Exhibit 10.20
EXECUTION COPY
--------------
===========================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
OFS BRIGHTWAVE, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
BY AND AMONG
OFS BRIGHTWAVE, LLC,
FITEL USA CORP.
AND
COMMSCOPE OPTICAL TECHNOLOGIES, INC.
DATED NOVEMBER 16, 2001
===========================================================================
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS..........................2
1.1 Definitions....................................................2
-----------
1.2 Accounting Terms and Determinations...........................11
-----------------------------------
1.3 Additional Defined Terms......................................11
------------------------
ARTICLE 2. GENERAL PROVISIONS.......................................11
2.1 Formation of Company..........................................11
--------------------
2.2 Name of Company...............................................11
---------------
2.3 Place of Business.............................................11
-----------------
2.4 Registered Office and Registered Agent........................11
--------------------------------------
2.5 Term..........................................................11
----
ARTICLE 3. PURPOSES AND POWERS......................................11
3.1 Purposes......................................................11
--------
3.2 Powers........................................................11
------
ARTICLE 4. MANAGEMENT OF THE COMPANY................................12
4.1 Management of Company.........................................12
---------------------
4.2 Board of Managers; Number and Selection.......................12
---------------------------------------
4.3 General Powers of the Board of Managers.......................12
---------------------------------------
4.4 Voting........................................................13
------
4.5 Quorum........................................................13
------
4.6 Regular Meetings..............................................13
----------------
4.7 Special Meetings..............................................13
----------------
4.8 Presence at Meetings..........................................13
--------------------
4.9 Written Consent...............................................13
---------------
4.10 Removal of Managers...........................................14
-------------------
4.11 Resignation of Managers.......................................14
-----------------------
4.12 Delegation of Manager's Powers; Officers......................14
----------------------------------------
4.13 Resignation and Removal of Officers...........................14
-----------------------------------
4.14 Chief Executive Officer.......................................14
-----------------------
4.15 Other Officers................................................15
--------------
4.16 Limitations on Power of Board of Managers.....................15
-----------------------------------------
4.17 Subsidiaries..................................................15
------------
4.18 Standard of Care; Fiduciary Duty..............................15
--------------------------------
4.19 CommScope Optical Designees...................................16
---------------------------
ARTICLE 5. MEMBERS..................................................17
5.1 Liability of Members..........................................17
--------------------
5.2 Authority of Members..........................................17
--------------------
5.3 Voting........................................................17
------
5.4 Preemptive Rights.............................................17
-----------------
i
ARTICLE 6. TRANSFERS AND REPURCHASES OF MEMBERSHIP INTERESTS........17
6.1 Transfer Restrictions.........................................17
---------------------
6.2 Right of First Refusal........................................18
----------------------
6.3 Tag-Along Rights..............................................19
----------------
6.4 Take-Along Rights.............................................20
-----------------
6.5 Assignment Binding on Company.................................21
-----------------------------
6.6 Substituted Members...........................................21
-------------------
6.7 Acceptance of Prior Acts......................................21
------------------------
6.8 Admission of Transferees to the Company.......................21
---------------------------------------
6.9 Right to Call Membership Interests............................21
----------------------------------
6.10 Right to Put Membership Interests.............................23
---------------------------------
6.11 Securities Laws...............................................24
---------------
ARTICLE 7. CAPITAL CONTRIBUTIONS, ACCOUNTS, ALLOCATIONS
AND DISTRIBUTIONS........................................24
7.1 Initial Capitalization........................................24
----------------------
7.2 Capital Accounts..............................................25
----------------
7.3 Distributions.................................................25
-------------
7.4 Tax Distributions.............................................25
-----------------
7.5 Allocation of Net Profit or Net Loss..........................25
------------------------------------
7.6 Allocations of Nonrecourse Deductions; Minimum Gain
---------------------------------------------------
Chargeback; Special Allocations and Rules.....................25
-----------------------------------------
7.7 Section 704(c) Allocations....................................26
--------------------------
7.8 No Restoration of Negative Capital Accounts...................27
-------------------------------------------
ARTICLE 8. INDEMNITIES..............................................27
8.1 Indemnities...................................................27
-----------
8.2 Insurance.....................................................28
---------
ARTICLE 9. DURATION, DISSOLUTION AND LIQUIDATION....................28
9.1 Duration; Events Causing Dissolution..........................28
------------------------------------
9.2 Cancellation of Certificate...................................28
---------------------------
9.3 Distributions Upon Dissolution................................28
------------------------------
9.4 Reasonable Time for Winding Up................................29
------------------------------
ARTICLE 10. BOOKS OF ACCOUNT; REPORTS; TAXES.........................29
10.1 Books of Account..............................................29
----------------
10.2 Financial Statements and Information..........................29
------------------------------------
10.3 Tax Returns...................................................29
-----------
10.4 Tax Matters Partner...........................................29
-------------------
10.5 Fiscal Year...................................................29
-----------
10.6 Tax Elections.................................................29
-------------
ARTICLE 11. REPRESENTATIONS AND WARRANTIES...........................30
11.1 Representations and Warranties................................30
------------------------------
11.2 Representations Regarding Purchase of Interests...............30
-----------------------------------------------
11.3 Wholly-Owned Subsidiaries.....................................30
-------------------------
ii
ARTICLE 12. OTHER AGREEMENTS AND MISCELLANEOUS PROVISIONS............31
12.1 Compliance with LLC Act.......................................31
-----------------------
12.2 Additional Actions and Documents..............................31
--------------------------------
12.3 Access to Information.........................................31
---------------------
12.4 Confidentiality...............................................31
---------------
12.5 Survival......................................................31
--------
12.6 Amendments; Waivers...........................................31
-------------------
12.7 Exercise of Rights............................................31
------------------
12.8 Assignment; Binding Effect; Benefit...........................32
-----------------------------------
12.9 Entire Agreement..............................................32
----------------
12.10 Severability..................................................32
------------
12.11 Headings......................................................32
--------
12.12 Governing Law.................................................32
-------------
12.13 Partition.....................................................32
---------
12.14 No Brokers....................................................32
----------
12.15 Counterparts..................................................32
------------
12.16 Enforcement Agreement.........................................32
---------------------
12.17 Effect of Initial Public Offering.............................33
---------------------------------
12.18 Notices.......................................................33
-------
12.19 Consent to Jurisdiction.......................................34
-----------------------
12.20 Waiver of Jury Trial..........................................34
--------------------
iii
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
OFS BRIGHTWAVE, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
This Amended and Restated Limited Liability Company Agreement (the
"AGREEMENT") of OFS BrightWave, LLC, a Delaware limited liability company
(the "COMPANY"), is adopted and entered into as of November 16, 2001 by and
among the Company, Fitel USA Corp., a Delaware corporation ("FITEL USA"),
CommScope Optical Technologies, Inc., a Delaware corporation ("COMMSCOPE
OPTICAL"), and any Persons hereafter admitted pursuant to the terms hereof
as Members of the Company.
R E C I T A L S
---------------
WHEREAS, on August 6, 2001 the Certificate of Formation of the Company
was filed with the Secretary of State of the State of Delaware (as amended
by the Amendment to the Certificate of Formation, as filed with the
Secretary of State of the State of Delaware on September 20, 2001, the
"CERTIFICATE");
WHEREAS, Fitel USA entered into a limited liability company agreement
of the Company, as the sole Member of the Company, on October 11, 2001;
WHEREAS, The Furukawa Electric Co., Ltd., a corporation organized
under the laws of Japan ("FURUKAWA"), and Lucent Technologies Inc., a
Delaware corporation ("LUCENT"), have entered into an Asset and Stock
Purchase Agreement, dated as of July 24, 2001, as amended by Amendment No.
1 to the Asset and Stock Purchase Agreement, dated as of November 15, 2001
(as amended, the "PURCHASE AGREEMENT"), pursuant to which, among other
things, Furukawa agreed to purchase substantially all of Lucent's Optical
Fiber Solutions business other than Lucent's interest in two joint ventures
in China ("OFS"), including the Business (as defined herein), subject to
the terms and conditions set forth in the Purchase Agreement;
WHEREAS, Furukawa and CommScope, Inc., a Delaware corporation
("COMMSCOPE") have entered into a Memorandum of Understanding, dated as of
July 24, 2001, as amended and restated by the Amended and Restated
Memorandum of Understanding, dated as of November 15, 2001 (as amended and
restated, the "MOU"), pursuant to which Furukawa and CommScope agreed that
the Company shall acquire the Business from Lucent pursuant to the Purchase
Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company and Lucent have entered into a Bill of Sale,
Assumption and Assignment Agreement,
dated as of the date hereof, pursuant to which the Company has acquired the
Business from Lucent pursuant to the Purchase Agreement;
WHEREAS, pursuant to the MOU, the Members desire to enter into this
Agreement to amend and restate the limited liability company agreement of
the Company in its entirety; and
WHEREAS, the consummation of the other transactions contemplated by
the MOU and the Purchase Agreement are taking place simultaneously with the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and promises contained herein, and intending to be legally bound
hereby, the parties hereto agree to amend and restate the limited liability
company agreement of the Company in its entirety as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. Unless otherwise specified, all references herein to
Articles or Sections are to Articles or Sections of this Agreement. As used
herein, the following terms shall have the meanings set forth below:
"AFFILIATE" shall mean with respect to a specified Person, any
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, as trustee or executor, by contract or
otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble.
"APPENDIX A TRANSACTION" shall have the meaning set forth in
Section 6.9(c).
"ASSUMED TAX RATE" shall have the meaning set forth in Section
7.4.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code,
11 U.S.C. Sections 101 et seq., as amended.
"BANKRUPTCY EVENT" shall mean to institute proceedings to
adjudicate a company, or any Subsidiary of such company, as bankrupt, or
consent to the filing of a bankruptcy proceeding against a company or any
Subsidiary of such company, or file a petition or answer or consent seeking
reorganization of a company or any Subsidiary of such company under the
Bankruptcy Code or any other similar applicable federal, state or foreign
law, or consent to the filing of any such petition against a company or any
Subsidiary of such company, or consent to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of a company
or any Subsidiary of such company, or make an assignment for the benefit of
creditors of a company or any Subsidiary of such company or admit in
writing a
2
company's or any Subsidiary of such company's inability to pay its debts
generally as they become due.
"BOARD OF MANAGERS" shall have the meaning set forth in Section
4.1.
"BUSINESS" shall mean the Cable Business as defined by the MOU or
such other business as may be determined by the Board of Managers or
conducted by the Company.
"BUSINESS COMBINATION" shall have the meaning set forth in the
definition of "Change of Control of CommScope".
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or any other day on which banks in New York or Tokyo are required or
permitted to be closed.
"CALL TRANSACTION" shall have the meaning set forth in Section
6.9(b).
"CALL TRANSACTION MEMBER" shall have the meaning set forth in
Section 6.9(b).
"CALL TRANSACTION NOTICE" shall have the meaning set forth in
Section 6.9(b).
"CAPITAL ACCOUNT" shall mean, with respect to any Member, the
capital account of such Member maintained pursuant to Article 7, including
all additions and subtractions thereto.
"CAPITAL CONTRIBUTION" shall mean a capital contribution (other
than any loan) by a Member to the Company.
"CERTIFICATE" shall have the meaning set forth in the recitals.
"CHANGE OF CONTROL OF COMMSCOPE" shall mean, with respect to
CommScope or any entity resulting from a Change of Control of CommScope:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% of either (A) the then outstanding
shares of common stock (the "OUTSTANDING STOCK") of such
company or (B) the combined voting power of the then
outstanding voting securities entitled to vote generally
in the election of directors or managers (the
"OUTSTANDING VOTING SECURITIES") of such company;
provided that, for purposes of this clause (i), any
acquisition by such company shall not constitute a Change
of Control of such company;
(ii) individuals who, as of the date hereof, constitute the
board of directors (the "INCUMBENT BOARD") of such
company cease for any reason to constitute at least 50%
of the board of directors of such
3
company; provided that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by such company's stockholders,
was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a individual, entity or group (as defined
above) other than the board of directors of such company)
shall be considered a member of the Incumbent Board;
(iii) the consummation of a reorganization, recapitalization,
liquidation, dissolution, share exchange, merger or
consolidation, or sale or other disposition of all or
substantially all of the assets (a "BUSINESS
COMBINATION") of such company, in each case, unless (A)
following such Business Combination, the individuals and
entities who were the beneficial owners, respectively, of
the Outstanding Stock and Outstanding Voting Securities
of such company immediately prior to such Business
Combination (the "CONTINUING STOCKHOLDERS") beneficially
own, directly or indirectly, 50% or more of the combined
voting power of the Outstanding Stock or the Outstanding
Voting Securities of, as the case may be, the corporation
or other entity resulting from such Business Combination
or (B) if the Continuing Stockholders own, directly or
indirectly, less than 50% of the combined voting power of
the Outstanding Stock or the Outstanding Voting
Securities of, as the case may be, the corporation or
other entity resulting from such Business Combination,
(x) no individual, entity or group (excluding any
corporation or other entity resulting from such Business
Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the Outstanding Stock or
the Outstanding Voting Securities of the corporation or
other entity resulting from such Business Combination,
(y) at least 50% of the members of the board of directors
of corporation or other entity resulting from such
Business Combination and the ultimate corporate parent of
such corporation or other entity, if any, were members of
the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the board of
directors of such company, providing for such Business
Combination and (z) Frank M. Drendel, or his successor
elected or appointed by a majority of the members of the
Incumbent Board, is the chairman of the board of
directors and the chief executive officer of the
corporation or other entity resulting from such Business
Combination and the ultimate corporate parent of such
corporation or other entity, if any;
4
(iv) (A) there shall have occurred the entry by a court of
competent jurisdiction of (x) a decree or order for
relief in respect of such company or any Subsidiary of
such company that owns, directly or indirectly through
its Subsidiaries, a Membership Interest, in an
involuntary case or proceeding under the Bankruptcy Code
or any other applicable federal or state law or (y) a
decree or order adjudging such company or any Subsidiary
of such company that owns, directly or indirectly through
its Subsidiaries, a Membership Interest, bankrupt or
insolvent, or seeking reorganization, of such company or
any Subsidiary of such company that owns, directly or
indirectly through its Subsidiaries, a Membership
Interest, under any applicable federal or state law, or
appointing a receiver, liquidator, assignee or trustee,
of such company or any Subsidiary of such company that
owns, directly or indirectly through its Subsidiaries, a
Membership Interest, and, in each case, any such decree
or order shall be unstayed and in effect, for a period of
90 consecutive days, or (B) such company or any
Subsidiary of such company that owns, directly or
indirectly through its Subsidiaries, a Membership
Interest, (x) commences a voluntary case or proceeding
under the Bankruptcy Code or any other case or proceeding
to be adjudicated bankrupt or insolvent, (y) consents to
the filing of a bankruptcy proceeding against such
company or any Subsidiary of such company that owns,
directly or indirectly through its Subsidiaries, a
Membership Interest, (c) files a petition or answer or
consent seeking reorganization of such company or any
Subsidiary of such company that owns, directly or
indirectly through its Subsidiaries, a Membership
Interest, or relief under the Bankruptcy Code or any
other similar applicable federal state law or foreign
law, or consents to the filing of such petition against
such company or any Subsidiary of such company that owns,
directly or indirectly through its Subsidiaries, a
Membership Interest, or the appointment of, or taking
possession by, a receiver, liquidator, assignee, or
trustee in bankruptcy or insolvency of such company or
any Subsidiary of such company that owns, directly or
indirectly through its Subsidiaries, a Membership
Interest, (d) makes an assignment for the benefit of
creditors of such company or any Subsidiary of such
company that owns, directly or indirectly through its
Subsidiaries, a Membership Interest, or (e) admits in
writing the inability of such company or any Subsidiary
of such company that owns, directly or indirectly through
its Subsidiaries, a Membership Interest, to pay its debts
generally as they become due; or
(v) such company shall have agreed to do any of the
foregoing.
5
"CHANGE OF CONTROL OF FITEL USA" shall mean, with respect to
Fitel USA or any entity resulting from a Change of Control of Fitel USA:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% of either (A) the Outstanding Stock of
such company or (B) the Outstanding Voting Securities of
such company; provided that, for purposes of this clause
(i), any acquisition by such company shall not constitute
a Change of Control of such company;
(ii) the consummation of Business Combination of such company
unless following such Business Combination the Continuing
Stockholders of such company beneficially own, directly
or indirectly, 50% or more of the combined voting power
of the Outstanding Stock or the Outstanding Voting
Securities of, as the case may be, the corporation or
other entity resulting from such Business Combination; or
(iii) such company shall have agreed to do any of the
foregoing.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMSCOPE" shall have the meaning set forth in the recitals.
"COMMSCOPE ENTITIES" shall have the meaning set forth in Section
4.19(a).
"COMMSCOPE OPTICAL" shall have the meaning set forth in the
preamble.
"COMMSCOPE OPTICAL DESIGNEE" shall have the meaning set forth in
Section 4.2(a)(i).
"COMPANY" shall have the meaning set forth in the preamble.
"COMPANY SECURITY" shall have the meaning set forth in Section
5.4.
"CONTINUING STOCKHOLDERS" shall have the meaning set forth in the
definition of "Change of Control of CommScope".
"CORNING" means Corning Incorporated, a New York corporation.
"CORNING PATENT LICENSE" shall mean the Patent License Agreement,
dated as of November 16, 2001, between Fitel USA and Corning relating to
optical fiber.
"CORNING DEFINED CONTROL" shall mean "CONTROL" as defined by the
Corning Patent License.
6
"CTV MEMBER TRANSFER" shall mean (i) a sale of stock, merger,
consolidation, share exchange, liquidation, dissolution, recapitalization
or any other transaction (other than the issuance of director qualifying
shares) pursuant to which any direct or indirect wholly owned Subsidiary of
CommScope (or any successor of CommScope or entity resulting from a Change
of Control of CommScope) which holds a Membership Interest ceases to be a
direct or indirect wholly owned Subsidiary of CommScope (or any successor
of CommScope or other entity resulting from a Change of Control of
CommScope) or (ii) the transfer, sale or disposition of any right to
receive a share of profits, losses or other allocations or distribution of
the Company (other than any such transfer, sale or disposition that is a
Direct Transfer or that is to a wholly owned Subsidiary of CommScope) by
any Subsidiary of CommScope (or any successor of CommScope or other entity
resulting from a Change of Control of CommScope) that owns, directly or
indirectly through its Subsidiaries, a Membership Interest.
"DIRECT TRANSFER" shall mean any transfer, sale, assignment,
pledge, encumbrance, offer or other disposition of all or any portion of a
Membership Interest by any Member.
"DISSOLUTION DATE" shall have the meaning set forth in Section
9.1.
"ELECTING MEMBER" shall have the meaning set forth in Section
6.2(d).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXEMPT ISSUANCE" shall mean an issuance of any Company Security
(i) to employees or Managers of, or to consultants or advisors to, the
Company or any Subsidiary thereof pursuant to any bona fide equity purchase
or option plan or other incentive compensation arrangements; (ii) to
financial institutions or lessors (other than, in each case, Affiliates of
the Company) in connection with commercial credit arrangements, in an
amount not to exceed, in the aggregate for all such lenders, 10% of the
fully-diluted equity interests in the Company then outstanding; (iii) in
connection with any acquisition of another company or business by the
Company or any Subsidiary of the Company, or any merger, consolidation,
strategic joint venture or other business combination involving the Company
or any Subsidiary of the Company other than, in each case, a transaction
between Company or any Subsidiary of the Company and an Affiliate of the
Company; or (iv) any Company Security issued in respect of goods or
services provided to the Company or its Subsidiaries in a commercial
transaction other than, in each case, a transaction between Company or any
Subsidiary of the Company and an Affiliate of the Company, in an amount not
to exceed, in the aggregate for all such Persons, 10% of the fully-diluted
equity interests in the Company then outstanding.
"EXERCISE NOTICE" shall have the meaning set forth in Section
6.9(c).
"EXIT TRANSACTION" shall have the meaning set forth in Section
6.10.
"EXIT TRANSACTION NOTICE" shall have the meaning set forth in
Section 6.10.
"EXIT PAYMENT DATE" shall have the meaning set forth in Section
6.10.
7
"FAIR MARKET VALUE" shall mean fair market value as determined by
an independent investment banking firm selected by the unanimous approval
of each Member proposing to purchase or sell a Membership Interest, whose
decision shall be final, binding and conclusive upon each such Member, and
its fees, costs and expenses shall be shared equally by, such Members. In
the event that the Members are unable to agree on an independent investment
banking firm within 14 calendar days of the event giving rise to the need
to appoint the independent investment banker, each Member referred to above
shall appoint an independent appointee within seven calendar days, and such
appointees shall select an independent investment banking firm to determine
Fair Market Value in accordance herewith. The appointed investment banking
firm shall be instructed to determine Fair Market Value within 30 calendar
days of appointment.
"FINAL DISTRIBUTION" shall have the meaning set forth in Section
7.4.
"FISCAL YEAR" shall mean each of the taxable years of the
Company, as determined by the Board of Managers.
"FITEL USA" shall have the meaning set forth in the preamble.
"FITEL USA DESIGNEE" shall have the meaning set forth in Section
4.2(a)(ii).
"FURUKAWA" shall have the meaning set forth in the recitals.
"GAAP" shall mean United States generally accepted accounting
principles.
"INDEMNIFIED PERSON" shall have the meaning set forth in Section
8.1(a).
"LLC ACT" shall mean the Delaware Limited Liability Company Act,
as amended.
"LOSSES AND EXPENSES" shall have the meaning set forth in Section
8.1(a).
"LUCENT" shall have the meaning set forth in the recitals.
"MAJOR DECISIONS" shall have the meaning set forth in Section
4.16.
"MAJORITY MEMBER" shall mean a Member that, together with its
Affiliates, has the right to designate a majority of the Managers on the
Board of Managers.
"MANAGER" shall have the meaning set forth in Section 4.2(a).
"MEMBER" shall mean each of CommScope Optical and Fitel USA and
any Substitute Member that, in each case, has not withdrawn, or, if other
than an individual, dissolved.
"MEMBERSHIP INTEREST" shall mean, with respect to any Member,
such Member's limited liability company interest in the Company at any
time, which shall equal a fraction (a) the numerator of which shall be the
number of Membership Units (or other ownership units
8
or interests) of the Company owned (directly or indirectly) by such Member
at such time and (b) the denominator of which shall be the number of
fully-diluted Membership Units (or other ownership units or interests, or
interests in the Company's profits pursuant to any other arrangement) of
the Company then outstanding.
"MEMBERSHIP UNITS" means nominal units used for the purpose of
determining relative or percentage Membership Interests. On the date of
this Agreement, the number of Membership Units held by each of the Members
is as set forth on the Schedule of Interests attached hereto as Schedule A.
"MINORITY MEMBER" shall mean a Member that, together with its
Affiliates, does not have the right to designate a majority of the Managers
on the Board of Managers.
"MOU" shall have the meaning set forth in the recitals.
"NON-TRANSFERRING MEMBERS" shall have the meaning set forth in
Section 6.2(a).
"OFFICERS" shall mean each of the individuals appointed by the
Board of Managers to serve as Officers of the Company in accordance with
Article 4.
"OFS" shall have the meaning set forth in the recitals.
"OUTSTANDING STOCK" shall have the meaning set forth in the
definition of "Change of Control of CommScope".
"OUTSTANDING VOTING SECURITIES" shall have the meaning set forth
in the definition of "Change of Control of CommScope".
"PAYMENT DATE" shall have the meaning set forth in Section
6.9(b).
"PERSON" shall mean any natural person, corporation, company,
partnership, limited liability company, firm, association, trust,
government, governmental agency or other entity, whether acting in an
individual, fiduciary or other capacity.
"PREEMPTION NOTICE" shall have the meaning set forth in Section
5.4.
"PREEMPTION NOTICE TRANSACTION" shall have the meaning set forth
in Section 5.4.
"PURCHASE AGREEMENT" shall have the meaning set forth in the
recitals.
"QUARTERLY DISTRIBUTION" shall have the meaning set forth in
Section 7.4.
"RESTRICTED TRANSFEREE" shall have the meaning set forth in
Section 6.1(b).
"RESTRICTION PERIOD" shall have the meaning set forth in Section
6.1(a).
"SCHEDULE OF INTERESTS" means Schedule A attached hereto, as the
same will be amended from time to time to reflect any addition or
withdrawal of Members, Direct Transfers of
9
Membership Interests or changes in any Member's Membership Interest in
accordance with the provisions of this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SUBSIDIARIES" of any Person shall mean any corporation or other
legal entity of which such Person (either alone or through or together with
any other Subsidiary) owns, directly or indirectly, more than 50% of the
stock or other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"SUBSIDIARY TRANSFER" shall have the meaning set forth in 6.1(a).
"SUBSTITUTE MEMBER" shall have the meaning set forth in Section
6.4.
"SUSPENDED MEMBER" shall have the meaning set forth in Section
6.1(c).
"SUSPENSION TRANSACTION" shall have the meaning set forth in
Section 6.1(c).
"TAG-ALONG INITIATOR" shall have the meaning set forth in Section
6.3(a).
"TAG-ALONG INTERESTS" shall have the meaning set forth in Section
6.3(a).
"TAG-ALONG NOTICE" shall have the meaning set forth in Section
6.3(a).
"TAG-ALONG OFFEREE" shall have the meaning set forth in Section
6.3(a).
"TAG-ALONG TRANSFER" shall have the meaning set forth in Section
6.3(a).
"TAKE-ALONG INITIATOR" shall have the meaning set forth in
Section 6.4(a).
"TAKE-ALONG NOTICE" shall have the meaning set forth in Section
6.4(a).
"TAKE-ALONG OFFEREE" shall have the meaning set forth in Section
6.4(a).
"TAX AMOUNT" shall have the meaning set forth in Section 7.4.
"TRANSFER" shall mean any CTV Member Transfer or Direct Transfer.
"TRANSFER NOTICE" shall have the meaning set forth in Section
6.2(a).
"TRANSFERRED INTEREST" shall have the meaning set forth in
Section 6.2(a).
"TRANSFERRING MEMBER" shall have the meaning set forth in Section
6.2(a).
"TREASURY REGULATIONS" or "TREAS. REG." shall mean the
regulations issued by the United States Department of the Treasury under
the Code as now in effect and as may be amended from time to time, and any
successor regulations.
10
1.2 Accounting Terms and Determinations. All accounting terms used
herein and not otherwise defined shall have the meanings accorded to them
in accordance with GAAP, and, except as expressly provided herein, all
accounting determinations shall be made in accordance with GAAP,
consistently applied.
1.3 Additional Defined Terms. Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to such terms in
the MOU.
ARTICLE 2. GENERAL PROVISIONS
2.1 Formation of Company. The Members hereby (a) acknowledge the
formation of the Company as a limited liability company pursuant to the LLC
Act by virtue of the filing of the Certificate; (b) confirm and agree to
their status as Members of the Company; and (c) execute this Agreement for
the purpose of continuing the existence of the Company and establishing the
rights, duties, and relationship of the Members, which shall be the limited
liability company agreement of the Company under Section 18-101(7) of the
LLC Act.
2.2 Name of Company. The name under which the Company shall conduct
its business is OFS BrightWave, LLC or such other name as the Board of
Managers shall determine from time to time provided that the name will not
include any Member's name (or derivation thereof) without that Member's
consent.
2.3 Place of Business. The principal place of business of the Company
shall be at 2000 N.E. Expressway, Norcross, Georgia 30071 or at such other
place as the Board of Managers shall determine from time to time. The Board
of Managers may establish and maintain such other offices and additional
places of business of the Company, either within or without the State of
Delaware, as they from time to time deem appropriate.
2.4 Registered Office and Registered Agent. The street address of the
initial registered office of the Company shall be 1209 Orange Street,
Wilmington, Delaware, 19801. The Company's registered agent at such address
shall be The Corporation Trust Company.
2.5 Term. The Company shall have perpetual existence unless earlier
dissolved and terminated pursuant to Section 9.1 hereof.
ARTICLE 3. PURPOSES AND POWERS
3.1 Purposes. The purposes of the Company shall be to own and operate
the Business and any development thereof. Subject to the terms and
conditions of this Agreement, the Company may engage in any and all other
activities and transactions reasonably necessary or incidental to any of
the foregoing and such other business and other activities as may be agreed
upon by the Members or the Board of Managers.
3.2 Powers. Subject to the terms and conditions of this Agreement, the
Company shall have the power to do any and all acts and things necessary,
appropriate, advisable, or convenient for the furtherance and
accomplishment of the purposes of the Company, including,
11
without limitation, to engage in any kind of activity and to enter into and
perform obligations of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the purposes of the Company, as long
as the activities and obligations may be lawfully engaged in or performed
by a limited liability company under the LLC Act.
ARTICLE 4. MANAGEMENT OF THE COMPANY
4.1 Management of Company. Except as otherwise expressly provided in
this Agreement, the powers of the Company shall be exercised by or under
the authority of, and the business and affairs of the Company shall be
managed under the direction of, a Board of Managers (the "BOARD OF
MANAGERS") as described herein.
4.2 Board of Managers; Number and Selection. (a) The number of
managers (each a "MANAGER") on the Board of Managers shall be not more than
six (6) unless agreed otherwise by the Members representing a majority of
the outstanding Membership Interests, and shall be selected as follows:
(i) CommScope Optical (or an Affiliate of CommScope Optical
to whom CommScope Optical has Direct Transferred all, but
not less than all, of its Membership Interest) shall be
entitled to designate a number of Managers on the Board
of Managers in proportion to its Membership Interest,
rounded down to the nearest whole number of Managers,
provided that such number shall not be less than one for
so long as CommScope Optical's Membership Interest
(together with the Membership Interest of its Affiliates)
exceeds 5% (each such Manager, a "COMMSCOPE OPTICAL
DESIGNEE"); and
(ii) Fitel USA shall be entitled to designate the remaining
Managers on the Board of Managers (each such Manager, a
"FITEL USA DESIGNEE").
(b) Each Member shall designate Managers it is entitled to
designate by delivering to the Company and the other Members written notice
designating each Manager and setting forth such Manager's business address
and telephone number. Each Manager shall serve until such Manager submits
his or her written resignation to the Board of Managers, until removed by
the Member who shall have designated him or her to the Board of Managers,
or until the dissolution or termination of the Company in accordance with
Section 9.1. In the event that a Manager is removed, resigns, or is
otherwise unable to serve on the Board of Managers, the Member who
designated such Manager shall have the right to designate his or her
successor.
4.3 General Powers of the Board of Managers. Except as may otherwise
be expressly provided in this Agreement, the Board of Managers shall manage
and control the business and affairs of the Company. The Board of Managers
shall possess all power, on behalf of the Company, to do or authorize the
Company or to direct the Officers of the Company, on behalf of the Company,
to do all things necessary or convenient to carry out the business and
affairs of the Company.
12
4.4 Voting. Except as otherwise provided in this Agreement, the Board
of Managers shall act by the affirmative vote of a majority of the
Managers. Each Manager shall have one (1) vote on all matters that arise
before the Board of Managers.
4.5 Quorum. At any meeting of the Board of Managers, a quorum shall be
three (3) or more Managers unless agreed otherwise by the Members
representing a majority of the outstanding Membership Interests. A Manager
expecting to be absent from a meeting shall be entitled to designate in
writing (or orally provided such oral designation is later confirmed in
writing) a proxy to act in his or her stead with respect to such meeting.
4.6 Regular Meetings. The Board of Managers shall hold regular
meetings at least once each fiscal quarter, at the principal offices of the
Company or at such other place as may be determined by the Chief Executive
Officer. The Board of Managers shall establish meeting times, dates and
places and requisite notice requirements and adopt rules or procedures
consistent with the terms of this Agreement. Notice of each such regular
meeting shall be given to each Manager by telecopy or similar method or
sent by reputable overnight delivery service, in each case at least five
Business Days before the meeting, unless a longer notice period is
established by the Board of Managers. Any Manager may waive notice of, or
the taking of any action at, any meeting in writing before, at, or after
such meeting. The attendance of a Manager at a meeting shall constitute a
waiver of notice of such meeting, except when a Manager attends a meeting
for the express purpose of objecting to the transaction of any business
because the meeting was not properly called.
4.7 Special Meetings. Special meetings of the Board of Managers may be
called by any two Managers. The call shall be in writing and shall state
the location of the meeting and the nature of the business to be
transacted. Notice of each such meeting shall be given to each Manager by
telecopy or similar method or sent by reputable overnight delivery service,
in each case at least three calendar days before the meeting, unless a
longer notice period is established by the Board of Managers. Any Manager
may waive notice of, or the taking of any action at, any meeting in writing
before, at, or after such meeting. The attendance of a Manager at a meeting
shall constitute a waiver of notice of such meeting, except when a Manager
attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting was not properly called.
4.8 Presence at Meetings. Any action required to be taken at a meeting
of the Board of Managers, or any action that may be taken at a meeting of
the Board of Managers, may be taken at a meeting held by means of
conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other. Participation
in such a meeting shall constitute presence in person at such meeting. The
Company shall permit any Manager or proxy of any Manager to participate by
conference telephone.
4.9 Written Consent. Notwithstanding anything to the contrary in this
Agreement, the Board of Managers may without a meeting take any action that
may be taken by the Board of Managers under this Agreement if such action
is approved by the written consent of that number of Managers otherwise
required for action by the Board of Managers (but not less than the number
of Managers as shall equal a quorum) and prior written notice of such
action is given to each of the Members (or waived in writing by each
Member). Notice of such action shall be
13
given to each Manager by telecopy or similar method or sent by reputable
overnight delivery service.
4.10 Removal of Managers. A Manager may be removed at any time, with
or without cause, by the written notice of the Member that designated such
Manager, delivered to the Company and the other Members, demanding such
removal. Upon the Company's receipt of such written notice, such Manager
shall be automatically removed without further action. The Member that
removed such Manager shall promptly designate a successor to such Manager;
provided that its failure to do so shall not affect any removal effected
thereunder or the ability of the Board of Managers to meet or take any
action. If at any time a Member ceases to be a Member (or becomes a
Suspended Member), any Manager designated by such Member shall be
automatically removed without further action.
4.11 Resignation of Managers. Any Manager may resign at any time by
giving written notice of his resignation to the Company. Such resignation
shall take effect at the time specified therein, or if no time is
specified, at the time of its receipt by the Company. In the event any
Manager resigns or is unable to serve on the Board of Managers, the Member
that designated such Manager shall promptly designate a successor to such
Manager (subject to Section 4.19(c)); provided that its failure to do so
shall not affect any resignation effected thereunder or the ability of the
Board of Managers to meet or take any action.
4.12 Delegation of Manager's Powers; Officers. The Board of Managers
shall have the right to delegate its authority by the same vote of the
Board of Managers as would be required for the Board of Managers to take
such action, to the extent provided in this Agreement, to Officers of the
Company, to assist with the management of the business affairs of the
Company. The Officers of the Company shall consist of a Chief Executive
Officer, a Chief Financial Officer, a Secretary and one or more Vice
Presidents. Any two or more offices may be held by the same person. The
Officers of the Company shall report to the Chief Executive Officer unless
the Board of Managers directs an Officer to report directly to the Board of
Managers.
4.13 Resignation and Removal of Officers. An Officer may resign at any
time by giving written notice to the Board of Managers or the Chief
Executive Officer. A resignation is effective when it is received unless it
specifies a later date. Officers may be removed at any time, with or
without cause, by the Board of Managers. In the event any Officer resigns,
is removed or is unable to serve as an Officer, the Board of Managers shall
promptly designate a successor to such Officer.
4.14 Chief Executive Officer. The Chief Executive Officer of the
Company shall have the powers and duties of supervision and management
usually vested in the chief executive officer of a company. The Chief
Executive Officer may sign, alone or with any of the Vice-Presidents or any
other proper Officer of the Company thereunto authorized by the Board of
Managers, any deeds, mortgages, bonds, contracts or other instruments which
the Board of Managers has authorized to be executed, except in cases where
the signing and execution thereof shall be expressly delegated by the Board
of Managers or by this Agreement to some other Officer or agent of the
Company, or shall be required by law to be otherwise signed or executed,
14
and in general he or she shall perform all duties incident to the office of
the Chief Executive Officer and other duties from time to time may be
prescribed by the Board of Managers.
4.15 Other Officers. The other Officers of the Company shall have such
powers and duties as may be delegated to such Officers by the Board of
Managers.
4.16 Limitations on Power of Board of Managers. The enumeration of
powers in this Agreement shall not limit the general or implied powers of
the Board of Managers or any additional powers provided by law.
Notwithstanding the foregoing and any other provision contained in this
Agreement to the contrary, the Company shall not, and shall not permit its
Subsidiaries to (the "MAJOR DECISIONS"):
(a) take any action in contravention of, amend, modify or waive, the
provisions of this Agreement or the Certificate in a manner (i)
adverse to any Member's rights under this Agreement or the
Certificate without the consent of any such Member then owning
(together with its Affiliates) 10% or more of the fully-diluted
Membership Interests then outstanding or (ii) materially adverse
to any Member's rights under this Agreement or the Certificate
without the consent of any such Member then owning (together with
its Affiliates) 5% or more of the fully-diluted Membership
Interests then outstanding; or
(b) take any action that would constitute a Bankruptcy Event with
respect to the Company without the consent of each Member then
owning (together with its Affiliates) 10% or more of the
fully-diluted Membership Interests then outstanding, or if
CommScope and its Affiliates own less than 10% of the
fully-diluted Membership Interests then outstanding, take any
action that would constitute a Bankruptcy Event with respect to
the Company without the consent of CommScope Optical if such
action would cause CommScope's right to sell the Membership
Interests held by it and its Affiliates under Section 5.6 of the
MOU to become unenforceable or incapable of being exercised.
4.17 Subsidiaries. The provisions of this Agreement relating to the
management and control of the business and affairs of the Company, and the
respective rights and duties of, and restrictions on, the Board of
Managers, Officers and the other Members, shall also be construed to be
fully applicable to the management and control of any Subsidiary of the
Company. In illustration and not in limitation of the foregoing, with
respect to any such Subsidiary of the Company, the provisions of this
Agreement relating to the respective rights and duties of, and restrictions
on, the Board of Managers, the Officers and the other Members with respect
to the management and control of the Company and its business shall be
equally applicable to the management and control of such Subsidiary.
4.18 Standard of Care; Fiduciary Duty. No Member or Manager of the
Company shall owe any fiduciary duty, other than the duty of a Manager to
act with the care of a reasonably prudent person, to the Company, any
Affiliate of the Company, any Member or any Affiliate of any of the
foregoing. No Member shall have any claim against any other Member, any
Manager or any Affiliate of any of the foregoing, based upon or arising
from a claimed breach of a fiduciary duty, duty of loyalty, corporate
opportunity doctrine, conflict of interest or any similar
15
basis, and each Member hereby waives any such claim on behalf of itself and
its Subsidiaries and Affiliates. In taking any action, making any decision
or exercising any discretion with respect to the Company or its
Subsidiaries, a Manager or Member shall be entitled to consider such
interests and factors as it desires, including its own interests or those
of its Affiliates, and shall have no duty or obligation (a) to give any
consideration to the interest of or factors affecting the Company or any
other Person or (b) to abstain from participating in any vote or other
action of the Company, any Subsidiary or Affiliate of the Company, the
Board of Managers, or any board of directors or similar governing body of
any of the foregoing. Nothing contained in this Section 4.18 shall
constitute a waiver of any claim for breach of this Agreement by any
Member.
4.19 CommScope Optical Designees. (a) CommScope Optical shall, and
shall ensure that CommScope Optical's Affiliates, implement measures to
prevent the CommScope Optical Designees (i) from receiving from CommScope
Optical or any Affiliate of CommScope Optical (collectively the "COMMSCOPE
ENTITIES") and (ii) from providing to any of the CommScope Entities, any
information that may be competitively sensitive with respect to any
competition between any of the CommScope Entities and the Company,
including without limitation any information containing pricing, markets,
customers, prospects, strategic planning, methods of operations, or
employees of any of the CommScope Entities with respect to areas where any
of the CommScope Entities competes with the Company; provided, however,
that nothing in this Section 4.19 is intended to limit any right of
CommScope set forth herein to obtain information necessary to protect and
evaluate CommScope's investment in the Company.
(b) CommScope Optical shall indemnify and hold harmless the
Company, each Member and any Affiliate of any Member from any Losses and
Expenses arising from (i) CommScope Optical's breach of this Section 4.19
or (ii) any federal, state or foreign antitrust law resulting from the
participation of any CommScope Optical Designee in the affairs of the
Company or any Subsidiary of the Company.
(c) Notwithstanding anything contained herein to the contrary,
the Majority Member shall have the right to (i) consent to the designation
of the person designated as the CommScope Optical Designee or (ii) to
remove as a Manager, at any time, the person designated as the CommScope
Optical Designee, in each case, if the Majority Member determines, after
consultation with counsel, that the identity of such person could create a
risk of non-compliance with any antitrust or competition law. No person
designated by CommScope Optical shall become a Manager of the Company prior
to the receipt by the Company and CommScope Optical of the Majority
Member's written notice of consent to the designation of such person as a
CommScope Optical Designee pursuant to clause (i) above. If the written
notice of consent is not delivered to CommScope Optical within ten Business
Days of CommScope Optical's written notice to the Majority Member of the
identity of its designee, the Majority Member shall be deemed to have
consented to such person for purposes of clause (i) above. Upon the
delivery of a written notice of removal, pursuant to clause (ii) above, to
the Company or CommScope Optical with respect to any person designated as a
CommScope Optical Designee, such person shall automatically cease to be a
Manager without further action and CommScope Optical shall promptly
designate a replacement Manager (subject to clause (i) above).
16
ARTICLE 5. MEMBERS
5.1 Liability of Members. Subject to the provisions of the LLC Act,
the debts, obligations and liabilities of the Company shall be solely the
debts, obligations and liabilities of the Company, and the Members shall
not be obligated personally for any such debt, obligation or liability of
the Company solely by reason of being a Member. The failure of the Company
to observe any formalities or requirements relating to the exercise of its
powers or management of its business or affairs under the LLC Act or this
Agreement shall not be grounds for imposing personal liability on a Member
for any liabilities of the Company.
5.2 Authority of Members. Except as set forth in Section 4.16 hereof,
the Members shall not have any right or power to take part in the
management or control of the Company or its business and affairs or to act
for or bind the Company in any way. Notwithstanding the foregoing, the
Members have all the rights and powers specifically set forth in this
Agreement and, to the extent not inconsistent with this Agreement, in the
LLC Act.
5.3 Voting. No Member has any voting right except with respect to
those matters specifically set forth in this Agreement and as required in
the LLC Act.
5.4 Preemptive Rights. If the Company proposes to issue any Membership
Interest, warrants, options or rights to purchase any Membership Interest,
any security which is or may be convertible into a Membership Interest or
any other equity security of the Company or calls for additional Capital
Contributions, regardless of form (each a "COMPANY SECURITY"), other than
an Exempt Issuance, the Company shall, prior to such issuance, deliver to
each Member a written notice (the "PREEMPTION NOTICE") thereof describing
the terms and conditions of such issuance (the "PREEMPTION NOTICE
TRANSACTION"). Such Members, by giving written notice to the Company not
later than five (5) Business Days following the giving of the Preemption
Notice, may participate as purchasers in the Preemptive Notice Transaction
on a pro rata basis based on the proportion of such Member's Membership
Interest relative to the amount of outstanding Membership Interests on a
fully-diluted basis. The participating Members shall participate as a
purchaser in such Preemption Notice Transaction for a price per Company
Security equal to the price per Company Security being paid to the Company
in such issuance and on the same terms and conditions as those applicable
to the proposed purchaser in such Preemption Notice Transaction. The number
of Company Securities to be issued by the Company to the proposed purchaser
in such issuance shall be reduced by the number of Company Securities that
the participating Members purchase pursuant to this Section 5.4. To the
extent that any Member receiving the Preemption Notice does not accept the
offer to participate in the Preemption Notice Transaction, the Company may
issue such Company Securities to another Person on terms no less favorable
to the Company than the terms set forth in such Preemption Notice. The
right of Members to participate in the Preemption Notice Transaction is
conditioned on the consummation of such Preemption Notice Transaction.
ARTICLE 6. TRANSFERS AND REPURCHASES OF MEMBERSHIP INTERESTS
6.1 Transfer Restrictions. (a) For three years from the date hereof
(the "RESTRICTION PERIOD"), no Direct Transfer shall be effected without
the prior consent of the Board of
17
Managers (other than, in the case of CommScope Optical or its Affiliates, a
Direct Transfer to Furukawa or its Affiliates; provided that a Member may
Direct Transfer all or part of its Membership Interest to one or more of
its wholly owned Subsidiaries at any time (a "SUBSIDIARY TRANSFER").
(b) At no time may any Direct Transfer of any Membership Interest
be made to any Person (i) then listed in Appendix A to the Corning Patent
License or (ii) engaged in the cable and/or fiber optics business (other
than Furukawa or any Subsidiary of Furukawa) and headquartered in Japan
(any such person described in clauses (i) or (ii), a "RESTRICTED
TRANSFEREE") without the consent of the Board of Managers.
(c) In the event that, without the prior approval of the Board of
Manager, (i) a CTV Member Transfer is effected prior to the expiration of
the Restriction Period or (ii) any CTV Member Transfer is entered into with
a Restricted Transferee (any transaction described in clause (i) or (ii), a
"SUSPENSION TRANSACTION"), the Member who engaged, or whose Affiliate
engaged, in such transaction (the "SUSPENDED MEMBER") shall not be
permitted to exercise any rights or privileges hereunder, all rights and
privileges hereunder of such Suspended Member with respect to its
Membership Interest shall be unenforceable and any Manager designated by
such Suspended Member shall be automatically removed from the Board of
Managers without any further action; provided that such Suspended Member
shall not be relieved of any of its obligations arising under this
Agreement; provided, further, that such Suspended Member shall be permitted
to receive, subject to applicable antitrust and other competition laws and
to the confidentiality provisions set forth in Section 12.4, such
information as is necessary for such Suspended Member to monitor any
determination of the Fair Market Value of such Suspended Member's
Membership Interest hereunder. A Suspended Member shall cease to be a
Suspended Member, and thereafter all rights and privileges of such
Suspended Member as a Member shall be restored, upon the rescission,
unwinding or undoing of the transaction that resulted in such Member
becoming a Suspended Member.
(d) All Direct Transfers, other than Subsidiary Transfers, must
be made for cash and in compliance with all applicable securities laws. Any
purported Direct Transfer in violation of applicable securities laws or
this Article 6 shall be void ab initio, and shall not bind the Company, and
the Member making such purported Direct Transfer shall indemnify and hold
the Company and the other Members harmless from and against any federal,
state, or local income taxes, or transfer taxes, including transfer gains
taxes, and any other liability arising as a result of, or caused directly
or indirectly by, such purported Direct Transfer. A Member shall not be
relieved of any of its obligations arising under this Agreement prior to
any Direct Transfer effected by such Member, and such Member and any
transferee shall execute such documents as the Company and/or such other
Members shall reasonably request to evidence the Transfer and the
assumption and continuing obligations under this Agreement.
6.2 Right of First Refusal. (a) In the event that following the
Restriction Period any Minority Member or Affiliate thereof (collectively,
the "TRANSFERRING MEMBER") has received a bona fide written offer from a
Person other than a Restricted Transferee, which such Transferring Member
is willing to accept, for the Transferring Member to Direct Transfer all,
but not less than all, of its Membership Interest (the "TRANSFERRED
INTEREST"), such Transferring Member shall deliver a written notice (the
"TRANSFER NOTICE") to all of the other Members (the "NON-
18
TRANSFERRING MEMBERS") stating the Transferring Member's intent to Direct
Transfer the Transferred Interest pursuant to such bona fide offer. The
Transfer Notice shall (i) specify the purchase price for and other material
terms with respect to the Direct Transfer, (ii) identify the proposed
purchaser of the Transferred Interest and (iii) specify the date scheduled
for the Direct Transfer.
(b) The Non-Transferring Members shall have the exclusive option
to purchase all, but not less than all, of the Transferred Interest on
terms and conditions substantially the same in all material respects as set
forth in the written offer delivered pursuant to subsection (a) above, but
at a price no less than that specified in the Transfer Notice; provided
that no Non-Transferring Member shall be required to pay more than Fair
Market Value for such Transferred Interest. The Non-Transferring Members
shall notify the Company and the Transferring Member of their intention to
exercise or not to exercise the right of first refusal hereunder within
forty-five (45) calendar days of receipt by the Non-Transferring Member of
a Transfer Notice.
(c) In the event that a Non-Transferring Member elects to
purchase the Transferred Interest (an "ELECTING MEMBER"), the Electing
Member and the Transferring Member shall diligently pursue obtaining all
regulatory approvals and use reasonable best efforts to consummate the
closing of the purchase of the Transferred Interest as soon as practicable
and in any event within 100 calendar days from receipt of the Transfer
Notice; provided that, if such closing does not occur within such 100
calendar day period due to the failure to obtain any required regulatory
approvals, the Electing Member's right to close such sale may be extended
at the option of the Electing Member, until such regulatory approvals are
obtained, but in no event for a period of greater than 100 additional
calendar days. In the event of a failure of the Non-Transferring Member to
elect to purchase all of the Transferred Interest or a failure of the
Electing Member to consummate such purchase in accordance herewith, the
Transferring Member will be free, at any time within 120 calendar days from
the date all Non-Transferring Members elect not to exercise their purchase
rights hereunder or from the date the time periods specified in this
section for such election have expired, subject, in each case, to extension
for up to an additional 120 calendar days to the extent necessary to
achieve any required regulatory approvals, to consummate the sale of the
Transferred Interest to the purchaser at a price and upon terms and
conditions no more favorable to the purchaser than those specified in the
Transfer Notice; provided that such Direct Transfer shall remain otherwise
subject to the provisions of this Article 6.
(d) At the closing of any proposed Transfer in respect of which a
Transfer Notice has been delivered, the Transferring Member shall deliver,
free and clear of all liens (other than this Agreement), to the Electing
Members the Membership Interests elected to be purchased by such Electing
Members and shall receive in exchange therefor the consideration to be paid
or delivered by such Electing Members in respect of such Membership
Interests as described in the Transfer Notice.
6.3 Tag-Along Rights. (a) In the event that (i) Majority Member
desires to Direct Transfer any Membership Interest or (ii) an Affiliate of
the Majority Member desires to transfer, sell, assign or offer 10% or more
of the voting stock of (x) any Person whose assets consist exclusively or
substantially in their entirety of Membership Interests or (y) any Person
whose
19
assets consist exclusively or substantially in their entirety of any Person
described in clause (x) above (any transaction described in clause (i) or
(ii) above, a "TAG-ALONG Transfer"), the Majority Member or Affiliate of
the Majority Member proposing to effect the Tag-Along Transfer (the
"TAG-ALONG INITIATOR") shall give written notice of such intended Tag-Along
Transfer to each other Member (each, a "TAG-ALONG OFFEREE") and to the
Company. Such notice (the "TAG-ALONG NOTICE") shall set forth the terms and
conditions of such proposed Tag-Along Transfer, including the name of the
proposed transferee, the amount of Membership Interests proposed to be
Tag-Along Transferred by the Tag-Along Initiator (the "TAG-ALONG
INTERESTS"), the purchase price of Membership Interests proposed to be paid
therefor or allocated thereto in good faith and the payment terms and type
of Tag-Along Transfer to be effectuated. Each Tag-Along Offeree shall, by
written notice to the Tag-Along Initiator and the Company delivered no
later than 14 calendar days after delivery of the Tag-Along Notice by the
Tag-Along Initiator to each Tag-Along Offeree and the Company, have the
opportunity and right to sell to the transferee in such proposed Tag-Along
Transfer (upon the same terms and conditions, or, in the case of a
Tag-Along Transfer that is not a Direct Transfer, on substantially
equivalent terms and conditions, as the Tag-Along Initiator) up to that
amount of Membership Interests owned by the Tag-Along Offeree equal to the
product of (x) a fraction, the numerator of which is the number of
Membership Units owned as of such date by that Tag-Along Offeree and the
denominator of which is the aggregate number of Membership Units owned as
of such date by the Tag-Along Initiator and each Tag-Along Offeree that has
accepted the opportunity to participate and (y) the aggregate number of
Tag-Along Interests. The amount of Tag-Along Interests to be sold by any
Tag-Along Initiator shall be proportionately reduced to the extent
necessary to provide for such sales of Membership Interests hereunder by
Tag-Along Offerees. Notwithstanding anything contained herein to the
contrary, no Member that is not a Tag-Along Offeree shall have any rights
under this Section 6.3.
(b) At the closing of any proposed Transfer in respect of which a
Tag-Along Notice has been delivered, the Tag-Along Initiator together with
all Tag-Along Offerees electing to sell Membership Interests, shall
deliver, free and clear of all liens (other than this Agreement), to the
proposed transferee the Membership Interests to be sold and shall receive
in exchange therefor the consideration to be paid or delivered by the
proposed transferee in respect of such Membership Interests as described in
the Tag-Along Notice.
6.4 Take-Along Rights. A Majority Member desiring to Direct Transfer
(other than in a Subsidiary Transfer or a Direct Transfer to an Affiliate
of the Majority Member) all, but not less than all, of the Membership
Interests owned by it and its Affiliates (the "TAKE-ALONG INITIATOR") shall
give written notice of such intended Transfer to each other Member (each, a
"TAKE-ALONG OFFEREE") and to the Company. Such notice (the "TAKE-ALONG
NOTICE") shall set forth the terms and conditions of such proposed
Transfer, including the name of the proposed transferee, the purchase price
proposed to be paid for such Membership Interests and the payment terms and
type of Transfer to be effectuated. The Take-Along Initiator shall have the
right, exercisable not later than 14 calendar days after delivery of the
Take-Along Notice, to require each Take-Along Offeree to sell to the
transferee in such proposed Transfer (upon the same terms and conditions as
the Take-Along Initiator, including with respect to price and form of
consideration) all of such Take-Along Offeree's Membership Interests.
20
(b) At the closing of any proposed Transfer in respect of which a
Take-Along Notice has been delivered, the Take-Along Initiator together
with all Take-Along Offerees electing to sell Membership Interests, shall
deliver, free and clear of all liens (other than this Agreement), to the
proposed transferee the Membership Interests to be sold and shall receive
in exchange therefor the consideration to be paid or delivered by the
proposed transferee in respect of such Membership Interests as described in
the Take-Along Notice.
6.5 Assignment Binding on Company. No Direct Transfer of all or any
part of the Membership Interest of a Member permitted to be made under this
Agreement shall be binding upon the Company unless and until a duplicate
original of such instrument of Direct Transfer, duly executed and
acknowledged by the assignor or transferor and assignee or transferee (the
"SUBSTITUTE MEMBER"), has been delivered to the Company, and such
instrument evidences (i) the written acceptance by each Substitute Member
of all of the terms and provisions of this Agreement and (ii) each
Substitute Member's representation that such Direct Transfer was made in
accordance with all applicable laws and regulations and the terms and
provisions of this Agreement.
6.6 Substituted Members. Members who Direct Transfer all their
Membership Interests pursuant to a Direct Transfer permitted under this
Agreement shall cease to be Members of the Company except that unless and
until a Substituted Member is admitted in its stead, the Direct
Transferring Member shall not cease to be a Member of the Company under the
LLC Act and hereunder. Notwithstanding Section 6.5, any Person who is an
assignee or transferee of any Membership Interest of a Member and who has
satisfied the requirements of Article 6 shall become a Substituted Member
only when (i) the Board of Managers has entered such Person as a Member on
the books and records of the Company, which the Board of Managers is hereby
directed to do upon satisfaction of such requirements, and (ii) such Person
shall have paid all reasonable legal fees and filing costs in connection
with the substitution as a Member.
6.7 Acceptance of Prior Acts. Any person who becomes a Member, by
becoming a Member, accepts, ratifies and agrees to be bound by all actions
duly taken pursuant to the terms and provisions of this Agreement by the
Company prior to the date it became a Member and, without limiting the
generality of the foregoing, specifically ratifies and approves all
agreements and other instruments as may have been executed and delivered on
behalf of the Company and which were in force and effect prior to the date
it became a Member.
6.8 Admission of Transferees to the Company. If the foregoing
provisions of this Article 6 have been observed, an assignee or transferee
of Membership Interests shall be admitted to the Company and shall have all
other rights and obligations of a Member hereunder.
6.9 Right to Call Membership Interests
(a) In the event that any Member (together with its Affiliates)
owns 5% or less than the fully-diluted Membership Interests then
outstanding, the Company shall have the right to purchase by written notice
to the Member all, but not less than all, of such Member's (and its
Affiliates') Membership Interest for an amount in cash equal to the Fair
Market Value of such Membership Interest at the time notice of such
exercise is given, and such notice, once given, shall be irrevocable;
provided that the Company shall not exercise such right to purchase any
21
Membership Interest held by CommScope Optical or its Affiliates prior to
the expiration of the Exercise Period and, in any event, only if CommScope
does not timely exercise the right to sell Membership Interests in
accordance with Section 5.6 of the MOU.
(b) In the event of any CTV Member Transfer or Change of Control
of CommScope (each, a "CALL TRANSACTION"), the Company shall have the right
to purchase all, but not less than all, of the Membership Interest of any
Member whose Affiliate entered into the Call Transaction (each, a "CALL
TRANSACTION MEMBER"). Upon the execution of any agreement by any Affiliate
of a Member to enter into a Call Transaction, each Call Transaction Member
shall deliver prompt written notice to the Company that it has entered into
a Call Transaction (a "CALL TRANSACTION NOTICE"). The Call Transaction
Notice shall (i) specify the type of transaction proposed to be effected by
the Call Transaction, (ii) identify the proposed parties to such Call
Transaction and (iii) specify the date scheduled to effect the Call
Transaction. The Company shall have the option (subject to consummation of
the Call Transaction in the event of a Change of Control of CommScope) to
purchase all, but not less than all, of the Call Transaction Member's (and
its Affiliates') Membership Interest for an amount in cash equal to the
then Fair Market Value of such Membership Interest. The Company shall
exercise its option to purchase such Membership Interests by delivering a
notice of exercise to the Call Transaction Member within forty-five (45)
calendar days of receipt by the Company of a Call Transaction Notice. In
the event that the Company elects to exercise its option to purchase the
Membership Interest of the Call Transaction Member, (i) the Company shall
deliver to the Call Transaction Member the purchase price for such
Membership Interests within 100 calendar days of the determination of the
Fair Market Value for such Membership Interests (such date, the "PAYMENT
DATE") and (ii) during the period, if any, commencing on the consummation
of the Call Transaction and ending on the earlier of (A) the consummation
of the purchase by the Company of the Call Transaction Member's Membership
Interest and (B) the Payment Date, the Call Transaction Member shall be
deemed to be a Suspended Member.
(c) In addition to, and not in limitation of, Section 6.9(b), if,
at any time that CommScope and its Affiliates own 15% or more of the
Membership Interests (whether calculated on a then actually outstanding or
a fully-diluted basis), any entity listed on Appendix A to the Corning
Patent License either (i) acquires, directly or indirectly, a 20% or
greater equity interest in CommScope, or (ii) acquires, directly or
indirectly, Corning Defined Control of CommScope (an "APPENDIX A
TRANSACTION") then the Company (or the Majority Member or an Affiliate of
the Majority Member) shall have the right, by notice to CommScope Optical
(an "EXERCISE NOTICE"), to purchase from any CommScope Entity then owning
Membership Interests, that amount of Membership Interests sufficient to
reduce the CommScope Entities' collective ownership to 14.9% of the
Membership Interests then actually outstanding or on a fully-diluted basis
(whichever method would result in the CommScope Entities having the smaller
aggregate ownership interest in the Company and its Subsidiaries), for a
purchase price equal to 80% of the then Fair Market Value of such
Membership Interests. The CommScope Entities shall give prompt written
notice (but in no event later than one calendar day after the event giving
rise to the obligation to give such notice) to the Company and the Majority
Member (i) of an agreement with respect to an Appendix A Transaction, or,
if no such agreement is entered into, upon consummation of an Appendix A
Transaction or (ii) of any public filing with the U.S. Securities and
Exchange Commission by any Person indicating the intention of such Person
to commence or consummate an Appendix A Transaction. If the Company (or the
22
Majority Member or an Affiliate of the Majority Member) delivers an
Exercise Notice, the Company (or the Majority Member or an Affiliate of the
Majority Member) and the CommScope Entities shall consummate the purchase
of CommScope Entity Membership Interests contemplated by this Section
6.9(c) within the time period set forth in Section 2.04 of the Corning
Patent License within which Corning may not exercise its right to terminate
the licenses to Fitel USA and/or its Affiliates thereunder. The Company (or
the Majority Member or an Affiliate of the Majority Member) and the
CommScope Entities agree that, to the extent that such purchase cannot be
consummated within the time period set forth above, the parties shall enter
into such escrow, trust or other arrangements as are necessary to avoid,
pending consummation of such purchase, Corning's termination right under
Section 2.04 of the Corning Patent License. Fitel USA shall give CommScope
Optical and its Affiliates prompt notice of any amendment, modification or
waiver of the Corning Patent License, including Appendix A thereto, that
could reasonably affect CommScope Optical's and its Affiliates' obligations
hereunder.
(d) Upon the consummation of a purchase by the Company of any
Membership Interest pursuant to this Section 6.9, the Member Direct
Transferring such Membership Interests shall deliver, free and clear of all
liens (other than this Agreement), to the Company the Membership Interests
elected to be purchased by Company and shall receive in exchange therefor
the consideration to be paid or delivered by the Company in respect of such
Membership Interests as described above.
6.10 Right to Put Membership Interests. In the event of any Change of
Control of Fitel USA (an "EXIT TRANSACTION"), each Minority Member shall
have the right to sell all, but not less than all, of such Minority
Member's Membership Interest to the Company. Upon the execution of any
agreement by the Majority Member to enter into an Exit Transaction, the
Majority Member shall deliver prompt written notice to the Company and each
Minority Member that it has entered into an Exit Transaction (an "EXIT
TRANSACTION NOTICE"). The Exit Transaction Notice shall (i) specify the
type of transaction proposed to be effected by the Exit Transaction, (ii)
identify the proposed parties to such Exit Transaction and (iii) specify
the date scheduled to effect the Exit Transaction. Each Minority Member
shall have the option (subject to consummation of the Exit Transaction) to
sell all, but not less than all, of the Minority Member's Membership
Interest to the Company for an amount in cash equal to the then Fair Market
Value of such Membership Interest. A Minority Member shall exercise its
option to sell such Membership Interests by delivering a notice of exercise
to the Company within forty-five (45) calendar days of receipt by the
Majority Member of an Exit Transaction Notice. In the event that a Minority
Member elects to exercise its option to sell its Membership Interest to the
Company, (i) the Company shall deliver to such Minority Member the purchase
price for such Membership Interests within 100 calendar days of the
determination of the Fair Market Value for such Membership Interests (such
date, the "EXIT PAYMENT DATE") and (ii) during the period, if any,
commencing on the consummation of the Exit Transaction and ending on the
earlier of (A) the consummation of the purchase by the Company of such
exercising Minority Member's Membership Interest and (B) the Exit Payment
Date, such Minority Member shall be deemed to be a Suspended Member. Upon
the consummation of a purchase by the Company of any Membership Interest
pursuant to this Section 6.10, the Minority Member Direct Transferring such
Membership Interests to the Company shall deliver, free and clear of all
liens (other than this Agreement), to the Company the Membership Interests
purchased by the Company and shall
23
receive in exchange therefor the consideration to be paid or delivered by
the Company in respect of such Membership Interests as described above.
6.11 Securities Laws. The Membership Units have not been registered
under the Securities Act, and, therefore, in addition to the other
restrictions on transfer contained in this Agreement, no Membership Units
or Membership Interest may be sold unless registered under the Securities
Act or an exemption from such registration is then available. Any
certificate (if any) evidencing Membership Units or any Membership Interest
and each certificate issued in exchange for or upon the Transfer of any
Membership Units or Membership Interest shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON NOVEMBER __, 2001 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND THE ISSUER (THE "COMPANY")
HAS NOT BEEN REGISTERED UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "INVESTMENT COMPANY ACT"). THE SECURITIES REPRESENTED
BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED (X) IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN THE ABSENCE
OF AN EXEMPTION FROM REGISTRATION THEREUNDER, OR (Y) IF SUCH SALE OR
TRANSFER CANNOT BE EFFECTED WITHOUT THE LOSS BY THE COMPANY OF ANY
APPLICABLE INVESTMENT COMPANY ACT EXEMPTION. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER SPECIFIED IN THE LIMITED LIABILITY COMPANY
AGREEMENT, DATED AS OF NOVEMBER __, 2001, AS AMENDED AND MODIFIED FROM
TIME TO TIME. THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF
SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT
TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
The legend set forth above shall be removed from the certificates (if any)
evidencing any Membership Units or any Membership Interest which ceases to
be a Membership Unit or Membership Interest in accordance with the
definitions thereof.
ARTICLE 7. CAPITAL CONTRIBUTIONS, ACCOUNTS, ALLOCATIONS
AND DISTRIBUTIONS
7.1 Initial Capitalization. Concurrently with the execution of this
Agreement, each Member shall (a) be deemed to have made a Capital
Contribution in the amounts set forth in Schedule 7.1(a) and (b) make a
loan to the Company in the amounts set forth in Schedule 7.1(b).
24
7.2 Capital Accounts. A separate Capital Account shall be established
and maintained for each Member in accordance with Treas. Reg. Section
1.704-1(b)(2)(iv).
7.3 Distributions. Except as set forth in Section 7.4, distributions,
including the amount and timing thereof, shall be determined by the Board
of Managers. Except as provided in Section 9.3(b), all distributions shall
be distributed among the Members in the proportion that the number of
Membership Units held by a Member bears to the total number of Membership
Units held by all of the Members.
7.4 Tax Distributions. Unless prohibited by applicable law, the Board
of Managers shall cause the Company to distribute, at the end of each
quarterly accounting period of the Company an amount equal to the Tax
Amount for such quarterly accounting period (each a "QUARTERLY
DISTRIBUTION") and, within 60 calendar days after the end of each Fiscal
Year, an amount equal to the excess (if any) of (a) the Tax Amount for such
Fiscal Year over (b) the sum of all Quarterly Distributions previously made
pursuant to this Section 7.4 for such Fiscal Year (each a "FINAL
DISTRIBUTION"). The "TAX AMOUNT" for a Quarterly Distribution means the
product of (x) the Assumed Tax Rate and (y) the estimated taxable income of
the Company for the relevant quarterly accounting period, and for a Final
Distribution means the product of (i) the Assumed Tax Rate and (ii) the
taxable income of the Company for such Fiscal Year. The "ASSUMED TAX RATE"
means, for any period, the marginal tax rate of a corporation subject to
U.S. federal income tax at the highest applicable marginal tax rate in
effect for such period plus 5%. Quarterly Distributions made pursuant to
this Section 7.4 shall be made in a manner consistent with the estimated
annual tax items of the Company, and each Quarterly Distribution shall be
adjusted to the extent Quarterly Distributions for prior quarterly
accounting periods did not correctly estimate such items. If the taxable
income for a Fiscal Year has not been determined within 60 calendar days
after the end of a Fiscal Year the Board of Managers shall make the Final
Distributions called for by this Section 7.4 (if any) on an estimated basis
and in the event that the taxable income exceeds the amount used in the
estimate shall make additional distributions pursuant to this Section 7.4
in respect of such excess when the taxable income for the Fiscal Year is
finally determined.
7.5 Allocation of Net Profit or Net Loss. Except as provided in
Section 7.6, all items of profit, loss, deduction and credit for each
Fiscal Year (or portion thereof) shall be allocated among the Members (and
credited or debited to their Capital Accounts as provided in Treas. Reg.
ss. 1.704-1(b)(2)(iv)) in the proportion that the number of Membership
Units held by a Member bears to the total number of Membership Units held
by all of the Members.
7.6 Allocations of Nonrecourse Deductions; Minimum Gain Chargeback;
Special Allocations and Rules. (a) Notwithstanding any other provision of
this Agreement, (i) "partner nonrecourse deductions" (as defined in Treas.
Reg. Section 1.704-2(i)), if any, of the Company shall be allocated to the
Member that bears the economic risk of loss within the meaning of Treas.
Reg. Section 1.704-2(i), and (ii) "nonrecourse deductions" (as defined in
Treas. Reg. Section 1.704-2(b)), if any, of the Company with respect to
each period shall be allocated in the same proportion that the number of
Membership Units held by a Member bears to the total number of Membership
Units held by all of the Members.
25
(b) This Agreement shall be deemed to include "qualified income
offset," "minimum gain chargeback" and "partner nonrecourse debt minimum
gain chargeback" provisions within the meaning of Treasury Regulations
under Section 704(b) of the Code. Accordingly, notwithstanding any other
provision of this Agreement, items of gross income shall be allocated to
the Members on a priority basis to the extent and in the manner required by
such provisions.
(c) Any special allocation of items pursuant to the above
provisions of this Section 7.6 shall be taken into account in computing
subsequent allocations pursuant to Section 7.5 so that the cumulative net
amount of all items allocated to each Member shall, to the extent possible,
be equal to the amount that would have been allocated to such Member if
there had never been any special allocation pursuant to this Section 7.6.
(d) Losses allocated to any Member with respect to any Fiscal
Year shall not exceed the maximum amount of losses that can be so allocated
without causing or increasing a deficit balance in a Member's Capital
Account as of the end of the partnership taxable year to which such
allocation relates (in excess of deficit amounts the Member is deemed
obligated to restore and for other adjustments as provided in Treas. Reg.
Section 1.704-1(b)(2)(ii)(d)). If some but not all of the Members would
have adjusted Capital Account deficits as a consequence of an allocation of
losses pursuant to the immediately preceding sentence, the limitation set
forth in such sentence shall be applied on a Member-by-Member basis and any
such losses not allocable to a Member as a result of such limitation shall
be allocated to the other Members in accordance with their positive Capital
Account balances so as to allocate the maximum possible losses to each
Member under Treas. Reg. Section 1.704-1(b)(2)(ii)(d).
(e) For purposes of determining the profits, losses, or any other
items allocable to any period, profits, losses, and any such other items
shall be determined on a daily, monthly, or other basis, as determined by
the Board of Managers under any permissible method under Code Section 706
and the Treasury Regulations thereunder.
(f) The Capital Accounts of the Members shall be increased or
decreased to reflect a revaluation of Company property at such time as the
Board of Managers shall determine consistent with Treasury Regulation
Section 1.704-1(b).
(g) The provisions of this Article 7 are intended to comply with
Code Section 704(b) and the Treasury Regulations thereunder and shall be
interpreted consistent therewith.
7.7 Section 704(c) Allocations. (a) In accordance with Code Section
704(c) and the Treasury Regulations thereunder, income, gain, loss, and
deduction with respect to any property contributed to the capital of the
Company shall, solely for tax purposes, be allocated among the Members so
as to take account of any variation between the adjusted basis of such
property to the Company for federal income tax purposes and its initial
gross asset value using any reasonable method determined by the Board of
Managers.
(b) In the event that the gross asset value of any Company
property is adjusted pursuant to Section 7.6(f) above, subsequent
allocations of income, gain, loss, and deduction
26
with respect to such property shall take account of any variation between
the adjusted basis of such property for federal income tax purposes and its
gross asset value in the same manner as under Code Section 704(c) and the
Treasury Regulations thereunder.
(c) Allocations pursuant to this Section 7.7 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account or
share of profits, losses, other items, or distributions pursuant to any
provision of this Agreement.
7.8 No Restoration of Negative Capital Accounts. At no time shall a
Member with a negative balance in its Capital Account have any obligation
to the Company or to any other Member to restore such negative balance.
ARTICLE 8. INDEMNITIES
8.1 Indemnities. (a) The Company shall indemnify and hold harmless
(each an "INDEMNIFIED PERSON") (i) each Member and each Manager, (ii) each
Affiliate of each Member, (iii) each of the foregoing's respective
directors, officers, employees and agents and (iv) each of the heirs,
executors, successors and assigns of any of the foregoing, from and against
any and all damages, claims, losses, expenses, costs, obligations and
liabilities including reasonable attorneys' fees and expenses incurred to
enforce the terms of this Section 8.1 (collectively, "LOSSES AND EXPENSES")
suffered or incurred by any such Indemnified Person arising from, relating
to or otherwise in respect of, (A) any liability of the Company or (B) any
act or omission performed or omitted by such Indemnified Person in its
capacity as a Member or Manager (or as an Affiliate, director, officer,
employee, agent, heir, executor, successor or assign of such Member or
Manager or Affiliate) except for acts or omissions constituting gross
negligence, bad faith, fraud or willful misconduct or breach of this
Agreement.
(b) If a claim by a Third Party is made against an Indemnified
Person hereunder, and if such Indemnified Person intends to seek indemnity
with respect thereto under this Section 8.1, such Indemnified Person shall
promptly notify the Company in writing of such claims setting forth such
claims in reasonable detail, provided that failure of such Indemnified
Person to give prompt notice as provided herein shall not relieve the
Company of any of its obligations hereunder, except to the extent that the
Company is materially prejudiced by such failure. The Company shall have
twenty (20) calendar days after receipt of such notice to undertake,
through counsel of its own choosing, subject to the reasonable approval of
such Indemnified Person, and at its own expense, the settlement or defense
thereof, and the Indemnified Person shall cooperate with it in connection
therewith; provided, however, that the Indemnified Person may participate
in such settlement or defense through counsel chosen by such Indemnified
Person, provided that the fees and expenses of such counsel shall be borne
by such Indemnified Person. If the Company shall assume the defense of a
claim, it shall not settle such claim without the prior written consent of
the Indemnified Person, (i) unless such settlement includes as a term
thereof the giving by the claimant of an unconditional release of the
Indemnified Person from all liability with respect to such claim or (ii) if
such settlement involves the imposition of equitable remedies or the
imposition of any material obligations on such Indemnified Person other
than financial obligations for which such Indemnified Person will be
27
indemnified hereunder. If the Company shall assume the defense of a claim,
the fees of any separate counsel retained by the Indemnified Person shall
be borne by such Indemnified Person unless and to the extent there exists a
conflict between them as to their respective legal defenses (other than one
that is of a monetary nature), in which case the Indemnified Person shall
be entitled to retain separate counsel, the reasonable fees and expenses of
which shall be reimbursed by the Company. If the Company does not notify
the Indemnified Person within twenty (20) calendar days after the receipt
of the Indemnified Person's notice of a claim of indemnity hereunder that
it elects to undertake the defense thereof, the Indemnified Person shall
have the right to contest, settle or compromise the claim but shall not
thereby be deemed to have waived any right to indemnity therefor pursuant
to this Agreement.
(c) No Member shall have any obligation or liability to any other
Member arising out of or relating to any liability of the Company.
8.2 Insurance. The Company may purchase and maintain insurance, on
behalf of the such Persons as the Board of Managers shall determine,
against any liability that may be asserted against, or expense that may be
incurred by, such Persons in connection with the business or activities of
the Company, regardless of whether the Company would have the power to
indemnify such Persons against such liability under the provisions of this
Agreement.
ARTICLE 9. DURATION, DISSOLUTION AND LIQUIDATION
9.1 Duration; Events Causing Dissolution. The Company shall continue
until the earlier of:
(a) the unanimous vote of the Board of Managers; or
(b) the entry of a decree of judicial dissolution under
Section 18-802 of the LLC Act.
The date of such dissolution is herein called the "DISSOLUTION DATE."
9.2 Cancellation of Certificate. Upon the dissolution of the Company,
the Certificate shall be cancelled in accordance with the provisions of
Section 18-203 of the LLC Act by the Board of Managers or any Member,
trustee or liquidator designated by the Board of Managers who is
responsible for winding up the affairs of the Company.
9.3 Distributions Upon Dissolution. (a) Upon the occurrence of the
Dissolution Date, the Board of Managers shall designate a Member, trustee
or liquidator to, without any unnecessary delay, sell or otherwise
liquidate the assets of the Company and pay or make due provision for the
payment of all debts, liabilities and obligations of the Company.
(b) Such Member, trustee or liquidator shall distribute the net
liquidation proceeds and any other liquid assets of the Company, after the
payment of all debts, liabilities and obligations of the Company
(including, without limitation, all amounts owing to a Member under this
Agreement or under any agreement between the Company and the Member entered
into by the Member other than in its capacity as a Member in the Company),
the payment of expenses of liquidation of the Company, and the
establishment of a reasonable reserve in an
28
amount estimated by the Member, or such trustee or liquidator to be
sufficient to pay any amounts reasonably anticipated to be required to be
paid by the Company, to the Members in the proportion that the number of
Membership Units held by a Member bears to the total number of Membership
Units held by all of the Members.
9.4 Reasonable Time for Winding Up. A reasonable time shall be allowed
for the orderly winding up of the business and affairs of the Company and
the liquidation of its assets in order to minimize any losses otherwise
attendant upon such a winding up.
ARTICLE 10. BOOKS OF ACCOUNT; REPORTS; TAXES
10.1 Books of Account. The Company shall keep, accurate and complete
records and books of account of all transactions of the Company. Such books
and records shall be kept in accordance with GAAP applicable thereto, shall
be maintained at the principal office of the Company and shall be available
for inspection and examination by any Member, or its respective designee,
at any reasonable time during regular business hours. The Company shall
provide to each Member all such information and financial statements of the
Company as such Member may reasonably request. All such information and
financial statements shall be used for Company purposes only.
10.2 Financial Statements and Information. Any Member may request from
the Company audited financial statements of the Company for a prior Fiscal
Year to be presented no later than 45 calendar days after the end of each
Fiscal Year.
10.3 Tax Returns. Fitel USA shall cause to be prepared, at the cost of
the Company, and shall make available (at least 30 calendar days prior to
the relevant due date (including extensions)) for review and comment by
each of the Members, all necessary federal, state and local tax returns
(including quarterly estimated tax information) of the Company. Fitel USA
shall cause all such returns to be timely filed.
10.4 Tax Matters Partner. Fitel USA is hereby designated as the "tax
matters partner" (as defined in the Code) of the Company and is authorized
and required to represent the Company (at the expense of the Company) in
connection with all examinations of the affairs of the Company by any
federal, state, or local tax authorities, including any resulting
administrative and judicial proceedings, and to expend funds of the Company
for professional services and costs associated therewith; provided that
Fitel USA shall provide CommScope Optical with prompt notice of the
commencement of any such examination or other proceeding and shall keep
CommScope Optical reasonably informed with respect to such examination or
other proceeding. Expenses of administrative proceedings relating to the
determination of Company items at the Company level undertaken by the "tax
matters partner" will be deemed to be Company expenses.
10.5 Fiscal Year. The Fiscal Year of the Company for financial,
accounting and federal, state and local income tax purposes shall be
determined by the Board of Managers and shall initially be the calendar
year.
10.6 Tax Elections. The Company intends to be treated as a partnership
for U.S. federal income tax purposes. The Members agree that no election
shall be made, and no action
29
shall be taken, to treat the Company as anything other than a partnership
for U.S. federal income tax purposes. At the request of any Member (but
subject to the consent (which shall not be unreasonably withheld) of the
other Members), the Company shall make an election under Section 754 and
the Treasury Regulations thereunder to adjust the basis of the assets of
the Company pursuant to Section 734 and 743 of the Code.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
11.1 Representations and Warranties. Each Member hereby represents and
warrants to the Company and the other Members as follows:
(a) (i) the execution and delivery of this Agreement by such
Member, the performance by such Member of its obligations hereunder, and
the consummation by such Member of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part of
such Member and (ii) this Agreement has been duly executed and delivered by
such Member and, assuming the due execution and delivery by such Member,
constitutes a legal, valid and binding obligation of such Member
enforceable against it in accordance with its terms;
(b) there is no action, suit or proceeding pending against such
Member or, to such Member's knowledge, threatened in any court or by or
before any other governmental agency or instrumentality which would
prohibit such Member from entering into, or that could have a material
adverse effect on such Member's ability to perform its obligations under,
this Agreement; and
(c) no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign, is required to be obtained by such Member that has not been
obtained in connection with the execution, delivery and performance of this
Agreement by such Member or the consummation by such Member of the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by such Member and the consummation of the transactions
contemplated hereby by such Member does not conflict with, or result in a
breach of, any law or regulation of any governmental authority applicable
to such Member or any material agreement to which such Member is a party.
11.2 Representations Regarding Purchase of Interests. Each Member
represents and warrants that it is purchasing the Membership Interest that
it purchases pursuant to this Agreement for investment purposes only and
not with a view to the resale of such Membership Interest (or any part
thereof or interest therein) in violation of any applicable securities
laws.
11.3 Wholly-Owned Subsidiaries. Fitel USA represents and warrants to
CommScope Optical that it is an indirect wholly owned Subsidiary of
Furukawa. CommScope Optical represents and warrants to Fitel USA that it is
an indirect wholly owned Subsidiary of CommScope.
30
ARTICLE 12. OTHER AGREEMENTS AND MISCELLANEOUS PROVISIONS
12.1 Compliance with LLC Act. Each Member agrees not to take any
action or fail to take any action which, considered alone or in the
aggregate with other actions or events, would result in the dissolution or
termination of the Company under the LLC Act.
12.2 Additional Actions and Documents. Each Member agrees to take or
cause to be taken such further actions, to execute, acknowledge, deliver
and file or cause to be executed, acknowledged, delivered and filed such
further documents and instruments, and to use reasonable best efforts to
obtain such consents, as may be necessary or as may be reasonably requested
in order to fully effectuate the purposes, terms and conditions of this
Agreement.
12.3 Access to Information. Each Member shall provide to each other
Member and their employees, counsel, auditors and representatives access,
during normal business hours, information and assistance as is reasonably
necessary for the Members to verify any amount allocated to the Company
pursuant to this Agreement or for any other reason reasonably requested by
the other party in connection with this Agreement. Each party shall
reimburse the other for reasonable out-of-pocket costs and expenses
incurred in assisting the other pursuant to this Section 12.3.
12.4 Confidentiality. Each Member shall comply with the terms and
conditions of Section 6.2 of the MOU with respect to Confidential
Information relating to the Company and its Subsidiaries as if such Member
were bound thereby.
12.5 Survival. It is the express intention and agreement of the
Members that all covenants, agreements, statements, representations,
warranties and indemnities made in this Agreement shall survive the
execution and delivery of this Agreement.
12.6 Amendments; Waivers. (a) Subject to Section 4.16(a), this
Agreement and/or the Certificate may be amended, modified or waived by an
instrument in writing signed by Members of the Company representing a
majority of the Membership Interests.
(b) Neither the waiver by a Member of a breach of, or a default
under, any of the provisions of this Agreement, nor the failure of a
Member, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, remedy or privilege hereunder, shall
thereafter be construed as a waiver of any subsequent breach or default of
a similar nature, or as a waiver of any such provisions, rights, remedies
or privileges hereunder.
12.7 Exercise of Rights. No failure or delay on the part of a Member
or the Company in exercising any right, power or privilege hereunder and no
course of dealing among the Members or between a Member and the Company
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein expressly provided are cumulative (except as
expressly provided herein) and not exclusive of any other rights or
remedies which a Member or the Company would otherwise have at law or in
equity or otherwise.
31
12.8 Assignment; Binding Effect; Benefit. Except as expressly
contemplated herein, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, provided that no such assignment will relieve
the assigning party of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, express or implied, is intended to
confer on any Person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
12.9 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements, written or oral, with respect to the
matters provided for herein.
12.10 Severability. If any provision of this Agreement, or any
application thereof to any circumstances, is invalid, in whole or in part,
such provision or application shall to that extent be severable and shall
not affect other provisions or applications of this Agreement.
12.11 Headings. The section and other headings of this Agreement are
for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.12 Governing Law. This Agreement shall be governed by and construed
both as to validity and enforceability in accordance with the laws of the
State of Delaware, without regard to the conflict of laws provisions
thereof.
12.13 Partition. The Members hereby agree that no Member nor any
Substitute Member shall have the right, while this Agreement remains in
effect, to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the
property of the Company partitioned, and each Member, on behalf of itself,
its successors, representatives and assigns, hereby waives any such right.
12.14 No Brokers. Each of the parties hereto warrants to each other
that there are no brokerage commissions or finders' fees (or any basis
therefor) resulting from any action taken by such party or any Person
acting or purporting to act on its behalf in connection with entering into
this Agreement. Each Member agrees to indemnify and hold harmless each
other Member for all costs, damages or other expenses arising out of any
misrepresentation made in this Section 12.14.
12.15 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which shall be
deemed to be one and the same agreement.
12.16 Enforcement Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of Articles 4 or
6, or Section 12.4, of this Agreement were not performed in accordance with
its specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of Articles 4 or 6, or Section 12.4, of this Agreement and to
enforce specifically the
32
terms and provisions of Articles 4 or 6, or Section 12.4, of this Agreement
in any court of competent jurisdiction, this being in addition to any other
remedy to which they may be entitled at law or in equity.
12.17 Effect of Initial Public Offering. Effective immediately prior
to an initial public offering of any Membership Interests or other Company
Securities, (a) Section 4.16, Section 4.18, Section 5.4, Section 6.1,
Section 6.2, Section 6.3, Section 6.4, Section 6.9 and Section 6.10 shall
become null and void and have no effect and (b) notwithstanding the
provisions of Section 4.2(a)(i), CommScope Optical shall not be entitled to
designate any Managers on the Board of Managers; provided that,
notwithstanding anything in this agreement to the contrary, no Member shall
be relieved or released from any liabilities or damages arising out of such
Member's breach of any provision of this Agreement. Notwithstanding
anything contained herein to the contrary, nothing herein shall require the
Company, or the Board of Managers or any Member to cause the Company, to
engage in an initial public offering of Membership Interests or other
equity securities of the Company or any Subsidiary of the Company, or
otherwise to offer or sell any securities of the Company or any Subsidiary
of the Company in any public offering or otherwise.
12.18 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered
mail (return receipt requested and first-class postage prepaid), addressed
as follows:
If to Fitel USA: If to CommScope Optical:
Fitel USA Corp. CommScope, Inc.
c/o The Furukawa Electric Co., Ltd. Lenoir-Rhyne Boulevard, SE
6-1, Marunouchi, 2 chome Hickory, North Carolina 28603-2520
Chioda Ku United States of America
Tokyo 100-8322 Attention: Frank B. Wyatt, II
Attention: Mr. Koichi Nakamura Facsimile: 828-431-2520
Facsimile: 011-81-3-3286-3919
with a copy to: with a copy to:
Masuda & Ejiri Fried, Frank, Harris, Shriver & Jacobson
399 Park Avenue, 18th Floor 1 New York Plaza
New York, New York 10022 New York, New York 10004
United States of America United States of America
Attention: Junji Masuda Attention: Christopher Ewan
Facsimile: (212) 486-2614 Facsimile: (212) 859-8588
or to such other address as any party or other addressee shall specify by
written notice so given, and such notice shall be deemed to have been
delivered as of the date so telecommunicated, personally delivered or
mailed.
33
12.19 Consent to Jurisdiction. The Company and each Member irrevocably
submits, and agrees to cause their Subsidiaries and Affiliates to
irrevocably submit to, the exclusive jurisdiction of the United States
District Court for the Southern District of New York, for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby (and each agrees that no such action, suit
or proceeding relating to this Agreement or any transaction contemplated
hereby shall be brought by it or any of its Subsidiaries or Affiliates
except in such court). The Company and each Member further agrees, and
agrees to cause their Subsidiaries and Affiliates to agree, that service of
any process, summons, notice or document by U.S. registered mail to such
person's respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. The Company and each Member irrevocably and
unconditionally waives (and agrees not to plead or claim), and agrees to
cause its Subsidiaries and Affiliates to irrevocably and unconditionally
waive (and not to plead or claim), any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the United States District Court for
the Southern District of New York or that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
12.20 Waiver of Jury Trial. The Company and each Member hereby waives,
and agrees to cause each of its Subsidiaries and Affiliates to waive, to
the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising
out of, under or in connection with this Agreement. The Company and each
Member (a) certifies that no representative of any other party has
represented, expressly or otherwise, that such other party would not, in
the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 12.20.
34
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
OFS BRIGHTWAVE, LLC
By: /s/ Akira Wada
--------------------------------------
Its: Akira Wada
Attorney-in-fact
--------------------------------------
FITEL USA CORP.
By: /s/ Osamu Sato
--------------------------------------
Its: Osamu Sato
President & CEO
--------------------------------------
COMMSCOPE OPTICAL TECHNOLOGIES, INC.
By: /s/ Frank B. Wyatt, II
--------------------------------------
Its: Frank B. Wyatt, II
Vice-President
--------------------------------------
SCHEDULE A
-----------
Membership Interests
--------------------
Name and Address Initial Initial
of Member Membership Units Membership Interest
---------------------- ---------------------- -------------------------
Fitel USA 8,156,775 81.56775%
CommScope Optical 1,843,225 18.43225%
SCHEDULE 7.1(A)
INITIAL CAPITAL CONTRIBUTIONS
-----------------------------
FITEL USA INITIAL CAPITAL CONTRIBUTION
$767,289,227.72
COMMSCOPE OPTICAL INITIAL CAPITAL CONTRIBUTION
$173,388,000.00
i
SCHEDULE 7.1(B)
INITIAL LOANS
-------------
COMMSCOPE OPTICAL INITIAL LOAN TO THE COMPANY
$30 million