Exhibit 10.2
Luminent, Inc.
Luminent Inc.
and
Fiberxon Inc.
 
Agreement
 
 
[CHINESE CHARACTERS EXCLUDED]
 

 

--------------------------------------------------------------------------------

 

Index

             
1.
  Definitions and Interpretations     3  
 
           
2.
  Standby Letters of Credit     5  
 
           
3.
  Joint and several liabilities     8  
 
           
4.
  Special Terms     10  
 
           
5.
  Representations, undertakings and warranties     11  
 
           
6.
  Notice     15  
 
           
7.
  Confidentiality     18  
 
           
8.
  Termination     18  
 
           
9.
  Breach of Agreement     20  
 
           
10.
  Dispute Resolutions     20  
 
           
11.
  Applicable Law     21  
 
           
12.
  Other Provisions     21  

2

--------------------------------------------------------------------------------

 

Agreement
This Agreement (hereinafter referred to as “This Agreement”) is executed by the
authorized representatives of each party in California and Shenzhen, China
respectively on the 28th day of March, 2007.
(1) Party A : Luminent, Inc.
     Registered office address: 20550 Nordhoff Street, Chatsworth, CA 91311,
United States of America
(2) Party B : Fiberxon Inc
     Registered office address: (“18th and 19th Floor, Dawning Building, # 12
Keji South Road, Hi Tech Park, Shenzhen 518057, People’s Republic of China”)
     Legal representative: (“Li Ji”)
(3) Fiberxon, Inc.
     Registered office address (or residential address): 5201 Great America
Parkway, Suite 340, Santa Clara, CA95054, United States of America
     Legal representative : (“Lu Ying”)
WHEREAS:

1

--------------------------------------------------------------------------------

 

(A)   Party A is a limited liability corporation established under the laws of
Delaware, United States of America and has the capacity to enter into this
Agreement;   (B)   Party B is a wholly foreign owned enterprise established
under the laws of the People’s Republic of China, is a separate legal entity as
has the capacity to enter into this Agreement;   (C)   Party C is a limited
liability corporation established under the laws of Delaware, United States of
America, owns 100% of the equity interests of Party B under the laws of the
People’s Republic of China and has the capacity to enter into this Agreement;  
(D)   Party B currently requires new banking facilities from CITIC Bank. Party B
and its shareholders request the support of Party A in order to fulfill CITIC
Bank’s requirements for granting the banking facilities;   (E)   Party A’s
parent company, MRV Communications, Inc., and Party C have entered into a merger
agreement regarding the acquisition of Party C, including Party C’s interests in
Party B on 26 January 2007 (the “Merger Agreement”). In anticipation of the
closing of the transactions contemplated by the Merger Agreement, Party A agrees
to provide the necessary support to Party B in order for CITIC Bank to grant the
banking facilities to Party B.

2

--------------------------------------------------------------------------------

 

As such, Party A, Party B and Party C (any one party shall hereinafter be
referred to as a “Party”, collectively “All Parties”) have, after friendly
negotiations, agree to enter into this Agreement.

1.   Definitions and Interpretations   1.1   In this Agreement, except where the
context otherwise requires, the following words and expressions shall have the
following meanings:

     
“Standby L/C”
  means a Standby Letters of Credit issued by Party A’s banker in favour of
CITIC Bank Shenzhen Branch pursuant to the terms and conditions of this
Agreement;
 
   
“Working Day”
  means the days of which banks within the territory of the People’s Republic of
China are open for business (except for Saturdays and Sundays);
 
   
“Domestic Loan
  means the Standby L/C issued by Party A’s bankers

3

--------------------------------------------------------------------------------

 

     
Agreement”
  accepted by CITIC Bank Shenzhen Branch, the loan agreement or other
agreements, arrangements and documents signed by Party B and CITIC Bank Shenzhen
Branch pursuant to the terms of this Agreement;
 
   
“US$”
  means the lawful currency of the United States of America;
 
   
“PRC”
  means the People’s Republic of China, which for the purpose of this Agreement,
excludes the Hong Kong Special Administrative Region of the PRC, the Macau
Special Administrative Region of the PRC and Taiwan;
 
   
“PRC Law”
  means laws, regulations, resolutions, directions, judicial interpretations and
other decisions or orders that are binding from any levels of legislative bodies
in the PRC or any departments established by such legislative bodies, the
Supreme People’s Court and the Supreme People’s Procuratorate.

4

--------------------------------------------------------------------------------

 

1.2   The headings are inserted for convenience only and shall not affect the
construction of this Agreement.   1.3   References to Clauses and Sub-clauses
are to clauses and sub-clauses to this Agreement.   1.4   References in this
Agreement to any laws and regulations shall be construed as references to those
laws and regulations as respectively modified or re-enacted from time to time.  
2.   Standby Letters of Credit   2.1   Party A shall, through an issuing bank to
be chosen by Party A, issue the Standby L/C in the amount of US$4,000,000 in
favour of a Shenzhen branch of CITIC Bank specified by Party B, within one
(1) Working Day from the date of signing of this Agreement, for the purpose of
providing a guarantee as collateral to the domestic loans granted by CITIC Bank
Shenzhen Branch to Party B.   2.2   Party B shall reimburse all legal charges
reasonably incurred by Party A in arranging the issuance of the Standby L/C to
Party A.

5

--------------------------------------------------------------------------------

 

2.3   Party B shall provide accurate, complete and correct information to Party
A, including but not limited to all the requirements and conditions of CITIC
Bank Shenzhen Branch in order to ensure that CITIC Bank Shenzhen Branch will
accept the Standby L/C issued by Party A through Party A’s banker.   2.4   Party
B shall upon signing of each Domestic Loan Agreement forthwith provide copies of
such Domestic Loan Agreement to Party A.   2.5   Party B shall be responsible to
cause CITIC Bank Shenzhen Branch to report and register the Standby L/C issued
by Party A’s banker and the provision of banking facilities by CITIC Bank
Shenzhen Branch to Party B with the State Administration of Foreign Exchange in
accordance with the PRC Law.

6

--------------------------------------------------------------------------------

 

2.6   If Party B breaches any terms of the Domestic Loan Agreements which in
turn causes CITIC Bank Shenzhen Branch to claim against the bank who issued the
Standby L/C and that pursuant to the terms of the Standby L/C, Party A is
required to make any repayments to CITIC Bank Shenzhen Branch through the
Standby L/C arrangement and to bear other obligations as a result of Party B’s
breach of the terms of the Domestic Loan Agreement, Party A shall have the right
to rely on this Agreement and also the Standby L/C to claim against Party B and
Party B shall indemnify Party A for all economic losses suffered by Party A,
including but not limited to the payment of any loan principals, interests and
penalty interests by Party A to CITIC Bank Shenzhen Branch pursuant to the
Domestic Loan Agreement and any other losses suffered by Party A.

7

--------------------------------------------------------------------------------

 

2.7   In the event that Party A is required to make any repayments to CITIC Bank
Shenzhen Branch through the Standby L/C arrangement and to bear other
obligations as a result of Party B’s breach of the terms of the Domestic Loan
Agreement, Party B shall be responsible to apply to the State Administration of
Foreign Exchange for a registration of foreign debt. Party B hereby warrants to
Party A that there are no legal obstacles that cannot be resolved in respect of
the registration of foreign debt with the State Administration of Foreign
Exchange. In the event that legal obstacles do exist and Party B fails to
complete the foreign debt registration process, Party B shall be responsible for
all legal consequences including but not limited to do all such things as may be
required by PRC Law to rectify the situation and to accept any administrative
penalties imposed by the PRC government and to indemnify Party A for any losses
or damages suffered by Party A as a result of Party B’s failure to complete the
foreign debt registration process.   2.8   If, for any reason, as a result of
failure to comply with the PRC law or failure to complete the approval or
registration requirements under PRC law, (i) Party A shall not be responsible
for any direct and indirect obligations as a result of the PRC government
imposing any administrative penalties against Party B and/or CITIC Bank;
(ii) Party B shall indemnify Party A for all negative consequences, losses
incurred or damages suffered by Party A as a result of or in relation to Party
A’s performance of the terms under this Agreement and/or the Standby L/C.   3.  
Joint and several liabilities

8

--------------------------------------------------------------------------------

 

3.1   Party B and Party C shall, on a joint and several basis, be responsible to
indemnify Party A for any economic losses suffered by Party A as a result of
Party B’s breach of the Domestic Loan Agreements, including but not limited to:
(i) the compensation payments required to be made by Party A pursuant to the
Standby L/C; (ii) penalty interests, bank charges, litigation or arbitration
costs, legal costs, etc; (iii) any other compensatory obligations which Party B
is liable to Party A pursuant to the terms of this Agreement.   3.2   Party C’s
joint and several liabilities towards Party A shall remain to be valid for a
period of two (2) years after the repayment of all indebtedness under the
Domestic Loan Agreement.   3.3   If Party A made a claim against Party C
directly pursuant to Clause 3.2 above, Party C hereby unconditionally and
irrevocably waive its rights to (i) demand Party A to wait until Party B
completes the foreign debt registration procedures before bringing a claim
against Party C for losses or damages suffered or (ii) rely on the fact that
Party B has not completed the foreign debt registration procedures as a defense
and avoid indemnifying Party A for any losses or damages suffered by Party A.

9

--------------------------------------------------------------------------------

 

4.   Special Terms   4.1   Party B shall only utilise the funds borrowed
pursuant to the terms of the Domestic Loan Agreements for the specific purposes
permitted under the Domestic Loan Agreements and such permitted purposes shall
be the same as those already disclosed to Party A by Party B.   4.2   Party B
shall give two (2) Working Days’ prior written notice to Party A containing the
intended recipient and amount of payments that will be settled by utilizing the
funds deposited in the special loan account opened with CITIC Bank. Thereafter,
Party B shall send copies of receipts of payments or evidence of settlement to
Party A within three (3) Working Days.   4.3   Party B shall submit a written
report to Party A at least once every thirty (30) days containing: (i) statement
of the special loan account issued by the CITIC Bank; (ii) bank statements of
the basic settlement account of Party B; (iii) monthly financial statements of
Party B.   4.4   If Party B fails to repay any installments in accordance with
the Domestic Loan Agreements in full, Party B shall, no later than the next day
following the occurrence of such event, notify Party A in writing by fax
together with other methods of communication.

10

--------------------------------------------------------------------------------

 

4.5   If Party A seeks indemnity from Party B and Party C for loss suffered by
party A as a result of any compensation made pursuant to the terms and
conditions of the Standby L/C and such compensation was made due to Party B’s
breach of the terms of the Domestic Loan Agreements, Party B, as a result of its
undertaking to Party A pursuant to Clauses 2.6 and 2.7 of this Agreement, Party
B and Party C hereby unconditionally and irrevocably agrees to waive its right
to rely on the following defenses or other similar defenses that will exempt
Party B or Party C from indemnifying Party A’s loss or damages (regardless of
whether such defenses are permitted under PRC law); (i) Party B shall not be
responsible to indemnify Party A due to the fact that This Agreement and/or the
Standby L/C and/or the Domestic Loan Agreements are not in compliance with the
PRC law or have not been approved by or registered with the PRC government;
(ii) Party A shall be liable for the consequence of failure to seek approval
from the PRC government or to register with any PRC government authorities in
respect of this Agreement and/or the Standby L/C and/or the Domestic Loan
Agreements.   5.   Representations, undertakings and warranties   5.1   Party B
and Party C hereby unconditionally and irrevocably represent, undertake and
warrant to Party A that all representations, undertakings and warranties made by
Party B and Party C are accurate, correct, valid and not misleading and that:

11

--------------------------------------------------------------------------------

 

  (a)   Party B and Party C have the full power and authority to enter into and
perform this Agreement. Party B and Party C have completed all necessary
procedures to enable their respective authorized representatives (if applicable)
to execute this Agreement. This Agreement, when executed, constitutes a legally
binding agreement and all the terms and conditions under this Agreement are
enforceable and binding against Party B and Party C.     (b)   Party B and Party
C shall, at the time of entering into this Agreement, perform their respective
obligations in accordance with the terms and conditions of this Agreement and
shall not breach any of the following;

  (i)   any laws, regulations, any directions, regulations issued by
administrative bodies or government departments and any orders, prohibition
orders, directions, decisions or judgments issued by any judicial bodies,
government authorities against Party B and Party C; or     (ii)   any documents
that binds the operation of Party B and Party C or the articles of association
of Party B and Party C (if applicable to Party C) at the time of signing of this
Agreement, including (but not limited to) the articles of association of Party B
and Party C (if applicable to Party C) and other constitutional documents; or  
  (iii)   any agreements of which Party B and Party C is a party, or any

12

--------------------------------------------------------------------------------

 

      binding agreements, guarantee, other undertakings or written instrument
regarding their assets.

  (c)   As at the date of signing of this Agreement, Party B and Party C have
not been involved in any material litigation or arbitration, are not aware of
the existence of any material litigation, arbitration or contingent liabilities
involving Party B and Party C, and is not and will not be the subject matter of
any winding-up proceedings. Each of Party B and Party C has the necessary
capacity and authorization to execute this Agreement and to comply with the
terms of this Agreement, and all terms contained in this Agreement shall be
binding on them;     (d)   Apart from normal business activities and unless
otherwise agreed by Party A in writing, Party C, in its capacity as a
shareholder of Party B, shall not and shall procure that any directors of Party
B as nominated by Party C will not do any of the following:

  (i)   any actions that will have a negative impact on the normal business
operation or adverse effect on the completeness of the business structure of
Party B or its subsidiaries;     (ii)   Party B or any of its subsidiaries
(i) increase or decrease its registered capital; (ii) changes to shareholders
and the shareholding structure; (iii) distribution of profits;

13

--------------------------------------------------------------------------------

 

  (iii)   Party B or any of its subsidiaries (i) be liable for or amend any
material obligations (including liabilities); or (ii) change, amend or terminate
any material contracts, or abandon, transfer any material rights or requests;
provide any material deposits, prepayments, capital expenditure or any
investments to any parties; or (iii) make any material commitments or enter into
any material transactions (including any capital investments or purchase, sale,
lease, hire, pledge, charge its assets or deal with its assets in any other
way);     (iv)   Party B or any of its subsidiaries approving any proposals or
pass resolutions regarding the winding-up of, dissolution of or restructuring of
Party B or any of its subsidiaries.

5.2   Party A hereby unconditionally and irrevocably represents, undertakes and
warrants to Party B and Party C that all representations, undertakings and
warranties made by Party A are accurate, correct, valid and not misleading and
that:

  (a)   It has full corporate power and authority to enter into and perform this
Agreement. The board of directors of Party A has authorized the authorized
representative to enter into and execute this Agreement.     (b)   The execution
and performance of this Agreement by Party A will not (i) contradict or violate
any provisions contained in Party A’s articles of association; (ii) lead to or
constitute a breach of any terms, conditions or provisions contained in any
material agreements of which Party A is a party; or (iii) violate any applicable
laws, government approvals or permits to Party A or any of its assets.

14

--------------------------------------------------------------------------------

 

6.   Notice   6.1   Any notices, claims, formal requests, writs or summons,
documents or other notices (hereinafter referred to as “Notices”) that are
required to be given under this Agreement shall be in Chinese and English and
shall be in writing. Such Notices may be personally delivered, or otherwise be
delivered to the relevant Party using the following addresses and fax numbers
(or other addresses or fax numbers notified by the receiving Party in writing to
all other Parties):       To Party A:       Address: 20550 Nordhoff Street,
Chatsworth, CA 91311, United States of America.       Fax number : 1 818 349
9258       Attention : Mr. Brett Chloupek       To Party B:       Address :
(“18th and 19th Floor, Dawning Building, # 12 Keji South Road, Hi Tech Park,
Shenzhen 518057, People’s Republic of China”)       Fax number: 86 755 2698 6666
      Attention: (“Li Ji”)       To Party C:       Address: 5201 Great America
Parkway, Suite 340, Santa Clara, CA95054, United States of America

15

--------------------------------------------------------------------------------

 

    Fax number: 1 408 562 6289       Attention: (“Lu Ying”)       Any Notices or
other communication shall be deemed to be delivered to the receiving Party when:
      Delivery method Time of which Notices are deemed to be delivered      
Local post or courier 24 hours       Fax            Upon transmission      
Courier by air 3 days       Normal airmail 5 days   6.2   Any Notice delivered
pursuant to Clause 6.1 above shall be deemed to have been served; in proving
that a Notice has been delivered or served, evidence that the Notice has already
been delivered to the address of the receiving Party or the address of the
receiving Party has been correctly quoted on the envelope enclosing the Notice
to the receiving Party shall be sufficient. If a Notice is delivered by fax, a

16

--------------------------------------------------------------------------------

 

    confirmation or report generated by the fax machine of the sending Party
confirming transmission of fax message shall be sufficient as prove of delivery
of Notice to the receiving Party.

17

--------------------------------------------------------------------------------

 

6.3   This Agreement does not preclude the Parties from using other methods to
deliver any Notices that are permitted by law or relying on other evidence as
prove of delivery of service of Notice.   7.   Confidentiality   7.1   Each of
the Parties hereby agrees that: unless otherwise required by PRC Law or any
other governing authorities (or pursuant to the directions issued by such
authorities), each Party and its respective representatives, consultants and
employees shall not disclose any information, requirements, particulars or other
related information regarding this Agreement or make any announcements to pubic
regarding the aforesaid information unless the remaining Parties have consented
to such disclosure in writing.   7.2   This Clause, including the
confidentiality obligations and restrictions on disclosure of information shall
survive termination of this Agreement.   8.   Termination

18

--------------------------------------------------------------------------------

 

8.1   This Agreement shall continue to be in full force and effect and shall not
be terminated until all rights, obligations, responsibilities, representations
and warranties contained in this Agreement and the Domestic Loan Agreement have
been fulfilled or completed. In the event that this Agreement has been
terminated for any reason, Party A shall reserve its rights to seek indemnity
for any losses or damages suffered by Party A as a result of Party B or Party
C’s breach of any representations and warranties.   8.2   Party A and Party B
may by agreement in writing terminate this Agreement, Party C’s joint and
several obligations under this Agreement shall, with the exception for its
obligations under Clauses 7.2 and 8.1 hereof, be terminated simultaneously.

19

--------------------------------------------------------------------------------

 

9.   Breach of Agreement   9.1   Any Party who breaches or fails to perform any
obligations in accordance with the terms of this Agreement, provide any
incorrect information, documents data or made any false or incorrect or
misleading representations, undertakings and warranties (including but not
limited to any representations, undertakings and warranties under this
Agreement) which affects other Party’s rights under this Agreement shall be
deemed to have committed a breach to this Agreement.   9.2   The Party that
committed a breach to this Agreement shall be liable to compensate the
non-defaulting Parties all losses and damages suffered by such non-defaulting
Parties including the loss or damages caused by the breaching Party’s breach of
representations, undertakings and warranties.   10.   Dispute Resolutions   10.1
  Negotiations

  (a)   Any disputes between the Parties in relation to the existence,
interpretation, binding effect, enforceability or termination of this Agreement
or any other related issues shall be resolved by the Parties through friendly
negotiations. All Parties should use their best endeavours to resolve such
disputes through friendly negotiations.

20

--------------------------------------------------------------------------------

 

  (b)   If such disputes cannot be resolved within thirty (30) days from the
date of which a Party has served a written notice of dispute to the other
Parties, either Party may commence legal proceedings in court. This Agreement
shall be governed and construed by the laws of the PRC and the Parties hereto
irrevocably submits to the non-exclusive jurisdiction of the courts of the PRC.
This Agreement may be enforced by courts of any competent jurisdictions.

11.   Applicable Law   11.1   This Agreement shall be governed by, and construed
in all respects in accordance with, the laws of the People’s Republic of China.
In the event that the laws of the People’s Republic of China do not contain any
specific requirements on a particular issue, the Parties may rely on
international common practices.   12.   Other Provisions   12.1   This Agreement
sets out the entire agreement and understanding between the parties in relation
to the transactions hereby contemplated, and supersedes all previous agreements,
arrangements and understandings, oral or written, between them with regard to
such transactions and neither Party is entering into this Agreement or any of
the arrangements contemplated hereby in reliance upon any representation or
warranty not expressly set out in this Agreement. This Agreement is not intended
to and does not effect, supersede, amend or otherwise impact the Merger
Agreement.

21

--------------------------------------------------------------------------------

 

12.2   Any amendment to this Agreement shall only be effective and binding if it
is in writing and signed by both Party A and Party B. If any amendment to this
Agreement increases the obligations of Party C as a guarantor, such amendment
shall only be effective and binding if it is in writing and signed by Party C.  
12.3   No party hereto shall assign the rights, powers, or benefits of this
Agreement to any third party without the consent of all the parties to this
Agreement.   12.4   None of the provisions of this Agreement shall be deemed to
constitute any partnership relationship between the Parties, nor shall any
provision of this Agreement be deemed by any Party hereto as appointing the
other Parties, or any of them, as the nominee of such Party.   12.5   No failure
by any Party hereto in exercising any right, power or remedy under this
Agreement against the other Parties, or any of them, to perform any terms and
conditions of this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of the same preclude any further exercise thereof or
the exercise of any other right, power or remedy. Without limiting the
foregoing, no waiver by any Party hereto of any breach by the other Parties, or
any of them, of any provision of this Agreement shall be deemed to be a waiver
of any subsequent breach of that or any other provision hereof and shall not
prejudice such Party’s rights in the event of another breach of the same or any
other term of this

22

--------------------------------------------------------------------------------

 

    Agreement. The rights and remedies of the Parties herein provided are
cumulative and not exclusive of any rights and remedies provided by law.
Notwithstanding the foregoing, any waiver shall only be effective if it is in
writing and expressly sets out the right, power or remedy under this Agreement
to be waived.   12.6   In the event that any provision of this Agreement is held
to be unenforceable, illegal or invalid by any court of competent jurisdiction,
the validity, legality or enforceability of the remaining provisions shall not
be affected nor shall any subsequent application of such provisions be affected.
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the parties shall get together and negotiate a provision as
similar in terms to such invalid, illegal or unenforceable provisions as may be
possible and accepted by all parties and be valid, legal and enforceable.   12.7
  All of the schedules (if any) referred to in this Agreement shall constitute
integral parts of this Agreement and shall have the same legal force and effect
as this Agreement.   12.8   This Agreement shall immediately become effective
upon the execution by the authorized representatives of the Parties and upon the
delivery of the Standby L/C by Party A or its authorized representative to Party
B or a CITIC Bank Shenzhen Branch specified by Party B.   12.9   This Agreement
shall be executed in both the English and Chinese languages. There are six
(6) sets of originals of this Agreement. Each set contains both the English and
Chinese versions. Both of the English and Chinese versions shall be executed by
the Parties. Parties A, B and C shall each keep one set of these originals and
the remaining three sets are kept by the company. Each set of these originals
shall have the same legal force and effect.

23

--------------------------------------------------------------------------------

 

This Agreement is executed by the authorized representatives of the Parties the
day and year first above written.
Luminent Inc. (Party A)
Signature:

     
/s/ Near Margalit
 
   

Name: Near Margalit
Title: CEO
(Party B)
Signature:

     
/s/ Li Ji
 
   

Name: Li Ji
Title: Legal Representative
Fiberxon Inc. (Party C)
Signature:

     
/s/ Lu Ying
 
   

Name: Lu Ying
Title: Acting CEO

24