses
Gerichts erheben.
In der Klage mussen Sie den Klager, den Beklagten (Freistaat Thuringen) und den
Streitgegenstand bezeichnen. Ferner sollen Sie einen bestimmten Antrag stellen
und die zur Begrundung dienenden Tatsachen und Beweismittel angeben. Der
Klageschrift sollen Sie diesen Bescheid beifugen (in Urschrift, in Abschrift
oder Ablichtung), femer zwei abschriften oder Ablichtungen der Klageschrift fur
die ubrigen Beteiligten.
Mit freundlichen Gru(beta)en
Im Auftrag
_______________________________
Muller
<PAGE>
"SUMMARY TRANSLATION OF GERMAN GRANT"
Ministry for Economics and Infrastructure
Date: 12 June 1996
FiberCore Glasfaser Jena GmbH
Granting of investment contribution from funds of the community program
"Improvement of the regional economic structure":
RE: Grant Notification: 25163181 12-30-95
Amendment: A820 5-13-96
Reg. No. WEG 144 a/95
HuL 89283/223
Ladies and Gentlemen:
In regard to the subject cited above, we submit the following amendment
(A529/96)
1. The grant notification 25163181 in the amount of DM 2.300.000 is increased
by DM 1.700.000 to DM 4.000.000 in the following manner:
2. The grant notification 25163181 is modified as follows:
o Investment contribution from the community program "improvement of the
regional economic structure" 1996 is raised from 0 by DM 850.000 to DM
850.000.
o Investment contribution from the European Fund for Regional
Development 1996 is raised from 0 by DM 850.000 to DM 850.000.
Following are summarized important points of the subsequent formal text.
o The obligation of the shareholder, i.e. FiberCore, Inc., namely to
repay the grant if the investment is not executed as stipulated or the
terms of the grant notification are not complied with, is now
applicable to the increased grant amount of DM 4.000.000.
o The grant amount now represents 40% of the investment project.
o The grant notification 25163181 and its terms generally apply to this
amended grant notification.
Darlehensvertrag
zwischen dem
Beteiligungsnehmer FiberCore Glasfaser Jena GmbH
Goschwitzer Str. 20
D-07745 Jena
- nachstehend "BN" genannt-
und dem
Beteiligungsgeber FiberCore, Inc.
PO Box 206, 174 Charlton Road
Sturbridge, MA 01566
USA
- nachstehend "BG" gennant-
Praambel
Die Beteiligung des BG erfolgt im Rahmen des KfW-Beteiligungsfonds Ost und dient
der Kapitalisierung des BN.
In Anbetracht dieser Gesamtsituation schlie(beta)en die Parteien den folgenden
Vertrag:
ss. 1 Zwech der Geselischaft
1. Der BN betreibt ein Unternehmen mit folgendem Gesellschaftszweck:
Fabrikation von Preformen/Glasfasern fur die Kabelindustrie.
2. Der BG ist die Muttergesellschaft des BN, dessen wirtschaftliche
Aktivitaten gefordert werden sollen. Der BN ist die einzige
Fertigungsstatte der Muttergesellschaft.
ss. 2 Einlage
1. Der BG gewahrt ein Darlehen von
DM 7.700.000
(i.W.: Deutsche Mark Sieben Millionen Siebenhunderttausent)
in bar.
<PAGE>
2. Der BG wird seine Anspruche aus dem Darlehensvertrag zur Sicherung des
Reginanzierungsdarlehens an die KfW abtreten. Der BN erteilt zu der
Abtretung seine Zustimmung.
ss. 3 Beginn und Dauer der Vereinbarung
Diese Vereinbarung gilt fur die Dauer des KfW-Kredits, d.h. bis zum Tage seiner
restlosen Ruckzahlung.
ss. 4 Geschaftsfuhrung
Der BG ist an der Geschaftsfuhrung des BN nicht beteiligt und hat keine
Vertretungsbefungnis.
ss. 5 Rechnungswesen und Berichtssystem
Voriage der Jahresabschlusse
Informationspflichten und -recte
1. Der BN verpflichtet sich, ein aussagefahiges betriebliches
Rechnungswesen und Berichtssystem aufzubauen bzw. Zu unterhalten. Dazu
gehoren Planungs-und Kontrollrechnungen.
2. Der Bn verpflichtet sich, dem BG fruhestmoglich nach Abschlu(beta) des
Geschaftsjahres - spatestens 6 Monate nach dem Bilanzstichtag - die von
einem Angehorigen der steuerberatenden bzw. Wirtscaftsprufenden Berufe
erstellte Jahresbilanz mit Gewinn- und Verlustrechnung sowie
Erlauterungsbericht vorzulegen. Der Jahresabschlu(beta) is nach den
ss.ss. 238-289 HGB n. F. Aufzustellen. Der Steuerberater hat die
Ordnungsma(beta)igkeit der Bestandsaufnahme der Vermogensgegenstande
und die Einhaltung der Bewertungsvorschriften ausdrucklich zu
bestatigen. Auf Verlangen des BG sind von einem Wirtschaftsprufer
geprufte und testierte Jahresabschlusse mit Prufungsberichten
einzureichen.
3. Der BN wird dem BG die Berichte uber steuerliche BetriebsprUfungen
unaufgefordert unverzuglich nach Erhalt einreichen.
4. Der BN wird dem BG mindestens vierteljahrlich uber die wirtschaftliche
Entwicklung des Unternehmens berichten. Uber geeignete Unterlagen
stimmen sich der BN und der BG ab.
5. Der BN wird dem BG jeweils bis zum Ende eines Geschaftsjahres eine
Erfolgs- und Finanzplanung fur das nachste Geschaftsjahr vorlegen.
6. Der BG is berechtigt, den Betrieb des BN wahrend der normalen
Geschaftszeit zu besichtigen. Er kann die Bilanz, die Gewinn- und
Verlustrechnung sowie das
<PAGE>
gesamte Rechnungswesen des BN uberprufen. Er kann auch einen
sachverstandigen Dritten mit der Prufung beauftragen. Der BG wird von
seinem Prufungsrecht nur dann Gebrauch machen, wenn erforderliche
Aufklarungen und Informationen auf andere Weise nicht mit ausreichender
Zuverlassigkeit zu eralten sind.
ss. 6 Entgeltregelung
1. Der BG erhalt fur sein Darlehen eine vom Jahresergebnis unabhangige
Vergutung in Hohe der auf den KfW-Kredit falligen Zinsen zuzuglich
eines Aufschlages von 0,5% p.a. und etwaiger KfW-Gebuhren, die der BN
auftrags BG bezahlt.
2. Au(beta)erdem ubernimmt der BN etwaige Nebenkosten der seitens des BG
zu erstellenden Bankgarantie (uber die Halfte des KfW-Kredits).
ss. 7 Rangrucktritt
Im Falle des gerichtlichen Vergleichs, des Konkurses oder des
Gesamtvollstreckungsverfahrens uber das Vermogen des BN tritt der BG mit seinem
Anspruch auf Ruckzahlung des Darlehens sowie mit samtlichen Nebenforderungen im
Range hinter die Forderungen der ubrigen Glaubiger des BN zuruck. Dieses gilt
nicht im Verhhaltnis zu sonstigen Forderungen von Gesellschaftern des BN und
deren Angehorigen, gegenuber diesen Forderungen ist BG vorrangig zu befriedigen.
ss. 8 Versicherungen
Der BN ist verpflichtet, sein Unternehmen fur die Dauer dieses
Beteiligungsvertrages in ausreichender Hohe gegen alle Gefahren, gegen die ein
Versicherungsschutz fur Unternehmen wie dasjenige des BN erforderlich und
branchenublich ist, unter Versicherung zu halten.
ss. 9
Die Bedingungen fur den KfW-Beteiligungsfonds (Ost) sind Bestandteil dieses
Vertrages.
ss. 10 Sonstiges
1. Der BG wird den BN aufWunsch in allen den Gesellschaftszweck fordernden
Ma(beta)nahmen, insbsondere in Finanzierungsfragen, beraten.
2. Anderungen and Erganzungen dieses Vertrages sind nur wirksam, wenn sie
schriftlich vereinbart werden.
3. Soweit einzelne Vertragsabstimmungen unwirksam sind oder werden, soll
der Vertrag im ubrigen Gultigkeit behalten. Etwaige unwirksame
Bestimmungen sind
<PAGE>
im Wege einer Vereinbarung zwischen den Vertragspartnern so umzudeuten
oder zu erganzen, da(beta) der mit diesem Vertrag beabsichtigte Zweck
erreicht wird.
4. Gerichtsstand ist Jena.
Sturbridge, 10. Juli 1996 Jena, 10. Juli 1996
fur den BG: fur den BN:
/s/ Dr. Mohd Aslami /s/ Hans F.W. Moeller
- -------------------- ----------------------
Dr. Mohd Aslami Hans F.W. Moeller
Chairman Managing Director
FiberCore, Inc. FiberCore Jena GmbH
<PAGE>
Loan Agreement
Between the
Participation receiver FiberCore Glasfaser Jena GmbH
(called BN)
and the
participation lender FiberCore, Inc.
(Called BG)
Prelude
The participation of BG is effected by means of the "KFW-Participation Fund
East" and serves the capitalization of the BN. In consideration of this
information the parties conclude the following contact:
1. Purpose of the Enterprise
1. The BN is a company with the following entrepreneurial purpose:
Manufacture of preforms/glass fibers for the cable industry.
2. The BG is the parent company of the BN whose economic activities are to
be promoted. The BN is the parent company's only manufacturing
facility.
2. Investment
1. The BG grants a loan of
DM 7.700.00
(German marks seven million and seven hundred thousand)
in cash
2. The BG will cede its claims from this loan agreement to KFW as security
against the refinancing loan. The BN is in agreement with this.
3. Start and duration of the Agreement
This agreement is in effect for the duration of the KFW - loan i.e. till the day
of its entire repayment.
<PAGE>
4. Business Management
The BG is not participating in BN's executive management and has no
representation rights.
5. Accounting and Reporting
Annual Reports
Information Duties and Rights
1. The BN is obligated to setup and maintain a plausible operational
accounting and reporting system, including planning and controlling.
2. The BN is obligated to present to the BG - At the earliest upon closing
of the fiscal year/latest 6 months after the cut-off date - The annual
balance sheet and P & L statements prepared by a tax advisor or
auditor. The annual report must conform to par. 238-289 HGB N.F
("Handel-Jesek-Buch"). The tax advisor must expressively confirm the
proper recording of the assets and the adherence to valuation rules and
regulations. If requested by the BG, also fully modified and attested
annual financials along with test reports must be submitted.
3. The BN will, without being asked, forward to BG any and all reports
about taxation audits by the authorities.
4. The BN will report to the BG at least quarterly about the economic
development of the company.
5. The BN will present to the BG before fiscal year end a budget and
financial plan.
6. The BG is entitled to visit the BN for inspections during normal
business hours. The BG may re-examine the balance sheet, P & L
statement and the entire accounting and may engage also a professional
third party. The BG will make sue of these rights only, if necessary
explanations and information is not obtainable through normal channels
or not with sufficient reliability.
6. Fees
1. The BG receives for the loan a compensation in the amount of the
interest due KFW plus a surcharge of 0.5% p.a. and any KFW
administrative charges. The BN pays the KFW interest and other charges
directly in behalf of the BG (to KFW via Berliner Bank).
2. Also, the BN pays for any fees on the bank guarantee to be given to the
bank (for half the loan).
<PAGE>
7. Security Concession
In the event of bankruptcy or similar court actions on the property of the BN,
the BG's claims on repayment of the loan or relaxed claims would rank secondary
to claims from BN's other creditors. This does not apply to other claims by BN's
shareholders or their families. Against such claims BG would rank as primary.
8. Insurance
The BN is obligated to provide for proper insurance coverage for its enterprise
for the duration of this contract against all risks as is required and customary
in this business.
9.
The terms/conditions for the "KFW participation Fund East" are part of this
contract.
10. Miscellaneous
1. The BG will advise the BN on request on all actions enhancing the
company purpose, particularly in financing matters.
2. Changes and amendments of this contract are only effective if agreed to
in writing.
3. As single contract items may not apply or become obsolete, the contract
basically remains valid. Any ineffective terms are to be interpreted or
supplemented in a manner so that the purpose of this contract is
achieved.
4. Venue Jena.
Sturbridge, July 10, 1996 Jena July 10, 1996
for the BG for the BN
- --------------------- --------------------
Dr. Mohd Aslami Hans F. W. Moeller
Chairman Managing Director
FiberCore, Inc. FiberCore Jena GmbH
EXH10.50
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS ("STATE LAWS"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS REGISTERED
PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE LAWS OR AN
OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE
WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
FIBERCORE, INC.
WARRANT FOR THE PURCHASE
OF 1,000,000 SHARES OF COMMON STOCK
No. W-3
FOR VALUE RECEIVED, FIBERCORE, INC., a Nevada corporation (the "Company"),
hereby certifies that Techman International Corp., or its sole shareholder Dr.
M. Mahmud Awan (collectively, the "Holder"), is entitled, subject to the
provisions of this Warrant, to receive from the Company, up to 1,000,000 fully
paid and non-assessable shares of Common Stock in lieu of commissions to be paid
on the Company's receipt of gross proceeds on sales generated by the Holder for
the Company of up to $200,000,000 (the "Limit"), or 1 share for every $200 of
sales (the "Exercise Price").
This Warrant was issued by the Company pursuant to a certain Distributor
Agreement of even date herewith between the Company and the Holder (the
"Agreement").
The term "Common Stock" means the Common Stock, par value $0.001 per share, of
the Company as constituted as of November 1, 1995 (the "Issue Date").
The number of shares of Common Stock to be received upon the exercise of this
Warrant may be adjusted from time to time as hereinafter set forth. The shares
of Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter referred to as "Warrant Stock." The term "Other
Securities" means any other equity or debt securities that may be issued by the
Company in addition thereto or in substitution for the Warrant Stock. The term
"Company" means and includes the corporation named above as well as (I) any
immediate or more remote successor corporation resulting from the merger or
consolidation of such corporation (or any immediate or more remote successor
corporation of such corporation) and (ii) any corporation to
<PAGE>
which such corporation has transferred its property or assets as an entirety or
substantially as an entirety.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
cancellation of this Warrant, if mutilated, the Company shall execute a new
Warrant of like tenor and date. Any such new Warrant executed shall constitute
an additional contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
The Holder agrees with the Company that this Warrant is issued, and all the
rights hereunder shall be held, subject to all of the conditions, limitations
and provisions set forth herein.
1. Exercise of Warrant.
-------------------
1.1 This Warrant shall be exercised automatically from time to
time, in increments of $1,000,000 of Exercise Price, up to the Limit. If this
Warrant should be exercised in part only, the Company may execute a new Warrant
evidencing the rights of the Holder thereof to receive the balance of the shares
receivable hereunder. The Holder shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that the
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. The Company shall pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue of shares of Common Stock on
exercise of this Warrant, except if such shares are to be registered in the name
of someone other than the Holder.
1.2 The Holder hereby acknowledges that neither this Warrant
nor any of the securities that may be acquired upon exercise of this Warrant,
including the Warrant Stock and the Other Securities, have been registered under
the Securities Act or under the State Securities Laws. The Holder acknowledges
that, upon exercise of this warrant, the securities to be issued upon such
exercise may be subject to applicable federal and state securities (or
other)laws requiring registration, qualification or approval of governmental
authorities before such securities may be validly issued or delivered upon
notice of such exercise. The Company's sole obligation to any Holder upon
exercise hereof shall be to use its best efforts to obtain exemptions from
registration or qualification for the issuance of such securities under
applicable state and federal securities laws, and the Holder further agrees that
the issuance of such securities shall be deferred until such exemption shall
have been obtained. With respect to any such securities, this Warrant may not be
exercised by, and securities shall not be issued, to any Holder in any state in
which such exercise would be unlawful. Any restrictions imposed by this section
upon the exercise of this Warrant shall cease and terminate as to any particular
shares of Common Stock (x) when such
<PAGE>
securities shall have been registered under the Securities Act and all
applicable State Securities Laws, or (y) when, in the opinion of counsel to the
Company, such restrictions are no longer required in order to ensure compliance
with the Securities Act or any applicable State Securities Laws.
2. Reservation of Shares. The Company shall at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Company (and Other Securities) from time
to time receivable upon exercise of this Warrant. All such shares (and Other
Securities) shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and non-assessable and free of all preemptive
rights.
3. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.
4. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
5. Anti-Dilution Provisions.
------------------------
5.1 Adjustment for Recapitalization. If the Company shall at
any time combine or subdivide its outstanding shares of Common Stock (or other
securities at the time receivable upon the exercise of the Warrant) by
recapitalization, reclassification, split-up, combination or reverse split
thereof, the Exercise Price per share of Warrant Stock subject to this Warrant
immediately prior to such combination or subdivision shall be proportionately
increased or decreased, as the case may be. Any such adjustment to the Exercise
Price pursuant to this Section 5.1 shall be effective at the close of business
on the effective date of such subdivision or combination or if any adjustment is
the result of a stock dividend or distribution, then the effective date for such
adjustment based thereon shall be the record date therefor.
Whenever the number of shares of Common Stock receivable upon
the exercise of this Warrant is adjusted, as provided in this Section 5, the
Exercise Price shall be adjusted to the nearest cent by multiplying such
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock receivable upon
the exercise immediately prior to such adjustment, and (y) the denominator of
which shall be the number of shares of Common Stock so receivable immediately
thereafter.
5.2 Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this Warrant)
after the date of this Warrant r in case after such date the Company (or any
such other corporation) shall consolidate with or merge into another
<PAGE>
corporation or convey all or substantially all of its assets to another
corporation, then, and in each such case, the Holder of this Warrant upon the
exercise thereof at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities or property to which such Holder would have
been entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto; in each such case, the terms of this Warrant shall be
applicable to the securities or property receivable upon the exercise of this
Warrant after such consummation.
5.3 Adjustment for Dilutive Events. Except as hereinafter
provided, in the event the Company shall, at any time or from time to time after
the date hereof, issue any shares of Common Stock as a stock dividend to the
holders of Common Stock (any such issuance being herein called a "Change of
Shares"), then, and thereafter immediately before the record date for each
Change of Shares, the Exercise Price for the Warrants (whether or not the same
shall be issued and outstanding) shall be adjusted (to the nearest cent), with
such adjusted Exercise Price determined by dividing (1) the product of (a) the
Exercise Price in effect immediately before such Change of Shares and (b) the
sum of (I) the total number of shares of Common Stock outstanding immediately
prior to such Change of Shares, and (ii) the number of shares determined by
dividing (A) the aggregate consideration, if any, received by the Company upon
such issuance by (B) the Exercise Price in effect immediately prior to such
Change of Shares, by (2) the total number of shares of Common Stock outstanding
immediately after such Change of Shares.
5
For the purposes of any adjustment to be made in accordance
with this Section 5 the following provisions shall be applicable:
5.3.1. Shares of Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed to
have been issued immediately after the opening of business on the day following
the record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.
5.3.2. The reclassification of securities of the
Company other than shares of Common Stock into securities including shares of
Common Stock shall be deemed to involve the issuance of such shares of Common
Stock for a consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such shares
of Common Stock shall be determined as provided in Section 5.
5.3.3. The number of shares of Common Stock at any
one time outstanding shall be deemed to include the aggregate maximum
<PAGE>
number of shares issuable (subject to readjustment upon the actual issuance
thereof) upon the exercise of options, rights or warrants and upon the
conversion or exchange of convertible or exchangeable securities.
5.3.4. Upon each adjustment of the Exercise Price
pursuant to this Section 5, the number of shares of Common Stock receivable upon
the exercise of each Warrant shall be the number derived by multiplying the
number of shares of Common Stock receivable immediately prior to such adjustment
by the Exercise Price in effect prior to such adjustment and dividing the
product so obtained by the applicable adjusted Exercise Price.
a. In case of any reclassification
or change of outstanding shares of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value or as a result of subdivision or combination),
or in case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger the Company
is the continuing corporation and which does not result in any reclassification
or change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants other than a change in par value, or from
par value to no par value, or from no par value to par value or as a result of
subdivision or combination) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
merger, sale or conveyance, the Company, or such successor or purchasing
corporation, as the case may be, shall make lawful and adequate provision
whereby the Holder of each Warrant then outstanding shall have the right
thereafter to receive on exercise of such Warrant the kind and amount of
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of
securities issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and shall
forthwith file at the corporate office of the stock transfer agent, if any, a
statement signed by its Chief Executive Officer, President or a Vice President
and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary evidencing such provision.
b. After each adjustment of the
Exercise Price pursuant to this Section 5, the Company will promptly prepare a
certificate signed by the Chairman, Chief Executive Officer or President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, of the Company setting forth: (I) the Exercise Price as so adjusted,
(ii) the number of shares of Common Stock receivable upon exercise of each
Warrant, after such adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly cause a brief summary
thereof to be sent by ordinary first class mail to each Holder at his last
address as it shall appear on the registry books of the Company. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity thereof except as to the Holder to
<PAGE>
whom the Company failed to mail such notice, or except as to the Holder whose
notice was defective. The affidavit of the Secretary or an Assistant Secretary
of the Company that such notice has been mailed shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
c. No adjustment of the Exercise
Price shall be made as a result of or in connection with the issuance or sale of
shares of Common Stock pursuant to options, warrants, stock purchase agreements
and convertible or exchangeable securities outstanding or in effect on the date
hereof or hereafter. In addition, Holders shall not be entitled to cash
dividends paid by the Company prior to the exercise of any Warrant or Warrants
held by them.
5.4 Notices of Record Date, Etc. In case:
5.4.1 the Company shall take a record of the holders
of its Common Stock (or Other Securities at the time receivable upon the
exercise of the Warrant) for the purpose of entitling them to receive any
dividend (other than a cash dividend at the same rate as the rate of the last
cash dividend theretofore paid) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of any class or any other
securities, or to receive any other right; or
5.4.2 of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or
5.4.3 of any voluntary or involuntary dissolution,
liquidation or winding up of the Company, then, and in each such case, the
Company shall mail or cause to be mailed to each Holder of the Warrant at the
time outstanding a notice specifying, as the case may be, (I) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding up is to take place, and
the time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or other
such securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up. Such notice shall be mailed at least 20
days prior to the date therein specified, and the Warrant may be exercised prior
to said date during the term of the Warrant.
6. Registration Covenants of the Company.
-------------------------------------
<PAGE>
6.1 The Company covenants and agrees that the Company will use
its best efforts to effect the registration of the shares of Common Stock
issuable upon exercise of the Warrants and will as expeditiously as possible:
(a) prepare and file with the Securities and
Exchange Commission (the "Commission") a registration statement with respect to
the issuance of Common Stock issuable upon exercise of the Warrants (the
"Registrable Securities") (as well as any necessary amendments or supplements
thereto)(a "Registration Statement") which Registration Statement (A) will state
that the holders of Registrable Securities covered thereby may sell such
Registrable Securities under such Registration Statement or pursuant to Rule 144
(or any similar rule then in effect), (B) when it becomes effective, and when
any post-effective amendment thereof and supplement thereto is filed, the
Registration Statement, as then amended or supplemented, will comply in all
material respects with the applicable provisions of the Securities Act and the
rules and regulations thereunder and, except for information provided in writing
by the Holder or other Holders for inclusion in the Registration Statement for
which the Company does not represent or warrant as to its accuracy, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading;
(b) furnish to the Holders copies of such
Registration Statement and any amendments or supplements thereto and any
prospectus forming a part thereof prior to filing, which documents will be
subject to the review of counsel for the Holders;
(c) use its best efforts to cause such
Registration Statement to become effective;
(d) notify the Holders, promptly after the
Company shall receive notice thereof, of the time when said Registration
Statement becomes effective or when any amendment or supplement to any
prospectus forming a part of said Registration Statement has been filed;
(e) notify the Holders promptly of any
request by the Commission for the amending or supplementing of such Registration
Statement or prospectus or for additional information;
(f) advise the Holders after the Company
shall receive notice or obtain knowledge thereof of the issuance of any order by
the Commission suspending the effectiveness of any such Registration Statement
or amendment thereto or of the initiation or threatening of any proceeding for
that purpose, and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal promptly if such stop
order should be issued;
(g) prepare and file with the Commission
such amendments and supplements to such Registration Statement and the
prospectus forming a part thereof as may be necessary to keep such
<PAGE>
Registration Statement effective until such time as the Holders pursuant to such
Registration Statement have disposed of all such Registrable Securities but in
no event exceeding five (5) years from the date of effectiveness;
(h) furnish to each Holder such number of
copies of such Registration Statement, each amendment and supplement thereto,
the prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents as that Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(i) use its reasonable best efforts to
register or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as determined by the Holders and do any and
all other acts and things which may be reasonably necessary or advisable to
enable the Holders to consummate the disposition in such jurisdictions of the
Registrable Securities (provided that the Company will not be required to: (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify; (B) subject itself to taxation in any such
jurisdiction; or (C) consent to general service of process in any such
jurisdiction);
(j) notify the Holders at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which such Registration
Statement contains an untrue statement of a material factor omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, at the request of the Holder, prepare a supplement
or amendment to such Registration Statement so that such Registration Statement
will not contain, to the Company's knowledge, an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(k) cause all Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed;
(l) provide a transfer agent for all such
Registrable Securities not later than the effective date of such Registration
Statement;
(m) enter into such customary agreements
(including an underwriting agreement in customary form) and take all such other
actions as the participating Holders or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of the Registrable
Securities;
(n) make available for inspection by the
Holders of such Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney, accountant
or other professional retained by any such Holder or underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company as shall be reasonably
<PAGE>
necessary to enable them to exercise their due diligence responsibility, and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any Inspectors in connection with such Registration
Statement; and
(o) use its reasonable best efforts to cause
the Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the Holders to consummate the disposition of such
Registrable Securities.
6.1.1 The Holder covenants and agrees to reasonably
cooperate in the preparation of the Registration Statement by providing such
information as the Company shall reasonably need from the Holder to include the
Registrable Securities in the Registration Statement.
6.2 Expenses. All expenses in connection with preparing and
filing any Registration Statement including, without limitation, costs of
complying with federal and state securities laws and regulations, attorney's and
accounting fees of the Company, printing expenses and federal and state filing
fees shall be borne in full by the Company, except that the underwriting
commissions and expenses attributable to the Registrable Securities so
registered shall be borne by such Holders.
6.3 Indemnification. Each Holder of Registrable Securities
will indemnify the Company, and each person who controls the Company within the
meaning of Section 15 of the Securities Act, from and against any and all
losses, claims, damages, expenses and liabilities caused by any untrue statement
or alleged untrue statement contained in any registration statement or in a
prospectus furnished under the Securities Act or caused by omission or alleged
omission to state a material fact therein necessary to make the statements
therein not misleading, insofar as such losses, claims, damages, expenses and
liabilities are caused by such untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished in writing to the
Company by any such Holder expressly for use in any registration statement or
prospectus and will reimburse each such indemnified person, as incurred, for any
legal or other expenses reasonably incurred by them in investigating, defending
or preparing to defend any such loss, claim, damage, liability, action or
proceeding. In addition, each Holder will execute and deliver all such documents
and undertakings as the Company may reasonably deem necessary or desirable for
purposes of compliance with applicable federal and state securities laws. This
indemnity agreement is in addition to any liability which the Holder may
otherwise have.
The Company agrees to indemnify and hold harmless the Holders (and each
person, if any, who controls the Holders within the meaning of the Securities
Act) from and against any loss, claim, damage or liability, joint or several, to
which they may become subject (under the Securities Act or otherwise) insofar as
such loss, claim, damage or liability (or action or proceeding in respect
thereof) arises out of, or is based upon, (A) any untrue
<PAGE>
statement or alleged untrue statement of a material fact contained (x) in the
Registration Statement, any preliminary prospectus, if used prior to the
effective date of the Registration Statement, or any final prospectus, or any
amendment thereof or supplement thereto, or (y)in any blue sky application or
other document executed by the Company, or based upon written information
furnished by the Company, filed in any state or other jurisdiction in order to
qualify any or all of the Registrable Securities under the securities laws
thereof (any such application, document or information being hereinafter called
a "Blue Sky Application"), or (B) the omission or alleged omission to state in
the Registration Statement, any preliminary prospectus, if used prior to the
effective date of the Registration Statement, or any final prospectus, or any
amendment thereof or supplement thereto, or in any Blue Sky Application, of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and will reimburse each such indemnified person, as incurred, for
any legal or other expenses reasonably incurred by them in investigating,
defending or preparing to defend any such loss, claim, damage, liability, action
or proceeding; provided, however, that the Company shall not be liable in any
such case to the extent, but only to the extent, that such loss, claim, damage
or liability arises out of or is based upon an untrue statement or an alleged
untrue statement or omission or alleged omission made in such Registration
Statement or in any Blue Sky Application in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder
specifically for use in preparation of the Registration Statement or any such
preliminary prospectus or the final prospectus or any such amendment thereof or
supplement thereto, or any Blue Sky Application (including information
concerning the manner in which the Holders intend to effect sales of the
Registrable Securities). This indemnity agreement is in addition to any
liability which the Company may otherwise have.
7. Transfers to Comply with the Securities Act. The Company shall be
under no obligation to transfer this Warrant, or any of the Common Stock issued
upon exercise of this Warrant, unless and until the Company shall have received
an opinion of counsel, reasonably acceptable to the Company, that such transfer
does not require registration of any such securities under the Securities Act or
any applicable state securities laws. This Warrant and any Warrant Stock or
Other Securities may not be sold, transferred, pledged, hypothecated or
otherwise disposed of except as follows: (a) to a person who, in the opinion of
counsel to the Company, is a person to whom this Warrant or the Warrant Stock or
Other Securities may legally be transferred without the delivery of a current
prospectus under the Securities Act with respect thereto and then only against
receipt of an agreement of such person to comply with the provisions of this
Section 8 with respect to any resale or other disposition of such securities; or
(b) to any person upon delivery of a prospectus then meeting the requirements of
the Securities Act relating to such securities and the offering thereof for such
sale or disposition, and thereafter to all successive assignees.
8. Legend. Unless the shares of Warrant Stock or Other Securities have
been registered under the Securities Act, upon exercise of any of the Warrants
and the issuance of any of the shares of Warrant Stock, all
<PAGE>
certificates representing shares shall bear on the face thereof substantially
the following legend:
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS ("STATE LAWS"), AND MAY NOT BE SOLD, OFFERED
FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS REGISTERED
PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE LAWS OR AN
OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE
WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
9. Supplements and Amendments. The Company may from time to time
supplement or amend this Warrant Certificate without the approval of any Holder
of Warrant Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which the Company determines shall not adversely affect the interests of the
Holders of Warrant Certificates.
10. Notices. All notices required hereunder shall be in writing and
shall be deemed given when telegraphed, delivered personally or within two days
after mailing when by certified or registered mail, return receipt requested, to
the Company or the Holder, as the case may be, for whom such notice is intended,
at the address of such party as set forth on the first page, or at such other
address of which the Company or the Holder has been advised by notice hereunder.
11. Applicable Law. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the State
of Massachusetts.
12. Captions. The caption headings of the Sections of this Warrant
Certificate are for convenience of reference only and are not intended, nor
should they be construed as, a part of this Warrant Certificate and shall be
given no substantive effect.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
ATTEST [SEAL] FIBERCORE, INC.
-------------------------
By:_______________________
Name:/s/ Michael J. Beecher
-----------------------
Title: Chief Financial
Officer
Name:/s/ Charles DeLuca
------------------------
Title: Vice President
Secretary
EXH10-51
NOTE PURCHASE AND WARRANT AGREEMENT
THIS AGREEMENT made as of this 31st day of July, 1996 between Bereshkai
S. Aslami ("the Purchaser") and FIBERCORE, INC. ("the Company") a Nevada
Corporation.
WHEREAS, the Purchaser and the Company executed a Term Sheet dated July
1, 1996 for the purchase and sale of the Company's $250,000 note (the "Note");
and
WHEREAS, pursuant to the Term Sheet, the Purchaser and the Company are
required to document such purchase and sale;
NOW THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, the parties agree as follows:
1. Offer
1.1 The Purchaser hereby agrees to purchase the Note subject to the conditions
hereinafter set forth;
1.2 Upon execution and delivery of this Agreement by both parties and the
execution and delivery of the Note (Exhibit A) by the Company to the Purchaser,
the Purchaser will pay to the Company the sum of $250,000;
1.3 In addition to the foregoing, the Company grants the Purchaser warrants (the
"Warrant") granting the Purchaser the right to purchase 115,220 common shares of
the Company for a purchase price of 1.81 per share exercisable in whole or in
part at any time within a 5-year period to July 31, 2001.
2. Acceptance
2.1 The Company agrees to sell to the Purchaser the Note subject to the terms
and conditions of this Agreement and to grant the Warrants referred to in clause
1.3.
3. Delivery of Warrants
3.1 Upon payment of the purchase price for the Note, this agreement shall
constitute the Warrants registered in Purchaser's name.
4. Representations and Warranties of the Company
4.1 The Company hereby represents and warrants to, and covenants with the
Purchaser as follows:
<PAGE>
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws of the State of
Nevada and is in good standing under such laws. The Company is not in violation
of its Certificate of Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation of its properties
and assets, and to carry on its business as presently conducted or now proposed
to be conducted.
(b) Corporate Action. The Company has all the necessary corporate power
and has taken the corporate action required to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company for the authorization, execution, delivery and performance
of this Agreement by the Company, the authorization, sale, issuance, and
delivery of the Note and Warrants and the performance of the Company's
obligations hereunder has been taken. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable in accordance with its terms. The issuance of the
Note and Warrant does not require any further corporate action, will not be
subject to preemptive rights or other preferential rights in any present
stockholders of the Company and will not conflict with any provisions of any
agreement to which the Company is a party or by which it is bound.
(c) Government Approvals. No authorization, consent, approval, license,
exemption from or filing of registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic, or
foreign, is or will be necessary for the execution and delivery by the Company
of this Agreement, and except for certain filings under state securities laws,
the offer and sale of the shares will be exempt from the registration
requirements of applicable federal and state securities laws.
(d) Compliance with Other Instruments. Neither the execution, issuance
and delivery of this Agreement or the Note, nor the consummation by the Company
of any transaction contemplated hereby or thereby, constitutes or results in or
will constitute or result in a default or violation of any term or provision of
the charter and By-laws of the Company, as amended and in effect, and the terms
and provisions of the mortgages, indentures, leases, agreements and other
instruments and of all judgments, decrees, governmental orders, statutes, rules
or regulations by which the Company or its properties are bound.
5. Purchaser Representations
5.1 In connection with this subjection, the Purchaser hereby makes the following
acknowledgment and representations:
(a) The execution of this Agreement has been duly authorized by all
necessary action on the part of the Purchaser has been duly executed and
delivered, and constitutes a valid, legal, binding, and enforceable agreement of
the Purchaser;
<PAGE>
(b) The Purchaser is acquiring the Note and the Warrants for its own
account, for investment, and not with a view to any "distribution thereof within
the meaning of the Securities Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Note and the Warrants
have not been registered under the Act, it cannot dispose of any of the Note and
Warrants unless such Note and the Warrants are subsequently registered under the
Act or exemptions from such registration are available. The Purchaser
acknowledges, and understands that, it has no right to require the Company to
register the Note, the Warrants or any shares obtained through the conversion or
exercise of the foregoing. The Purchaser further understands that the Company
may, as a condition to the transfer of any of the Note or Warrants, require that
the request for transfer be accompanied by an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
does not result in a violation of the Act, unless such transfer is covered by an
effective registration statement under the Act. The Purchaser understands that
each certificate representing the shares will bear the following legend or one
substantially similar thereto:
The securities represented by this certificate have
not been registered under the Securities Act of 1933.
These securities have been acquired for investment
and not with a view to distribution or resale, and
may not be sold, mortgaged, pledged, hypothecated or
otherwise transferred without an effective
registration statement for such shares under the
Securities Act of 1933, or an opinion of counsel
satisfactory to the corporation that registration is
not required under such Act.
(d) The Purchaser understands the offering is being made pursuant to
the exemption from registration with the Securities and Exchange Commission (the
"Commission") afforded by Section 4(2) of the Act and/or Regulation D adopted by
the Commission relating to transactions by an issuer not involving any public
offering, and similar federal, state, and foreign laws or policies.
Consequently, any offering materials have not been subject to review and comment
by the staff of the commission or by any state or foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to ask questions of
and receive answers from the Company concerning the terms and conditions of its
investment, and to obtain any additional information of the same kind that is
specified in Part I of a registration Statement on Form SB-2 under the Act. The
Purchaser or its purchaser representative has examined the information furnished
by the Company and, through discussions and examination of such materials as the
Purchaser has requested: has obtained sufficient information upon which to make
an investment decision. The Purchaser is familiar with the type of investment
which the shares constitute, and has reviewed the merit and risks of this
investment to the extent deemed advisable by the Purchaser. The Purchaser has
such knowledge and experience in financial and business affairs that it is
capable of evaluation the merits and risks of investing in the shares, and
acknowledges that it is able to bear the economic risks of this investment.
Further, the Purchaser understands all matters in this Agreement.
<PAGE>
(f) The investment in the Company by the Purchaser does not constitute
a principal portion of the Purchaser's total assets and the Purchaser is able to
afford a complete loss of the investment contemplated herein.
6. Covenants of the Company
6.1 Annual Reports. The Company agrees to use its best efforts to deliver to the
Purchaser, as soon as practicable after the end of each fiscal year and in any
event within 120 days thereafter, a consolidated balance sheet of the Company as
at the end of such fiscal year, a consolidated Statement of Cash Flow of the
Company for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants selected by the Company.
6.2 Quarterly Reports. The Company agrees to use its best efforts to deliver to
the Purchaser as soon as practicable after the end of each of the first three
quarterly fiscal periods in each fiscal year and in any event within 60 days
thereafter, a consolidated balance sheet of the Company as at the end of such
period, a consolidated statement of operations and a consolidated statement of
Cash Flow of the Company for such period, in each case prepared in accordance
with generally accepted accounting principles consistently applied and setting
forth in comparative form the figures for the corresponding periods of the
previous fiscal year, all in reasonable detail and certified; subject to changes
resulting from audit adjustments, by the principal financial or accounting
officer of the Company.
6.3 Inspection. The Company agrees to permit any authorized representative of
the purchaser to visit the Company to discuss its affairs and finances with its
officers all upon reasonable notice to the Company, at such reasonable times and
as often as may be reasonably requested.
6.4 Purchaser's Right to Receive Reports. The Company shall deliver the reports
or give the rights specified in Paragraph 6.1, 6.2, and 6.3 to the Purchaser
until the earlier of (i) the closing date of the Company' s first underwritten
public offering pursuant to an effective registration statement filed under the
Act; or (ii) until the Purchaser no longer holds the Note or any Warrants.
7. No Waiver
7.1 Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser, the Purchaser does not thereby or in
any other manner waive any rights granted to it under federal and state
securities laws.
8. Survival of Representation Warranties and Agreements
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations, and warranties made by the Company and
the Purchaser herein shall
<PAGE>
survive the execution of this Agreement, the delivery to the Purchaser of the
shares being purchased and the payment therefore.
9. Transferability
9.1 The Purchaser agrees not to transfer or assign this Agreement, or any of its
interest herein, and further agrees that any assignment or transfer of the
shares shall be made only in accordance with applicable securities laws and that
an appropriate legend with respect thereto may be placed by the Company on any
certificate evidencing such shares
10. Miscellaneous
10.1 Notices. All notices or other communications given or made hereunder shall
be in writing and shall be delivered to the Purchaser at:
Bereshkai S. Aslami
7 Laurel Hill Rd.
Sturbridge, MA 01566
and to the Company:
174 Charlton Road
P.O. Box 206
Sturbridge, MA 01566
10.2 Governing Law. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts without giving effect to the conflict
of laws.
10.3 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by all parties.
10.4 Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and by the Purchaser.
10.5 Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
10.6. Severability. In case any provision contained in this Agreement should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
10.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when taken
together, shall constitute but one
<PAGE>
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party.
10.8 Pronouns. All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person or persons, firm or
other entity may require in the context thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
BERESHKAI S. ASLAMI FIBERCORE, INC.
By:___/s/________________________ By:___/s/_______________
Title: Chief Financial Officer
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$250,000 Sturbridge, MA
Due July 31, 1999 July 31, 1996
FOR VALUE RECEIVED, FiberCore, Inc., a Nevada corporation ("Payor"),
hereby unconditionally promises to pay to the order of Bereshkai S. Aslami
("Payee"), at 7 Laurel Hill Road, Sturbridge, MA 01566, the principal sum of Two
Hundred Fifty Thousand Dollars ($250,000) together with any unpaid interest
thereon, on July 3 l, 1999.
This Note shall bear interest at the initial rate of 9.25% for the
period July 3l, 1996 to September 30, 1996. Thereafter the note will bear
interest for each 3-month period beginning October 1, 1996 at the rate of the
prime interest rate as published in the Wall Street Journal on the business day
immediately preceding the 3-month period plus one-percent (1%). Interest will be
payable quarterly on the 1st day of the month following the 3-month interest
period (October 1, January l, April 1 and July l ) during the term hereof.
In the event the Payor is unable to make the interest payments when due
the Payor agrees to pay an additional amount equal to l/2 of 1% (.5%) on the
then outstanding principal as a late payment fee. In no event however, shall the
failure of the Payor to make an interest payment when due be an event of
default. All principal and unpaid interest shall be due at maturity, July 31,
1999.
This Promissory Note may be prepaid in whole or in part at any time or
from time to time without penalty or premium, together with interest accrued on
the amount so prepaid.
The principal amount of this Promissory Note and interest accrued
thereon shall become immediately due and payable, without presentation, protest,
notice or further demand, all of which are expressly waived, in the event of the
filing by or against the Payor of a petition in bankruptcy or reorganization or
insolvency. No event of default shall occur until Payor receives written notice
of an alleged default and, after 30 days, such default has not been remedied or
cured.
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to
be duly executed and delivered as of the date set forth above.
FiberCore, Inc.
By: ___/s/______________________
Michael J. Beecher
Chief Financial Officer and Treasurer
EXH10-52
NOTE PURCHASE AND WARRANT AGREEMENT
THIS AGREEMENT made as of this 31st day of July, 1996 between Elizabeth
DeLuca ("the Purchaser") and FIBERCORE, INC. ("the Company") a Nevada
Corporation.
WHEREAS, the Purchaser and the Company executed a Term Sheet dated July
15 1996 for the purchase and sale of the Company's $250,000 note (the "Note"");
and
WHEREAS, pursuant to the Term Sheet, the Purchaser and the Company are
required to document such purchase and sale;
NOW, THEREFORE in consideration of the premises and mutual covenants
and agreements herein contained, the parties agree as follows:
1. Offer
1.1 The Purchaser hereby agrees to purchase the Note subject to the conditions
hereinafter set forth;
1.2 Upon execution and delivery of this Agreement by both parties and the
execution and delivery of the Note (Exhibit A) by the Company to the
Purchaser, the Purchaser will pay to the Company the sum of $250,000;
1.3 In addition to the foregoing, the Company grants the Purchaser warrants
(the "Warrant") granting the Purchaser the right to purchase 1 15,220
common shares of the Company for a purchase price of 1.81 per share
exercisable in whole or in part at any time within a 5-year period to July
31, 2001.
2. Acceptance
2.1 The Company agrees to sell to the Purchaser the Note subject to the terms
and conditions of this Agreement and to grant the Warrants referred to in
clause 1 O3.
3. Delivery of Warrants
3.1 Upon payment of the purchase price for the Note, this agreement shall
constitute the Warrants registered in Purchaser's name.
4. Representations and Warranties of the Company
4.1 The Company hereby represents and warrants to, and covenants with the
Purchaser as follows:
<PAGE>
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws of the State of
Nevada and is in good standing under such laws. The Company is not in violation
of its Certificate of Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation of its properties
and assets, and to carry on its business as presently conducted or now proposed
to be conducted.
(b) Corporate Action. The Company has all the necessary corporate power
and has taken the corporate action required to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company for the authorization, execution, delivery and performance
of this Agreement by the Company, the authorization, sale, issuance, and
delivery of the Note and Warrants and the performance of the Company's
obligations hereunder has been taken. This Agreement has been duly executed and
delivered by the Company and constitutes a legal valid and binding obligations
of the Company enforceable in accordance with its terms. The issuance of the
Note and Warrant does not require any further corporate action, will not be
subject to preemptive rights or other preferential rights in any present
stockholders of the Company and will not conflict with any provisions of any
agreement to which the Company is a party or by which it is bound.
(c) Government Approvals. No authorization, consent, approval, license,
exemption, from or filing of registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic, or
foreign, is or will be necessary for the execution and delivery by the Company
of this Agreement, and except for certain filings under state securities laws,
the offer and sale of the shares will be exempt from the registration
requirements of applicable federal and state securities laws.
(d) Compliance with Other Instruments. Neither the execution issuance
and delivery of this Agreement or the Note, nor the consummation by the Company
of any transaction contemplated hereby or thereby, constitutes or results in or
will constitute or result in a default or violation of any term or provision of
the charter and By-laws of the Company, as amended and in effect, and the terms
and provisions of the mortgages, indentures, leases, agreements and other
instruments and of all judgments decrees, governmental orders, statutes, rules
or regulations by which the Company or its properties are bound.
5. Purchaser Representations
5.1 In connection with this subjection the Purchaser hereby makes the following
acknowledgment and representations:
(a) The execution of this Agreement has been duly authorized by all
necessary action on the part of the Purchaser, has been duly executed and
delivered and constitutes a valid, legal, binding, and enforceable agreement of
the Purchaser;
<PAGE>
(b) The Purchaser is acquiring the Note and the Warrants for its own
account, for investment, and not with a view to any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Note and the Warrants
have not been registered under the Act, it cannot dispose of any of the Note and
Warrants unless such Note and the Warrants are subsequently registered under the
Act or exemptions from such registration are available. The Purchase
acknowledges, and understands that, it has no right to require the Company to
register the Note, the Warrants or any shares obtained through the conversion or
exercise of the foregoing. The Purchaser further understands that the Company
may, as a condition to the transfer of any of the Note or Warrants, require that
the request for transfer by accompanied by an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
does not result in a violation of the Act unless such transfer is covered by an
effective registration statement under the Act. The Purchaser understands that
each certificate representing the shares will bear the following legend or one
substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933. These securities
have been acquired for investment and not with a view to
distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the
Securities Act of 1933, or an opinion of counsel satisfactory
to the corporation that registration is not required under
such Act.
(d) The Purchase understands the offering is being made pursuant to the
exemption from registration with the Securities and Exchange Commission (the
"Commission") afforded by Section 4(2) of the Act and/or Regulation D adopted by
the Commission relating to transactions by an issuer not involving any public
offering, and similar federal, state, and foreign laws or policies.
Consequently, any offering materials have not been subject to review and comment
by the staff of the commission or by any state or foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to ask questions of
and receive answers from the Company concerning the terms and conditions of its
investment, and to obtain any additional information of the same kind that is
specified in Part I of a registration Statement on Form SB-2 under the Act. The
Purchaser or its purchaser representative has examined the information furnished
by the Company and, through discussions and examination of such materials as the
Purchaser has requested, has obtained sufficient information upon which to make
an investment decision. The Purchaser is familiar with the type of investment
which the shares constitute, and has reviewed the merit and risks of this
investment to the extent deemed advisable by the Purchaser. The Purchaser has
such knowledge and experience in financial and business affairs that it is
capable of evaluation the merits and risks of investing in the shares and
acknowledges that it is able to bear the economic risks of this investment.
Further, the Purchaser understands all matters in this Agreement.
<PAGE>
(f) The investment in the Company by the Purchaser does not constitute
a principal portion of the Purchaser's total assets and the Purchaser is able to
afford a complete loss of the investment contemplated herein.
6. Covenants of the Company
6.1 Annual Reports. The Company agrees to use its best efforts to deliver to
the purchasers as soon as practicable after the end of each fiscal year and
in any event within 120 days thereafter, a consolidated balance sheet of
the Company as at the end of such fiscal year, a consolidated Statement of
Cash Flow of the Company for such year, prepared in accordance with
generally accepted accounting principles consistently applied and setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and certified by independent public
accountants selected by the Company.
6.2 Quarterly Reports. The Company agrees to use its best efforts to deliver to
the Purchaser as soon as practicable after the end of each of the first
three quarterly fiscal periods in each fiscal year and in any event within
60 days thereafter, a consolidated balance sheet of the Company as at the
end of such period, a consolidated statement of operations and a
consolidated statement of Cash Flow of the Company for such period, in each
case prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for
the corresponding periods of the previous fiscal year, all in reasonable
detail and certified; subject to changes resulting from audit adjustments,
by the principal financial or accounting officer of the Company.
6.3 Inspection. The Company agrees to permit any authorized representative of
the purchaser to visit the Company to discuss its affairs and finances with
its officers, all upon reasonable notice to the Company, at such reasonable
times and as often as may be reasonably requested.
6.4 Purchaser's Right to Receive Reports. The Company shall deliver the reports
or give the rights specified in Paragraph 6.1, 6.2, and 6.3 to the
Purchaser until the earlier of (i) the closing date of the Company's first
underwritten public offering pursuant to an effective registration
statement filed under the Act; or (ii) until the Purchaser no longer holds
the Note or any Warrants.
7. No Waiver
7.1. Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser, the Purchaser does not thereby or
in any other manner waive any rights granted to it under federal and state
securities laws.
8. Survival of Representation Warranties and Agreements
Notwithstanding any investigation made by any party to this Agreements,
all covenants, agreements, representations, and warranties made by the Company
and the Purchaser herein shall survive the execution of this Agreement, the
delivery to the Purchaser of the shares being purchased and the payment
therefore.
<PAGE>
9. Transferability
9.1 The purchaser agrees not to transfer or assign this Agreement, or any of
its interest herein, and further agrees that any assignment or transfer of
the shares shall be made only in accordance with applicable securities laws
and that an appropriate legend with respect thereto may be placed by the
Company on any certificate evidencing such shares.
10. Miscellaneous
10.1 Notices. All notices or other communications given or made hereunder shall
be in writing and shall be delivered to the Purchaser at:
Elizabeth DeLuca
261 Foster Street
S. Windsor, CT 06074
and to the Company:
174 Charlton Road
P.O. Box 206
Sturbridge, MA 01566
10.2 Governing Law. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts without giving effect to the
conflict of laws.
10.3 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties
10.4 Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and by the Purchaser.
10.5 Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall hot be deemed to be
part of this Agreement.
l0.6 Severability. In case any provision contained in this Agreement should be
invalid, illegal, enforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.
10.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when taken
together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party.
<PAGE>
10.8 Pronouns. All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person or persons, firm
or other entity may require in the context thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
ELIZABETH DELUCA FIBERCORE, INC.
BY:___/S/___________________ BY:___/S/________________
Date: November 22, 1996 Title: Chief Financial Officer
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$250,000 Sturbridge, MA
Due July 31, 1999 July 31, 1996
FOR VALUE RECEIVED, FiberCore, Inc., a Nevada corporation ("Payor"),
hereby unconditionally promises to pay to the order of Elizabeth DeLuca
("Payee"), at 261 Foster Street, S. Windsor, CT 06074, the principal sum of Two
Hundred Fifty Thousand Dollars ($250,000) together with any unpaid interest
thereon, on July 31, 1999.
This Note shall bear interest at the initial rate of 9.25% for the
period July 31, 1996 to September 30, 1996. Thereafter the note will bear
interest for each 3-month period beginning October 1, 1996 at the rate of the
prime interest rate as published in the Wall Street Journal on the business day
immediately preceding the 3-month period plus one-percent (1%). Interest will be
payable quarterly on the 1 st day of the month following the 3-month interest
period (October 1, January 1, April 1 and July 1) during the term hereof.
In the event the Payor is unable to make the interest payments when due
the Payor agrees to pay an additional amount equal to 1/2 of 1% (.5%) on the
then outstanding principal as a late payment fee. In no event however, shall the
failure of the Payor to make an interest payment when due be an event of
default. All principal and unpaid interest shall be due at maturity, July 31,
1999.
This Promissory Note may be prepaid in whole or in part at any time or
from time to time without penalty or premium, together with interest accrued on
the amount so prepaid.
The principal amount of this Promissory Note and interest accrued
thereon shall become immediately due and payable, without presentation, protest,
notice or further demand, all of which are expressly waived, in the event of the
filing by or against the Payor of a petition in bankruptcy or reorganization or
insolvency. No event of default shall occur until Payor receives written notice
of an alleged default and, after 30 days, such default has not been remedied or
cured.
IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to
be duly executed and delivered as of the date set forth above.
FiberCore, Inc.
By:___/s/___________________
Michael J. Beecher
Financial Officer and Treasurer
SUMMARY OF TERMS
Parties: Connecticut Development Authority ("CDA")
Automated Light Technologies, Inc. ("ALT")
FiberCore, Inc. ("FCI")
Loan Balance: As of August 20, 1996, ALT is in default on
its loan from CDA, with the loan balance being
$272,150 on that date, including principal of $20,275
and interest of $69,875. ALT also owes late payment
penalties in connection with the loan, which CDA
agrees to waive if ALT complies with its covenants as
contemplated hereunder.
Warrant: CDA's warrant currently entitles CDA to purchase
106,399 shares of FCI common stock at $1.48 per share
(aggregate purchase price $157,470). CDA will
exercise the warrant and pay the exercise price by
canceling $157,470 of the Loan Balance. As a result,
CDA will received 106,399 shares of FCI common stock.
Conversion: On the date of closing, the then remaining actual
loan balance (principal and interest) will
automatically be converted into shares of FCI common
stock at the rate of 60% of the Current Market Value
of FCI. Current Market Value of FCI shall be defined
as the average closing price of FCI's common shares
as reported through (Bloomberg or America On-Line)
for the last 15 consecutive trading days, immediately
preceding the date of closing.
Other: In the event that the CDA stock is not freely salable
to the public and FCI's common stock is not listed on
the Nasdaq Small Cap Market or the National Market
Listing on or before May 15, 1997, FCI shall issue an
additional 10,000 shares of its common stock to CDA
for no additional consideration. If these conditions
remain unsatisfied as of August 15, 1997, then FCI
shall issue 10,000 additional shares of its common
stock to CDA for no additional considerations.
All share issued to CDA shall be subject to
anti-dilution protection for stock splits,
combinations, and stock dividends.
Upon conversion, CDA will issue a general release in
favor of ALT, FCI, their respective officers,
directors, employees and guarantors with respect to
the loan and warrant, and will release its lien on
ALT's assets. ALT and FCI will issue similar releases
to CDA.
<PAGE>
Closing: On or before August 31, 1996.
By their signatures below, the parties accept and agree to the foregoing,
subject in each case to Board of Directors approval.
CONNECTICUT DEVELOPMENT AUTHORITY AUTOMATED LIGHT
TECHNOLOGIES, INC.
BY: /s/ Antio Roberto BY: /s/ Charles DeLuca
---------------------------- ------------------------------
Its Senior Vice President Its Exec. V.P. & Director
Antonio Roberto Charles DeLuca
27th of August 1996
FIBERCORE, INC.
BY: /s/ Mohd Aslami
-----------------------------
Its Chairman, CEO
Mohd Aslami
27th of August 1996
EXH10-54
FORBEARANCE AGREEMENT
This AGREEMENT is made as of the 31st day of July, 1996, by and among
AUTOMATED LIGHT TECHNOLOGIES, INC., a Delaware corporation with an office and
principal place of business located at 174 Charlton Road, Sturbridge,
Massachusetts ("ALT"), FIBERCORE, INC., a Nevada Corporation with an office and
principal place of business located at 174 Charlton Road, Sturbridge,
Massachusetts ("FCI") and CONNECTICUT INNOVATIONS, INCORPORATED, a corporation
constituted a cussi-public instrumentality of the State of Connecticut with an
office located at 40 Cold Spring Road, Rocky Hill, Connecticut ("CII").
WITNESSETH
WHEREAS, on August 2, 1990, CII made a loan to ALT in the original
principal amount of $300,000 as evidenced by a Promissory Note from ALT in such
amount and governed by a Loan Agreement and related documents of the same date
(the "Obligations");
WHEREAS, in connection with the loan made in 1990, CII received a
Warrant to purchase 66,667 shares of ALT Common Stock at an exercise price of
$1.50 per share, which Warrant has, due to subsequent events, including a merger
of ALT into a wholly owned subsidiary of FCI in September of 1995, been adjusted
such that CII is now entitled to purchase 70,933 shares of FCI Common Stock at
$1.48 per share; and
WHEREAS, ALT has acknowledged that it is in default under the
Promissory Note and Loan Agreement and has requested that CII forbear at this
time from pursuing its rights and remedies for payment in full of its
indebtedness and liabilities under the aforementioned agreements; and
WHEREAS, FCI acknowledges that, as owner of 100% of the capital stock
of ALT, it will receive a direct and substantial benefit from entering into this
Agreement.
NOW, THEREFORE, in consideration for CII's agreeing to forbear from
immediately pursuing its rights and remedies under the Loan Agreement (subject
to the terms and conditions contained herein), and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
Section 1. Ratification of Obligations; Modification.
(a) All of the Obligations, including without limitation, all
indebtedness and liabilities, existing as of the date of this Agreement or
arising thereafter, subject to the terms and conditions contained herein, shall
be and are ratified and confirmed in all respects. As of June 30, 1996, the
remaining principal and interest balance on the
<PAGE>
Promissory Note is $241,128, and subject to the provisions of this Agreement,
interest shall continue to accrue and any late payment penalties or interest
charges shall be applied as provided in the Promissory Note and Loan Agreement.
(b) Until the sooner to occur of the Conversion Date (as defined in
Section 2) or September 1, 1996, ALT's payment obligations under the Promissory
Note are hereby modified as follows. For the months beginning March 1, 1996
through and including the Conversion Date, ALT shall make a payment to CII in
the amount of One Thousand Dollars ($1,000.00) per month.
Section 2. Forbearance Obligations; Conversion.
(a) CII agrees to forbear from taking any action to recover payment in
full of the Obligations and from instituting any proceedings against ALT to
enforce its rights and remedies under the Loan Agreement arising from ALT's
default thereunder through and including the earlier to occur of (I) the
Conversion Date or (ii) September 1, 1996. If the Conversion Date has not
occurred as of September 1, 1996, then the Obligations shall be fully restored
as though never modified.
(b) The Conversion Date shall be the date upon which (I) FCI shall have
filed an S-1 Registration Statement covering all shares of FCI Common Stock to
be issued to CII hereunder (the "CII Stock"), and (ii) ALT shall have made the
payments required under Section 1(b) above.
(c) On the Conversion Date, the following events shall occur:
(i) CII will exercise the Warrant and pay the exercise
price by canceling One Hundred Four Thousand Nine
Hundred Eighty One Dollars and No/100 ($104,981.00)
of the balance of the Obligations. FCI shall deliver
to CII a stock certificate representing 70,933 shares
of FCI Common Stock;
(ii) The actual principal and interest balance remaining
under the Promissory Note as of the Conversion Date
(not including any late payment penalties of interest
charges), after giving credit for payments made
pursuant to Section 1(b) above and exercise of the
Warrant pursuant to Section 2(c)(i) above, shall be
converted automatically into that number of shares of
FCI Common Stock determined by dividing said balance
by a number equal to 60% of the Current Market Value
of FCI Common Stock. For purposes hereof, Current
Market Value of FCI Common Stock shall mean the
average closing price of FCI's common stock as
reported through Bloomberg for the fifteen (15)
consecutive trading days immediately preceding the
date of this Agreement. FCI shall
<PAGE>
deliver to CII a stock certificate representing that
number of shares of FCI Common Stock determined
pursuant to this Section 2(c)(ii);
(iii) CII will issue a release in favor of ALT, FCI, their
officers, directors, and employees with respect to
the Obligations, including the Warrant, and will
release its lien on ALT's assets; and
Section 5. Events of Default and Remedies. Upon the occurrence of any
of the following events or the existence of any of the following conditions (any
such event or condition being herein referred to as an "Event of Default"):
(a) Any representation or warranty made by ALT or FCI herein or in any
other instrument creating, evidencing or securing any of their Obligations to
CII or in any certificate, financial statement or other document delivered in
connection herewith shall prove to have been incomplete, untrue or incorrect in
any material respect as of the date made or deemed to have been made or
repeated; or
(b) ALT or FCI shall fail fully to perform or comply with any terms,
covenants or provisions of this Agreement;
then, and in any such event, CII's obligation to forbear pursuant to Section
2(a) of this Agreement shall terminate and the Obligations, to the extent they
have not been released, shall, at CII's option and without notice or demand
become and be immediately due and payable in full and CII may, at its option,
exercise and enforce its rights and remedies available under or in connection
with the Loan Agreement, the other documents and agreements executed or
delivered in connection therewith, at law and/or in equity.
CII's failure or delay to exercise any remedy after any particular
Event of Default shall not operate as a waiver of any remedy in that or in any
subsequent instance.
Section 6. No Present Claims and Releases. ALT and FCI acknowledge and
agree that (a) they have no claim or cause of action against CII; (b) neither
ALT, FCI nor any of its stockholders or affiliates have any offset rights,
counterclaims or defenses of any kind with respect to any of ALT's Obligations,
indebtedness or liabilities to CII and/or against CII for any reason whatsoever;
and (c) CII has heretofore properly performed and satisfied in a timely manner
all of its obligations to ALT and FCI. ALT and FCI each further unconditionally
releases, waives, and forever discharges (I) any and all liabilities,
obligations, duties, promises or indebtedness of any kind of CII to ALT, except
the obligations to be performed by CII for ALT and FCI as expressly stated in
this Agreement; and (ii) all claims, offsets, causes of action, suits or
defenses of any kind whatsoever (if any), whether known or unknown, which ALT or
FCI might otherwise have against CII or any of its directors, officers,
shareholders, employees, agent and/or attorneys.
Section 7. Expenses. ALT agrees that it is responsible and liable for
the payment to CII of an amount equal to any and all out-of-pocket costs or
expenses (including legal
<PAGE>
fees, appraisals and disbursements) hereafter incurred or sustained by CII in
connection with the preservation of or enforcement of any of its rights under
this Agreement, the Loan Agreement (as set forth therein) or in respect of any
of their other obligations to CII, (whether or not any one or more legal
proceedings is commenced by or on behalf of CII or an appearance is filed on
behalf of CII in any legal proceeding filed by, against or in any way involving
CII).
Section 8. Waiver of Jury Trial. ALT AND FCI EACH HEREBY WAIVES ANY
RIGHTS THAT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN
AGREEMENT, ANDY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. THEY ACKNOWLEDGE AND AGREE THAT THEY HAVE
KNOWINGLY, VOLUNTARILY AND INTELLIGENTLY, WITH THE ADVICE OF LEGAL COUNSEL IF
THEY HAVE DEEMED IT NECESSARY, AGREED TO THIS WAIVER.
Section 9. Miscellaneous.
(a) Except as expressly set forth herein, all of the agreement, terms,
convenants, representations, provisions and obligations to us of any nature
arising under or in respect of this Agreement and the Loan Agreement (if the
Loan Agreement has not been canceled pursuant to Section 2(c)(iii) above) shall
survive the termination of CII's forbearance obligations under this Agreement.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
(c) This Agreement shall be binding upon ALT, FCI and their respective
heirs, representatives and assigns and shall inure to the benefit of CII, its
successors and assigns and any subsequent holder of the Loan Agreement (if the
Loan Agreement has not been canceled pursuant to Section 2(c)(iii) above).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed this 31st day of July, 1996.
CONNECTICUT INNOVATIONS, INCORPORATED
BY:___/S/________________________
Victor Budnick
Its: President and Executive Director
AUTOMATED LIGHT TECHNOLOGIES, INC. FIBERCORE, INC.
BY:___/S/_____________________ BY:___/S/___________________________
Its Exec. V.P. & General Manager Its
July 31, 1996 July 31, 1996
EXH10-55
LONG TERM PREFORM SUPPLY AGREEMENT
This First Preform Supply Agreement ("Agreement ") is made and entered into this
25th of July 1996.
BETWEEN
1. FIBER OPTIC INDUSTRIES (PVT.) LIMITED, a company incorporated in Pakistan
with its principal place of business at 74-B Nazimuddin Road, F-8/4 Sector
Islamabad Pakistan, referred as the "Buyer" or the "Company" hereafter.
AND
2. FIBERCORE, INC., an American Company with its principal place of business
at 174 Charlton Road, Sturbridge, Mass. 01566 hereafter referred as the
"Seller."
RECITALS
WHEREAS
A. The Company is being formed to manufacture optical fiber and fiberoptic
cable (the "Products");
B. The Seller has offered to supply raw materials including Optical Preforms
specified as INFOGLAS 1G-09/125 shown in the three page Appendix attached
herewith and has committed to a twenty year supply of Preform requirements
of the Company that the Buyer has agreed to
C. The Buyer is willing to purchase these preforms on the terms and conditions
set forth herein;
NOW THEREFORE, the parties hereto agree as follows:
1. OBJECT OF THE AGREEMENT
1.1 The Buyer agrees to purchase from the Seller for twenty years and
the Seller agrees to sell to the Buyer the Preforms manufactured under the
patented of FiberCore from its manufacturing facility at Jena Germany or from
another location.
1.2 The Seller agrees to ship Preforms in time for testing of Buyer's
machinery and equipment for speedy implementation of optical fiber manufacturing
plant; The Seller further agrees to supply preforms for a twenty year period on
prices and delivery terms to be negotiated on a yearly basis.
<PAGE>
1.3 The Buyer agrees to purchase First Run Preforms as the first phase
purchases for year 1 only for its current manufacturing needs and not for
purposes of inventory or resale.
2. PRICE
2.1 The price for "First Run Preforms" needed to test the plant and
machinery and initial production is fixed at US$4,500 per single mode preform as
per attached specifications in Appendix:
2.2 The price for "First Run Preform" shall be US$1.2 Million (US
Dollars One Million and Two Hundred Thousand only) FOB Frankfurt Airport which
covers (266.67) rods at an average cost of US$4,500 per rod.
3. PAYMENT
3.1 The order for the "First Run Preform" valued at US$1.2 Million will
be structured as follows:
3.1.1 10% advance payment against ($120,000) advance payment guarantee;
3.2.2 Open a letter of Credit for US$1,080,000 covering 90% of total
value of supplies valid for a period of 6 months from date of issuance and to
allow for payment in full upon FOB Delivery of Preforms with deposit of Bill of
Landing and Seller's Invoice;
3.1.3. The irrevocable Letter of Credit will allow for partial
shipments for a minimum quantity of 75 rods per shipment and in form and
substance that is acceptable to the Seller and its Bank.
3.2 All payments will be made to ALT/FiberCore Account No. 936344170 at
Fleet Bank of Massachusetts, N.A. (ABA Routing No. 011000138), USA;
3.3 All payments of any nature under this Agreement shall be made
without any deduction or withholding whatsoever unless the Buyer is required by
the specific Law of the Government of Pakistan.
4. SITE AND TERMS OF DELIVERY
4.1 The timely availability of the "First Run Preform" is contingent
upon the issuance of the Letter of Credit in accordance with 3.1;
4.2 Shipments for future requirements of the Buyer can be met from the
other FiberCore locations at terms to be agreed upon by the Parties under
separate contract;
4.3 All unadjusted advance payments made under the contract will be
refunded to the Buyer in all cases where the Supplier is unable to fulfill its
commitments.
<PAGE>
5. TESTING OF THE PREFORMS
Seller's representatives shall be present for all inspections and
testing of Preforms both at the Manufacturing site and at the Buyer's building.
6. WARRANTY
The Seller shall be responsible for making good by replacement, at its
expense, any defective preform which may be identified during the period
commencing on the date of shipment of the Preform and ending twelve (12) months
after the preforms have been received by the buyer provided the defect was not
due to any wrongful act or omission on the part of the Buyer.
7. FORCE MAJEURE
Neither pat shall be liable for the delays or non-performance of this
Agreement due to acts of God, war, Government decrees, labor disturbances, or
an) other cause beyond the control of that party.
8. GOVERNING LAW AND DISPUTE RESOLUTION
This Agreement shall be governed by and construed in accordance with
the laws of Pakistan. However, nothing in this Agreement shall be construed to
require the Seller to take or omit to take any action if such act or omission is
contrary to the laws s of the United States of America and Germany.
9. NOTICES
Any notices given hereunder shall be deemed to be sufficiently given if they are
in writing and delivered by facsimile or by postpaid registered mail or through
international courier sent as follows:
If to the Seller FiberCore
174 Charlton Road
Sturbridge, Mass. 01566
Tel. (508) 347-7744
FAX: (508) 347-2778
Attention: Mr. Charles DeLuca
If to the Buyer Fiber Optic Industries ( PUT.) Limited
74-B Nazimuddin Road
F-8/4 Sector Islamabad, Pakistan
Tel. (508) 853520
Fax. (508) 256047
Attention: Sayed Ijaz Husain Shah
<PAGE>
10. TERM AND TERMINATION OF THIS AGREEMENT
10.1 This Agreement shall be effective as of the date first written
above. Unless canceled, modified or terminated under the provisions set forth
below, this Agreement shall continue in force for an initial period of ten years
and will be renewable for another ten years with the mutual consent of both
parties.
10.2 Without prejudice to any other right or remedy available to it
either party shall have the right to terminate this Agreement:
10.2.1 If the Buyer commits a material breach of this Agreement by
offering to purchase from a competitor and such breach is not cured within 30
days of a written notice; or
10.2.2 Conditions of Force Majeure prevail for more than a year; or
10.2.3 The other party becomes bankrupt or ceases to continue business.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
for FiberCore, Inc. for FiberOptic Industries
NAME: Charles DeLuca NAME: M. Mahmud Awan
TITLE: Vice President Business Dev. TITLE: Chairman/CEO
___/s/_______________________________ ___/s/_______________________
<PAGE>
APPENDIX I
PREFORM SUPPLY AGREEMENT
TABLE
<PAGE>
TABLE
INFOGLAS IG-09/125 TARGET FIBER SPECIFICATION
<PAGE>
TABLE
INFOGLAS IG-09/125
MASS - INSERT
EXH10-56
Optical Fiber and Preform Supply Agreement
This Agreement is made as of November 1, 1996, between FiberCore Inc.,
a Nevada Corporation with its principal place of business in Sturbridge,
Massachusetts and Middle East Fiber Cable Company ("MEFC") with its principle
place of business in Riyadh, Saudi Arabia.
WHEREAS, MEFC wishes to have from FCI a firm commitment to sell to it a
set quantity of Optical Preforms and/or Fiber for FIVE (5) years; and
WHEREAS, FCI wishes to supply MEFC with a firm FIVE (5) year supply of
Optical Preforms and/or Fiber,
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Definitions
For the purposes of this Agreement:
i. FiberCore ("FCI" shall mean FiberCore Inc. and its subsidiary FiberCore
Jena GmbH ("FCJ").
ii. "Optical Fiber" means a waveguide, in the form of a filament or fiber with
a glass core suitable for use in communications including any coating
applied concentrically around a single filament in the course of drawing a
preformed glass blank into such filament. The term "waveguide" for the
purpose of this definition means a dielectric transmission medium whose
dimensions and boundary conditions are designed to propagate energy inside
the guide structure in its lengthwise direction. The term "communications"
for the purpose of this definition shall refer to the transmission of any
form of information by the modulation of light waves.
iii. "Preform" means an optical blank in a rod from which optical fiber may be
drawn, suitable for use in the field of optical communications.
iv. Hereinafter, Optical Preforms and Fiber are the "Products".
1
<PAGE>
ARTICLE 2
Sale and Purchase of Products
2.1 Purchase Commitment: Quantity Changes
MEFC shall purchase from FCI and FCI shall sell to MEFC the quantities of
Products with the Product mix, as provided in Attachment A hereto subject to FCI
available capacity. MEFC can, pursuant to the rolling forecasts described under
Section 2.2, increase or decrease its order of Products shown on Attachment A
for any quarter during the first two years by not more than ten percent (10%)
and during years three through five by not more than 25%, except as may result
from product mix changes under Section 2.5. The aggregate of such changes cannot
exceed (either as a reduction or an addition) ten percent of the total ordered
under Attachment A for the first two years of this Agreement or twenty five
percent for the last three years of this Agreement, except as may result from
product mix changes under Section 2.5. FCI will only accept quantity increases
under this section only to the extent that FCI has sufficient uncommitted
production capacity to meet such increases.
2.2 Annual and Quarterly Rolling Forecasts
During the term of this agreement, on October 1 of each year, MEFC will provide
FCI with a monthly projection of MEFC's requirements for the following calendar
year. On the 10th day of the month preceding each calendar quarter (i.e.
December 10, March 10, June 10 and September 10) MEFC will provide FCI with an
updated forecast by month for the following quarter. However, such forecast
cannot vary in quantity beyond the permitted percentages under Section 2.1.
Also, the product mix for the first month in each such forecast shall be the
product mix FCI ships to MEFC during such first month, except that if such
product differs from Attachment A, the provisions of Section 2.6 shall govern
the applicable product mix for such first month.
2.3 Subsequent Year Increases
In addition to any changes under Section 2.1, if requests in writing between FCI
and MEFC that FCI increase the total quantities (with or without changing the
product mix) contained in Attachment A, FCI and MEFC shall negotiate in good
faith in order to try to reach an agreement regarding the amount of such
increase and the prices for such increased amount. However, any such negotiation
shall be subject to the amount of product, if any FCI then has available for
sale in addition to quantities in Attachment A. These revised quarterly and
yearly amounts would then replace the quarterly and yearly amounts on Attachment
A and in Section 3.2.
2.4 Technical Specifications
The specifications for the Products sold hereunder are attached hereto as
attachment B. As new Products are added to this Agreement under Section 2.3 or
2.6, the specifications for such new
2
<PAGE>
Products will be agreed to by the parties and included on Attachment B.
2.5 Product Mix
MEFC may request in any three month forecast under Section 2.2 that FCI alter
the Attachment A mixture of the Products for the third month of such forecast.
If in FCI's opinion its production rate to produce the requested amount of the
type of Products to which MEFC wants to change is measurably less than the
production rate to produce the same amount of the type of Products contained in
Attachment A, then FCI will permit MEFC to order product in an amount decreased
as FCI deems appropriate to reflect the lower production rate. Conversely, if
the production rate of product is measurably higher, FCI will permit the product
mix change hereunder if MEFC agrees to take product in an amount in an amount
increased as FCI deems appropriate to reflect the higher production rate.
If MEFC accepts FCI's volume change, if any, pursuant to the preceding
paragraph, and if FCI and MEFC agree on the appropriate price change and any
required delivery change resulting from such product mix change, FCI will only
withhold its consent to any such product mix change request if by agreeing to
any such request it would either have to renegotiate a supply agreement with
another customer or it would (in its sole opinion) have to alter unreasonably
its own production schedule. If FCI grants any volume change request hereunder,
this will not serve as a precedent for any future volume change request.
2.6 Most Favored Nations
FCI represents that the total price for the Preforms ordered in Attachment A for
the term (as calculated at the per gram rates under Section 3.2) shall be no
higher than the total term price of any other Preform supply agreement concluded
by FCI (I) of the same supply time lenght as is this Agreement, (ii) of the same
product mix, and in substantially the same percentages, as contained in
Attachment A, (iii) for Preforms of comparable technical specifications and
quantity (on a product by product basis), and (iv) which contains comparable
commercial terms and conditions. If any FCI customer, which has concluded such a
term agreement, makes a change under Secitons 2.1, 2.3 or 2.6, the pricing for
the total amount of each product being ordered for that year including the
amount resulting from the change shall be no higher than FCI at that time has
concluded for the same total amount of this same type of Preform with any such
customer under similar commercial terms and conditions.
FCI also represents that the FOB FCI factory per gram price of any type of
Preform being ordered hereunder ("Agreement Preform") shall at the time of such
order be no higher than any other FOB FCI factory Preform price of FCI Preform
sold at that time ("Non Contract Preform") for delivery in the year if:
i. The delivery time of the Non Contract Preform is the same as the Agreement
Preform;
3
<PAGE>
ii. The Non Contract Preform is of comparable technical specifications and
quantity as the order of the Agreement Preform; and
iii. The Non Contact Preform is sold for comparable commercial terms-and
conditions as the Agreement preform (excluding those provisions for the
Agreement Preform which are unique to a long term contract).
If MEFC claims an FCI violation of this Section, MEFC and FCI shall agree on a
third party, which shall be given access by FCI (after executing a nondisclosure
agreement) to required FCI documents in order to decide the validity of MEFC's
claim. The decision of the third party as to whether or not there has been a
violation shall be in writing and shall not contain any named reference to any
other FCI customer or other FCI proprietary information. Such decision, absent
manifest error, shall be final. If a decision is rendered negotiations of a
settlement will be initiated.
ARTICLE 3
Prices, Penalties and Payments
3.1 Pricing Schedule
i. Pricing of single-mode fiber (SMF) and single-mode preform (SMP) shall
be set annually and shall be 10% less than prices for equivalent
specifications and quantity as delivered in Saudi Arabia, as quoted by
suppliers in ii below. The market price shall be documented at least 90
days prior to the start of the subsequent year.
ii. Pricing for single mode fiber (SMF) or preform (SMP) shall be based on
price quoted/set by Corning, AT&T, Alcatal or similar reputable
international suppliers.
iii. Prices for 1997 are as follows:
SM Fiber prices are $58.50
SM Preform prices are $1.289 per gram gross weight, without
handles on unyielded basis. Multimode fiber (MMF) prices are
as follows: MMF 625/125 - FDDI grade - $0.175 per meter. These
prices will be subject to change based on FCI material costs.
iv. Prices per above are net on an unyielded basis. Losses due to yield are
the sole responsibility of MEFC. FCI takes no responsibilities or
warrants as to yield. This supersedes any prior agreement to the
contrary. FCI will not be responsible for any losses due to yield
incurred by MEFC and FCI is not obligated to provide any technical
support for MEFC's fiber draw production.
v. Prices are to be reviewed twice a year or as market changes require.
Prices for all years 1998 and beyond are for reference only. Actual
contract prices will be set 90 days prior to beginning of year.
4
<PAGE>
vi. Price discounts shall be as provided in i.above, however, in no event
shall such discounted prices be less than FCI costs (including
overheads) plus 15%.
3.2 Letters of Credit
Prior to the first day of each calendar quarter of this Agreement, MEFC shall
establish with a German bank reasonably acceptable to FCI an irrevocable letter
of credit for the value of the immediately following quarterly supply as set
forth in Appendix A including any adjustments to the value under Article 2, in
U.S. Dollars (US$) in favor of FCI/FCJ as the beneficiary under such letter of
credit.
3.3 Letter of Credit Payment Terms
i. All Products sold hereunder shall be paid through draw-downs against
the letters of credit within thirty (30) days after FCI presents
complete shipping documents.
ii. Any Products sold hereunder in excess of the letters of credit total
shall be paid within thirty (30) days after FCI's FOB shipment.
iii. If MEFC fails to accept the annual quantities as set forth in Appendix
A including any adjustments to the value under Article 2 for any
Agreement year, except under the applicability of Section 6.5, FCI
shall be entitled to draw down 50% of the remaining value after 30 days
of the end of the respective year.
iv. All letter of credit payments and direct payments to FCI, shall be
settled within forty-five (45) days of the end of the respective fiscal
year.
3.4 FCI Delivery Penalty
If FCI fails to deliver the annual quantities as set forth in Appendix A
including any adjustments to the value under Article 2 for any Agreement year,
except under the applicability of Section 6.5, FCI shall issue MEFC a credit
equal to the excess the difference in cost which MEFC had to pay compared to
FCI's price to purchase the shortfall from other sources. The credit shall be
applicable to 25% of the value of each shipment in the subsequent year under the
credit is fully used.
i. Force Majeure as defined in 6.5 shall apply as well.
3.5 No Carry backs/Carry forwards
None of the penalties under Section 3.3c) or under Section 3.4 can be calculated
by including shipments in a prior year or a subsequent year, as the case may be
Shipments of the four quarterly letter of credit periods in any one Agreement
year are to be totaled when calculating whether or not any penalties are due.
5
<PAGE>
ARTICLE 4
Supply
4.1 Delivery
The Products shall be delivered in amounts and in time periods as provided in
Attachment A and Section 2.2 hereof.
4.2 Claims for Missing or Damaged Products
If it is determined by MEFC and FCI that, for reasons attributable to FCI, there
is damage to or shortage in Products supplied by FCI resulting from FCI's
handling of such Products after it was produced by FCI, a return authorization
shall be made and signed by the parties. This signed return authorization shall
serve as the basis for any claims by MEFC against FCI for FCI to give
appropriate credit for such damaged or missing Products and to replace such
Products. MEFC shall only receive such credit or forgiveness for the replacement
Products.
ARTICLE 5
Limited Warranty
5.1 Warranty
i. FCI warrants that at the time of its delivery Products sullied
hereunder will conform to the written specifications identified in
Attachment B to the Agreement.
ii. Products which do not meet the foregoing subsection (a) warranty shall
be deemed defective and FCI will give an appropriate credit for such
defective product to and at its expense replace such product; provided:
(I) that all claims regarding such defective Products are made by MEFC
in writing to FCI (with appropriate samples), in amounts as FCI
requests of such claimed defective Products within ninety (90) days
after FCI's FOB factory shipment date of such Products and, unless FCI
objects to the claim within (30) days of receipt of such claim, the
claim shall be deemed accepted by FCI; (ii) that the defective Products
shall have been maintained by MEFC in accordance with normal operating
procedures as well as any relevant FCI written standards that shall
have been delivered to MEFC and that such product shall not have had
any stage of processing performed on it in cabling such product, and
(iii) that if any repair or alteration to the product has been done,
this is not a cause of the Products being defective.
5.2 Limitation of Warranty
6
<PAGE>
FCI guarantees and warrants all Products supplied by it under this Agreement
only to the extent set forth in this Article 5. THIS GUARANTEE CONSTITUTES THE
SOLE GUARANTEE OF PRODUCTS PROVIDED BY FCI, AND IS IN LIEU OF ALL OTHER
WARRANTIES (WHETHER WRITTEN, ORAL, OR IMPLIED), INCLUDING BUT NOT LIMITED TO ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR LIABILITY
FOR ANY SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF PRODUCTS.
THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE HEREOF.
FCI's liability to MEFC whether in contract or tort or under any other legal
theory arising out of warranties, representations, instructions or defects from
any cause shall be limited exclusively to replacing defective Products as
provided in Section 5.1. FCI shall not be liable for special, consequential or
indirect damage such as the loss of capital, use, substitute performance,
production, profits, or claims of customers.
FCI makes no guaranty against and shall not be liable regarding any damage to
Products cabled, installed, operated or maintained negligently in any manner or
otherwise not due to FCI's fault. FCI shall be allowed a reasonable period to
investigate any MEFC claim for defective Products, and shall be given access to
relevant records and data for this purpose.
ARTICLE 6
MISCELLANEOUS PROVISIONS
6.1 FCI's Bank Account
Unless and until changed by FCI, all payments due FCI from MEFC under this
Agreement shall be made to the bank account of FiberCore Jena GmbH, at the
following address:
BERLINER BANK
FILIALE ERFURT
WEIMARISCHE STRASSE 46
99099 ERFURT, GERMANY
6.2 Address
Formal communications under this Agreement, except of an ongoing technical
nature, shall be in writing addressed as follows:
If to FiberCore Jena GmbH
(By mail) FiberCore Jena GmbH
Goschwitzer Strasse 20
7
<PAGE>
D-07745 Jena-Burgau
GERMANY
(By fax) 49-3611-677334
Attn: Lothar Brehm
If to MEFC
(By mail) P.O. Box 60536
Riyadh 11555
Saudi Arabia
(By fax) 966-1-478 7973
Attn: Hashem Al Huneidi
For ongoing technical/commercial communications:
If to FCI: Dr. Dau Wu (Technical)
If to FCI: Charles DeLuca (Commercial)
174 Charlton Road
P.O. Box 206
Sturbridge, MA 10566 USA
Tel.: 1 508 347-7744
Fax.: 1 508 347-2778
The date of such reports, payments and other notices shall be the date of
mailing if sent by certified or registered mail and shall be the date of receipt
if transmitted in any other manner.
6.3 Assignability
Neither party may assign any of its right or privileges hereunder without the
prior written consent of the other and any attempted assignment shall be void,
except to a successor in ownership of all or substantially all the assets of the
assigning party's operations and upon condition that such successor shall assume
the performance of all the terms and conditions of this Agreement to be
performed by the assigning party.
6.4 Terminability for Default
If any payment due and payable under this Agreement continues to be past due
ninety (90) days after written notice thereof from FCI to MEFC the FCI supply
commitment hereunder shall become terminable at FCI's option. If there is a
default of any other material provision of this Agreement and such default is
not cured within ninety (90) days after written notice from the non-defaulting
8
<PAGE>
party, then the non-defaulting party may at its option terminate this Agreement;
provided that any payment obligations that have already arisen shall not be
terminated. The rights granted under this paragraph shall be in addition to any
other rights, claims or damages which a non-defaulting party hereto may have be
law.
6.5 Force Majeure
If the performance of this Agreement or of any obligation hereunder, other than
the payment of the purchase price for the Products delivered hereunder, is
prevented, restricted or interfered with by reason of acts of God, civil
disorders, strikes, governmental act, wars or, without limiting the foregoing,
by any other cause not within the control of the party, 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 efforts to avoid or
remove such causes or nonperformance and shall continue performance hereunder
with the utmost dispatch whenever such causes are removed. If FCI's performance
hereunder is delayed for from three (3) to six (6) months due to force majeure,
MEFC may purchase Products from a third party (and shall be entitled to letter
of credit reductions for such purchases).
If a party's performance hereunder is delayed for more than six (6) months due
to force majeure, the other party shall be entitled to terminate this Agreement
without any further liability to the defaulting party.
6.6 No Waiver
Failure of a party to this Agreement to terminate this Agreement or pursue any
other remedy available to it following breach of this Agreement by the other
party or failure by such other party to comply with any provision hereof shall
not be deemed to constitute a waiver by such first mentioned party of any of its
defenses, rights or causes of action arising form such or any future breach or
noncompliance of the same or different nature.
6.7 Governing Law
This Agreement shall be governed and construed in accordance with the laws of
the State of Massachusetts except for conflicts of law principles.
6.8 Arbitration
Any dispute or claim arising out of or relating to this agreement, which cannot
be settled between the parties within six (6) months, shall be finally settled
under the "Rules of Conciliation and Arbitration" of the International Chamber
of Commerce by one or more arbitrators appointed in accordance with such rules.
Any such proceeding shall beheld in London, UK. FCI and MEFC hereby agree that
process in connection therewith mailed to it at its office by registered mail,
return receipt requested, shall be effective and valid to obtain jurisdiction
over either.
9
<PAGE>
6.9 Entire Agreement, Headings
This Agreement, with all Attachments hereto, constitutes the entire agreement
between the parties with respect to its subject matter. All prior or
contemporaneous oral and written agreements, memoranda and representations (and
any subsequent purchase order, purchase order confirmation, or similar document
relating to sales hereunder of Products) are superseded by this Agreement.
Headings used in this Agreement are only for convenience and are not to be used
in the interpretation of the Agreement.
6.10 Amendments
This Agreement may be amended only by a subsequent writing signed by authorized
representatives of both parties, indicating an intent to amend the Agreement.
6.11 Taxes
MEFC shall pay, or reimburse FCI, for any sales, use or similar taxes (including
interest and penalties caused by MEFC) arising out of any sales of Products
resulting from this Agreement; except that MEFC shall have no obligation to pay
any such taxes or amounts that are based upon FCI's net income from this
Agreement.
6.12 Severability
If any provision of this Agreement is held invalid or unenforceable, the
remaining provisions shall not be affected thereby, and the parties shall in
good faith attempt to amend this Agreement to eliminate such invalidity or
unenforceability.
6.13 Advertising
Each party hereto agrees not to use the name of the other party in the first
party's advertising regarding Products without the second party's prior written
consent.
6.14 Export Control
MEFC acknowledges that it is aware that these Products are subject to the Export
Administration Regulations administered by the country of export, and that such
Products require a validated export license before they can be re-exported.
6.15 Confidentiality
MEFC and FCI agree that all confidential commercial and technical information
provided hereunder to the other party (which the transmitting party designates
in writing as being confidential) will be kept confidential by the receiving
party (using the same standard of care as the receiving party uses to protect
its own similar confidential information); and shall not be sold to or disclosed
in any other
10
<PAGE>
manner to any third party by the receiving party for a period of five (5) years
commencing on the date when the transmitting party delivers such information to
the receiving party. The preceding sentence shall not apply to:
a. Information which at the time of disclosure hereunder is in the public
domain;
b. Information which after disclosure hereunder is published or otherwise
becomes part of the public domain through no fault of the receiving party
but only after it is published or comes into the public domain;
c. Information which the receiving party can document through written records
as having been in its possession at the time of its disclosure to the
receiving party hereunder; and
d. Information which has been or may in the future be disclosed or delivered
to the receiving party by any third party which does not have an obligation
to the transmitting party to refrain from disclosing such information.
The obligations under this paragraph 6.15 shall survive the termination of this
Agreement for any cause whatsoever.
11
<PAGE>
The parties agree that FCI pricing information contained herein, as well as the
other provisions of this Agreement, are confidential and may not be disclosed by
MEFC to any third party.
6.16 Preference for Additional Requested Supply
If MEFC decides that it needs to purchase Products for delivery in addition to
the amounts it is able to purchase under this Agreement submit to FCI a request
for such additional amount. If FCI determines at that time that it has adequate
available capacity for such requested additional deliveries, MEFC shall have a
first preference to purchase such additional Products for a price and other
commercial terms and conditions negotiated at that time. However, the amount
that MEFC may purchase on such preferential basis shall be proportionate to all
the requests for preferential additional supplies, from customers with similar
five year supply agreements, which have not been resolved at the time of a
request hereunder. Such proportion shall be the total value of the applicable
years older under Attachment A in this Agreement compared to such total value
under all the other agreements requesting preferential additional supplies at
this same time.
ARTICLE 7
TERM
7.1 Time Periods of Deliveries
This Agreement shall be for deliveries of Products, in quantities as provided
hereunder, from January 1, 1997 through December 31, 2001.
****
The parties have caused this Agreement to be signed by their duly authorized
representatives in a manner legally binding upon the parties.
12
<PAGE>
FiberCore, Inc.
Signature /s/ Charles Deluca
Date March 13, 1997
MID EAST FIBER CABLES
By General Manager
Signature /s/ Hashem Al-Henaidi
Date: March 13, 1997
13
FIBERCORE, INC.
List of SICO Jena GmbH Quarzschmelze
Patents Assigned to FiberCore, Inc.
Patent # Filed Content
-------- ----- -------
1. DD 248 928 A3 10-26-81 Annealing of tube surfaces
2. DD 261 055 A3 10-06-86 Preforms for graded index fibers
3. DD 301 011 A7 6-09-88 Collapsing process
4. DD 300 163 A7 3-01-89 Rod with spiral
5. DD 299 878 A7 9-25-89 Z-burner
6. DD 288 515 A7 10-30-89 Refill valve
7. DD 295 197 A5 6-15-90 Inside thermostat for bubbler
<PAGE>
FIBERCORE, INC.
SUMMARY DESCRIPTION OF 7 PATENTS FROM SICO
DD248 928 A3 - Process to Improve Fused Silica Tubing
The invention is a process to refine fused silica tubing, particularly its
inside surface, in order to create a high-value material required for products
in the telecommunication and microelectronics field. The inventive task is to
eliminate from the surfaces essentially all micropores, micro bubbles, micro
inclusions and any desitrifcation centers. The process solves this problem by
moving the tubing for a defined time span through a highly concentrated mixture
of fluoride acid at a certain temperature and by injecting the tubing surfaces
subsequently to a heat treatment of 1700-2000(degree)C.
DD 261 055 A3 - Preform for a Multimode Waveguide Fiber
The invention involves a preform for a MM fiber produced by the MCVD process and
pursues the goal of achieving greater material efficiency. The step by step
chemical vapor deposition process described is rather complex. Emphasis is at
first on a particular Si02-Ge02-P205 composition of the preform waveguide core
and secondly on the sequence and positioning of the gradient layers with the
P205 concentration reaching a constant concentration level for all subsequent
layers.
<PAGE>
DD 301 011 A7 - Collapsing Coated Carrier Tubes
The invention concerns the collapsing of coated tubes into glass rods as per the
MCVD process of making optical preforms. After applying core coatings of high
optical quality on the inner tube surface, strong heat treatment is applied to
cause the tube to collapse into (forming) a round rod. The optical and geometric
quality of the preform normally suffers from the firing process. The invention
provides for special conditions (pressure and gas flow manipulation) to minimize
such detrimental effects.
DD 300 163 A7
The patent covers an invention which consists of an apparatus (see drawing)
which secures continuous soot removal from the carrier tube as well as
stabilizes the tube geometry in this MCVD process of making optical preforms.
DD 299 878 A7 - Device for Burner Positioning
The invention is a device improving the geometric design and positioning of the
burners in a manner that heat zone and flame pressure effects are reduced and
thus the quality and production economics are maintained.
DD 288 515 A7 - Improved Refilling of Evaporation Vessel
Specially designed bypass valves safeguard transfer of highest purity and
chemically aggressive liquid dopants from storage containers into the actual
evaporation chamber.
DD 295 197 A5 - System for Thermostat-controlled Chemical Vapor Deposition
The invented system for chemical vapor deposition as per the CVD process is
designed to secure high temperature constancy for the dopant under varying
filling and ambient conditions.
<PAGE>
DEUTSCHE DEMOKRATISCHE REPUBLIK PAT E N T S C H R I F T
(12) Wirtschaftspatent (19) DD (11) 248 928 A3
Erteilt gema(beta)Gss.18Absatz 2 Patentgesetz 4(51) C 03 C 15/02
C 03 B 29/02
AMT FUR ERFINDUNGS - UND PATENTWESEN
- -------------------------------------------------------------------------------
(21) WP C 03 C/234 340 (22) 26.10.81 (45) 26.08.87
- -------------------------------------------------------------------------------
(71) siehe (72)
(72) Schmid, Werner, Dipl. Phys., 6908 Jena-Winzerla, O(beta)maritzer Stra
(beta)e 7; Wichert, Friedel, Fischer, Johannes, Dipl.-Ing.; Lau, Ruth; (Braune,
Hannelore; Hofmann, Christel; Medicke, Christine, Dipl, Chem., DD
- -------------------------------------------------------------------------------
(54) Verfahren zur Vergutung von Kieselglasrohren
- -------------------------------------------------------------------------------
(57) Die Erfindung betrifft ein Verfahren zur Vergutong von Kieselglasrohren
insbesondere deren Innenoberflache, mit dem Ziel, hochwertige Halbzeuge fur
Erzeugnisse der Nachrichtenzechnik und Mikroelektronik zu schaffen. Die Aufgabe
der Erfindung ist es, die zu vergutenden Oberflachen von Mikroporen,
Mikroblasen, Mikroeinschlussen und Kristallisationszentren im wesentlichen zu
befreien. Das wird erfindungsgema(beta) dadurch gelost, da(beta) die zu
vergutenden Kieselglasrohre uber einen bestimmten Zeitraum in einem
hochkonzentrierten Flu(beta)sauregemisch bestimmter Temperatur bewegt werden und
die anschlie(beta)end neutralisierte Kieselglasoberflache einer
Temperaturbehandlung von 1700(Degree)C-2000(Degree)C unterzogen wird.
<PAGE>
DEUTSCHE DEMOKRATISCHE REPUBLIK PAT E N T S C H R I F T
(12) Wirtschaftspatent (19) DD (11) 261 055 A3
Erteilt gema(beta)Gss.18Absatz 2 Patentgesetz 4(61) C 03 B 37/018
G 02 B 6/00
AMT FUR ERFINDUNGS - UND PATENTWESEN
- -------------------------------------------------------------------------------
(21) WP C 03 (beta)/295 047 0 (22) 0G.10.BG (45) 19.10.88
- -------------------------------------------------------------------------------
(71) VEB JENA GLASWERK, Otto-Schott-Stra(beta)e 13, Jena, 6900, DD
(72) Wichart, Friodal, Engfar, Hans. Dipl. Ing., Fook, Datlav, Dipl. Ing., DD
- -------------------------------------------------------------------------------
(54) Varform fur oine Multimode-Lichtleitfaser
- -------------------------------------------------------------------------------
(67) Die Erfindung betrifft ejna Varlorm fur gino Multimode Lichtleitfaser, die
nach dem MCVD Verfahren hargastolli wird, mit dem Zipl, den Materialpinsatz
affoktiver zu gostalten. Die Erlindung bostaht darm, da(beta) der lictleitonda
Kern der Vorform im Glassystom Si02-Ge02-P205 so gostafrut ist, da(beta) von don
don Kurn bakfondon Gradientenschieton mindestens swai dor den Sparrschichten
benachbarton au(beta)oron Gradiontoschiehton als brochzahtbostimmandon Dotenden
nur P205-Konzontration auf ain tioforios, fur allo waitaren Gradientenschichter,
konstant htoibondes Nivoau absinki und als wosentlich dia Brochzahl bostimmendor
Dotand noch GeO2 mit sctichtweisa ontsprochand dem vorgogebonon Gradiantonprofil
ansteigander Konzentration vorhanden ist.
<PAGE>
(19) BUNDESREPUBLIK DEUTSCHLAND PATENTSCHRIFT
(12) Ausschlie(beta)ungspatent (11) DD 301 011 A7
Erteilt gema(beta)ss.18 Absatz 2 5(51) C 03 B 37/018
Patentgesetz der DDR
vom 27.10.1983
in Ubereinstimmung mit den entzprechenden
Festlegungen im Einigungsvertrag
DEUTSCHES PATENTAMT
- --------------------------------------------------------------------------------
(21) DD C 03 B / 316 557 6 (22) 09. 06.88 (45) 24.09.92
- --------------------------------------------------------------------------------
(72) Fenk, Detlev, Dipl.-Ing.; Schmidt, Wolfgang, Dipl.-Ing., DE
(73) Jenaer Gleswerk GmbH, Otto-Schott-Stra(beta)e 13, O-6900 Jena, DE
- --------------------------------------------------------------------------------
(54) Verfahren zum Kollabieren von beschichteten Tragerrohren nach dem MCVD-
Verfahren zur Herstellung von Lichtleitervorformen
- -------------------------------------------------------------------------------
(55) Lichtleitervorform; Preform; MCVD-Verfahren; kreisformiger Glasstab;
Kollabiertorgang; kollabieren; beschichtetes Tragerrohr;
Knallgasbrenner; Gasstrom; Kollabierdurchlaufe; Druckverhaltnisse;
Unterdnuck; Austragsende; Eintragsende; hei(beta)e Zone;
Brechzahleinbruch; Mittendip; Ovalitat
(57) Die Erfindung bertrifft den Kollabiervorgang von beschichteten
Tragerrohren zu kreisformigen Glasstaben im MCVD-Proze(beta) der
Lichtleitervorformherstellung, wobel nach dem Auftragen von Schichten
hoher optischer Qualitat im Innern eines Tragerrohres dieses durch
Einbringen erhohtar Energie mittels eines Knallgasbrenners zu einem
kreisformigen Glasstab zusammensinkt und wobei die optische und
geometrische Qualitat der Lichtleitervorform durch die Strommungs-und
Druckverhaltnisse wahrend des Kollablervorganges beeinflu(beta)t
werden. Erfindungsgema(beta) wird wahrend des gesamten
kollabierprozesses am Austragsende des beschichteten Tragerrohres ein
Unterdruck angelegt, wobei das Eintragsende des beschichteten
Tragerrores mit dieser Unterdruckseite verbunden ist, und weiterhin
wird eine hel(beta)e Zone, die durch einen Knaligasbrenner erzaught
wird, entegen der Stromungsrichtung eies gleichzeitig durch das
beschichtete Tragerrohr geleiteten Gasstromes gefuhrt, wobei wahrend
wenigstens eines der aufeinanderfolgenden Kollabierdurchlaufe die
Durchflu(beta)menge des Gasstromes verringert und die Breite der heiben
Zone vergro(beta)ert wird.
<PAGE>
(19) BUNDESREPUBLIK DESSCHLAND PATENTSCHRIFT
(12) Ausschlie(beta)ungspatent (11) DD 300 163 A7
Erteilt gema(beta)ss.18 Absatz 2 5(51) C 03 B 37/018
Patentgesetz der DDR
vom 27.10.1983
in Ubereinstimmung mit den entsprechenden
Festlegungen im Einigungsvertrag
DEUTSCHES PATENTAMT
- -------------------------------------------------------------------------------
(21) DD C 03 B / 326 105 3 (22) 01.03.89 (45) 27.05.92
- -------------------------------------------------------------------------------
(71) VEB JENA GLASWERK, Otto-Schott-Stra(beta)e 13, O - 6900 Jena, DD
(72) Muller, Walter, Dr. Rer. Nat. Dipl. - Chem.; Fenk, Detlev, Dipl.-Ing.:
Engler, Hans, Dipl. - Ing.: Eisenhardt, Heidrun, Dipl.-Phys.; Knoch,
Hardo, Dipl.-Ing., DE
(73) JENA Glaswerk GmbH, Otto-Schott-Stra(beta)e 13, 0-6900 Jena;
Physikalisch-Technisches Institut Jena, O-6900 Jena, DE
- --------------------------------------------------------------------------------
(54) Vorrichtung zum kontinuierlichen Ru(beta)austrag aus Tragerrohren und
zur Stabillisierung der Tragerrohrgeometrie im MCVD-Proze(beta) zur
Lichtleitervorformherstellung
(55) Lichtleitervorform; Preform; MCVD-Verfahren; Tragerrohr;
Ru(beta)austragsrohr; Konus; Glasru(beta); Ru(beta);
Tragerrohrgeometrie; Hohlwendel; Stab; Glasstab; Ru(beta)etransport;
rotierendes Mittel; Beschichtungsvorgang
(57) Die Erfindung betrifft die Ausgestaltung eines rotierenden Mittels im
Ru(beta)austragsrohr von Vorrichtungen zur Herstellung von
Lichteltervorformen nach dem MCVD-Verfahren. Erfindungsgema(beta)
besteht das rotierende Miteel aus einer Hohlwendel und einemn darin
angeordneten Stab, die in einem Ru(beta)austragsrohr drehbar gelagert
angeordnet sind, wobei sich das Ru(beta)austragsrohr mit arweitertem
Querschnitt uber einen Konus an das zu beschichtende Tragerrohr
anschlie(beta)t. Gunstige Ausfuhrungsformen sind, wenn Hohlwendel oder
Stab in den Konus hineinragen, wobei das Ende der Hohlwendel oder des
Stabes derart gestaltet sind, da(beta) dieses etwa parallel zur
Konuswand vertauft und annahernd die Lange der Seitenlinie des Konus
aufweist. Es tritt der uberraschende Effekt ein, da(beta) diese
Vorrichtung einen kontinuierlichen Ru(beta)austrag aus dern Tragerrohr
bewirkt und gleichzeitig zur Stabilisierung der Tragerrohrgeometrie
beitragt, wodurch die Gebrauschswerte der hergestellten Vorforman fur
die Lichtleiternachrichtenubertrag8ng verbassert werden. Besonderes
Anwandungsgebiet liegt bei Tragerrohrvorrichtungen mit gro(beta)en
Beschichtungslangen. Fig. 1
<PAGE>
(19) BUNDESREPUBLIK DEUTSCHLAND PATENTSCHRIFT
(12) Ausschlie(beta)ungspatent (11) DD 299 878 A7
Erteilt gema(beta)ss.18 Absatz 2 (51) C 03 B 37/018
Patentgesetz der DDR
vom 27.10.1983
in Ubereinstimmung mit den entsprechenden
Festlegungen im Einigungsvertrag
DEUTSCHES PATENTAMT
- -------------------------------------------------------------------------------
(21) DD C 03 B / 332 930 5 (22) 25.09.89 (45) 14.05.92
- -------------------------------------------------------------------------------
(71) VEB JENA GLASWERK, Otto- Schott-Stra(beta)e 13, 0 - 6900 Jena, DE
(72) Fenk, Detlev, Dipl.-Ing.; Schmidt, Wolfgang, Dipl.-Ing: Menzel,
Andreas, Dipl. -Ing, DE
(73) Jenaer Glaswerk GmbH, Otto-Schott-Stra(beta)e 13, 0 - 6900 Jena, DE
- --------------------------------------------------------------------------------
(54) Vorrichtung zurWarmebeaufschlagung von Kieselglastragerrohren zur
Herstellung von Lichtleiter-Vor-formen nach dem MCVD-Verfahren
- --------------------------------------------------------------------------------
(55) Lichtleitervorform: Preform; MCVD -Verfahren; Tragerrohre;
synthetisches Kieselglas; Warmebeaufschlagung; Brenner; Drehbankbett;
Tragerrohrumfangsflache: Tragerrohrechse; Knaligasflamme; hei(beta)e
Zone; Flammenpre(beta)druckverhaltnisse
(57) Die Erfindung betrifft die raumliche Anordnung und geometrische
Gestaltung von Einzelbrennern zur Warmebeaufschlagung von
Kieselglastragerrohren, wobei die Breite, die Form und der Aufbau der
durch die Knallgasflammen erzeugten hei(beta)en Zone sowie die
Flammenpre(beta)druckverhaltnisse am Umfang und Iangs des Tragerrohres
antscheidend die Qualitat der hergestelltan Lichtleitervorformen und
die Okonomie des Herstellungsprozesses beeinflussen. Als Hauptmerkmal
der Erfindung bestehen die Einzelbrenner aus einem zylindrischen
Korper, deren Mantelflache durch zwei ebene, gegenuberliegenda,
zueinander geneigte Flachen unterbrochen ist, liegt der Schnittpunkt
der veriagerten Symmetrieachsen der einzelbrenner im Mittelpunkt der
durch den Durchmesser des Tragerrohres beschriebenen Kreisflace, wobei
der Schnittpunktwinkel der verlangerten Symmetrieachse zweier
benachbarter Einzelbrenner mindestens 20(Degree) und hochstens
30(Degree) betragt, und weisen benachbart angeordnete Einzelbrenner an
jeweils einer ebenen geneigten Flache eine gemeinsame Beruhhrungskante
bzw. - flache auf. Fig. 1.
<PAGE>
19) BUNDESREPUBLIK DEUTSCHLAND PATENTSCHRIFT
(12) Ausschlie(beta)ungspatent (11) DD 288 515 A7
Erteilt gema(beta)ss.18 Absatz 2 5(51) F 17 C 13/00
Patentgesetz der DDR C 23 C 16/44
vom 27.10.1983
in Ubereinstimmung mit den entsprechenden
Festlegungen im Einigungsvertrag
DEUTSCHES PATENTAMT
- -------------------------------------------------------------------------------
(21) DD F 17 C / 333 992 6 (22) 30.10.89 (45) 04.04.91
- --------------------------------------------------------------------------------
(71) siehe (73)
(72) Coriand, Frank, Dipl.-Phys.; Menzel, Andreas, Dipl. -Ing, Lietz, Uwe,
Dipl.-Ing.; Vehihaber, Bernd, Dipl.-Ing.; Sondermann, Monika, DE
(73) JENA GLASWERK, Otto-Schott-Stra(beta)e 13, 0 - 6900 Jena, DE
- ------------------------------------------------------------------------------
(54) Anordnung zum Befullen eines Verdampfungsgefa(beta)es aus einem
Vorratsgefa(beta) fur den CVD-Proze(beta)
- ------------------------------------------------------------------------------
(55) CVD; chemische Dampfabscheidung; Dotierungsflussigkeit;
Verdampfungsgefa(beta); Sammier, befullen, spulen; Oberlaufgefa(beta);
Bypass; Leitungssystem; Lichtleiter-Vorform
(57) Anordnung zum Befullen eines Verdampfungsgefa(beta)es aus einem
Vorratsgefa(beta) mit reinstan aggressiven Dotierungsflussigkeiten, dis
speziell beim Verfahren der chemischen Dampfabschsidung (CVD-Verfahren)
seine Anwendung findet z. B. Zur Herstellung von Lichtleiter-Vorformen,
Ziel der Erfindung ist es bei einfacher Handhabung und geringem
technischen Aufwand ein sicheres, verunreinigungsfreies Befullen eines
Vardampfungsgefa(beta)es aus einem vorratsgefa(beta) mit reinsten
aggressiven Dotierungsflussigkeiten bei gleichzeitiger Gewarleistung
einer hohen Reinheit der bereits im Vorrats-bzw. Verdampfungsgefa(beta)
befindlichen Menge en Dotierungsflussigkeit rowie des mit
Dotierungsflussigkeit in Verbindung kommenden Leitungssystem,
einschlis(beta)lich der Ventile und Verbindungselemente zu erreichen.
Dss wird erreicht, Indern sich in Durchstromungsrichtung des gasfomigen
Mediums zwischen dem Ventil am Elngang und dern Ventil am Ausgang des
Vorretsgefa(beta)es ein Bypass mit Ventil befindet, und das die
Verbindung zwischen dem Ausgang des Vorratsgefa(beta)es fur
Dotierungsflussigkeiten undurchlasigen Abzwaig fur die Verbindung zum
Sammier auf dem Oberlaufgefa(beta) enthalt. Der Sammier ist derart
gestaitet, da(beta) mindestens swei Verdampfar angeschlossen werden
konnen und ein Eindringen von dotierten Gasen aus dem
Oberluafgefa(beta) in des Leitungssystem durch standinges Spulen
verhindert wird. Fig. 1.
<PAGE>
19) BUNDESREPUBLIK DEUTSCHLAND PATENTSCHRIFT
(12) Ausschlie(beta)ungspatent (11) DD 295 197 A5
Erteilt gema(beta)ss.17 Absatz 1 5(51) C 23 C 16/54
Patentgesetz der DDR C 23 C 16/52
vom 27.10.1983
in Ubereinstimmung mit den entsprechenden
Festlegungen im Einigungsvertrag
DEUTSCHES PATENTAMT
- --------------------------------------------------------------------------------
(21) DD C 23 C / 341 694 8 (22) 15.06.90 (45) 24.10.91
- --------------------------------------------------------------------------------
(71) siehe (73)
(72) Menzel, Andreas, Dipl. -Ing, Coriand, Frank, Dipl.-Phys.; Menge, Rolf,
Dipl. -Ing. DE
(73) VEB JENA GLASWERK, Otto-Schott-Stra(beta)e 13, 0 - 6900 Jena, DE
- --------------------------------------------------------------------------------
(54) Anordnung zur Verdampfung von Dotierungsflussigkeit beim
CVD-Proze(beta)
- --------------------------------------------------------------------------------
(55) CVD; chemische Dampfabscheidung; Dotierungsflussigkeit;
Thermostatierung; Warmetauschergefa(beta); Verdampfungsgefa(beta);
Tragergasvolumenstrom; Kurzschlu(beta)leitung; Fullstandssensoren;
Lichtleiter-Vorform; Dotierungsflussigkeitstemperatur
(57) Anordnung zur Verdampfung von Dotierungsflussigkeiten, kie speziell bei
Verfahren der chemischen Dampfabscheidung (CVD-Verfahren)O ihre
Anwendung finden, Ziel der Erfingung ist die Schaffung einer Anordnung
zur Verdampfung von Dotierungsflussigkeiten, bestehend aus wenigstens
swei Verdampfungsgefa(beta)en aus Glas und einem Thermostaten. Dabei
soll die Beladung des Tragergases bis zu einer gewissen Minimalfullhohe
bei konstanter Dotierungsflussigkeitstemperatur und unabhangig von
unterschiedlichen F:ullvolumina und schwankenden umgebungstemperaturen
erfolgen. Des weiteran soll bei der Reihenschaltung von wenigstens zwei
Verdampfungsgefa(beta)en das jeweils vorgeschaltete
Verdampfungsgefa(beta) sicher drucklos geschaltet werden und der
Fullstand kontrollierber sein. Dies wird erreicht, indern im unteren
Teil jedes der in Reiche gescalteten Verdampfungsgefa(beta)e jeweils
ein mit mindestens' pinem separaten Eingangs und Ausgangsstutzen
verseenes, mit termostatieter Flussigkeit durcstromtes
Warmetauscergefa(beta) angeordnet ist, wobei die
Warmetauschergefa(beta)e in Reiehe mit einer bzg.
Tragergasstromrichtung im Gegenstro arbeitenden Thermostatiervornictung
verbunden sind, da(beta) weiterhin bei der Reihenschaltung jedes
bezuglich. Tragergasdurchstromungsrichtung nicht letzte
Verdampfungsgefa(beta) zusatzlich uber aine separate
Kurzalclu(beta)leitung mit integriertern Vantil mit dem Ausgang des
nacfolgenden oder letzen Verdampfungsgefa(beta)es verbunden ist
und-da(beta) die Verdampfungsgefa(beta)e au(beta)en voilstandig mit
einer warnteisolieranden Schicht umgeben sind, die in wenigsters einem
genugen breiten Bereich aus einem durshsichtigen Material gestaltest
sind. Figur
<PAGE>
008970176 WPI Acc No: 92-097445/13
XRAM Acc No: C92-045305
XRPX Acc No: N92-072871 *Image available*
Liq. dopant evapn. system for chemical vapour deposition - has
thermostat controlled series-connected evapn. vessels, for optical
fibre preform
Patent Assignee: (JENA) VEB JENA GLASWER
Author (Inventor): MENZEL A; CORIAND F; MENGE R
Number of Patents: 001
Patent Family:
CC Number Kind Date Week
DD 295197 A 911024 9213 (Basic)
Priority Data (CC No Date): DD 341694 (900615)
Abstract (Basic): DD 295197
System, comprises two glass evapn. vessels and a thermostat, each
vessel having a carrier gas inlet tube extending down to near the vessel bottom
and having an outlet above the doping liq. level, the outlet of the first vessel
connected to the inlet tube of the second vessel. Lower portion of each
externally insulated vessel (1,11) contains a heat exchanger (4,14) with an
inlet (5,15) and an outlet (6,16), the outlet (16) of the heat exchanger (14) of
the second vessel (11) connected to the inlet (5) of the heat exchanger (4) of
the first vessel (1), while the outlet (6) of the first vessel heat exchanger
(4) and the inlet (15) of the second vessel heat exchanger (14) are connected to
a thermostat (20). The thermostat (20) controls the temp. of liq. passing
through the heat exchangers (4,14) in the direction opposite to carrier gas
passage through the vessels (1,11). The first vessel outlet is connected to the
second vessel outlet by a separate short circuit line (9) fitted with a valve
(10).
USE/ADVANTAGE - Optical fibre preform prodn.. It provides high temp. constancy
of the liq. dopant independent of vessel filling levels and fluctuating ambient
conditions, has low energy costs and has a simple design. @(12pp Dwg.No.l/l)@
Derwent Class: L03; M13; V07
Int Pat Class: C23C-016/54
[Letterhead]
January 17, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: FiberCore, Inc.
File Ref. No. 0-21823
We were previously the principal accountant for FiberCore, Inc. and,
under the date of July 29, 1996, except for the eighth paragraph of Note 15, as
to which the date is December 18, 1996, we reported on the consolidated
financial statements of FiberCore, Inc. and subsidiaries as of and for the years
ended December 31, 1995 and 1994. On January 14, our appointment as principal
accountant was terminated. We have read FiberCore, Inc.'s statements included
under Item 4 of its Form 8-K dated January 14, 1997 and we agree with such
statements.
Very truly yours,
/s/ Mottle McGrath Braney & Flynn, P.C.
EXHIBIT 22
LIST OF SUBSIDIARIES
OF
FIBERCORE, INC.
Infoglass Incorporated ( Delaware )
Fibercore Glasfaser Jena GmbH ( Germany )
Automated Light Technologies ( Delaware )
Fibercore Mideast Ltd. ( Cayman Islands )
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<EXCHANGE-RATE> 1 1
<CASH> 190 833
<SECURITIES> 0 0
<RECEIVABLES> 711 622
<ALLOWANCES> (36) (39)
<INVENTORY> 1,921 1,407
<CURRENT-ASSETS> 3,222 3,138
<PP&E> 5,244 5,044
<DEPRECIATION> (1,473) (925)
<TOTAL-ASSETS> 17,642 14,783
<CURRENT-LIABILITIES> 3,072 3,415
<BONDS> 4,545 5,000
0 0
0 0
<COMMON> 35 30
<OTHER-SE> 9,990 6,338
<TOTAL-LIABILITY-AND-EQUITY> 17,642 14,783
<SALES> 8,096 3,094
<TOTAL-REVENUES> 8,204 3,242
<CGS> 7,200 4,509
<TOTAL-COSTS> 11,944 6,684
<OTHER-EXPENSES> 0 51
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 393 516
<INCOME-PRETAX> (4,133) (4,009)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (4,133) (4,009)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (4,133) (4,009)
<EPS-PRIMARY> (0.13) (0.15)
<EPS-DILUTED> 0 0
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