Exhibit 10.2

 

PEDRENA

 

 

REPRESENTATIONS AND WARRANTIES AGREEMENT

 

 

MRV COMMUNICATIONS, INC.

 

 

AND

 

 

IJ NEXT

 

 

Dated August 1, 2012

 

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REPRESENTATIONS AND WARRANTIES AGREEMENT

 

BETWEEN THE PARTIES:

 

1)              MRV COMMUNICATIONS, INC., a corporation organized under the laws
of the state of Delaware, United States of America, whose registered office is
located 20415 Nordhoff Street — Chatsworth CA 91311, represented by Mr. Barry
Gorsun, duly authorized by a Board of Directors’ resolution,

 

Hereafter referred to as “MRV” or the “Warrantor”,

 

ON THE ONE HAND,

 

AND

 

2)              IJ Next, a French “société par actions simplifiée”, with a share
capital of € 1, whose registered office is located 59, boulevard Exelmans -
75016 Paris, registered with the Corporate Register of Paris under
Identification Number 752 517 409, and represented by Mr Jerôme LEFEVRE duly
authorized by a power of attorney given by HOLDING BAELEN GAILLARD, in its
capacity of Chairman (“Président”) of IJ Next,

 

Hereafter referred to as “IJ Next” or the “Beneficiary”,

 

ON THE OTHER HAND.

 

The Warrantor and the Beneficiary are hereafter referred to (1) collectively as
the “Parties”, or (2) individually as a “Party”.

 

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WITNESSETH

 

(1)                                  WHEREAS pursuant to a share purchase
agreement dated August 1, 2012 (the “Share Purchase Agreement”), the Beneficiary
shall acquire 100 % of the shares of PEDRENA entirely owned by MRV (the
“Shares”) on the Completion Date (the “Acquisition”), subject to the terms and
conditions of the Share Purchase Agreement.

 

(2)                              WHEREAS it should be noted that the Beneficiary
would not have signed the Share Purchase Agreement, had the Warrantor not
accepted to provide it with the representations and warranties hereunder.

 

(3)                                 WHEREAS the present representations and
warranties agreement (the “Agreement”) covers all the Shares.

 

(4)                                  WHEREAS at the date of the execution of
this Agreement, PEDRENA :

 

·                  has only one subsidiary: INTERDATA, a French “société
anonyme”, with a share capital of €530,995, whose registered office is located
5bis, chemin des Graviers — 91190 Gif-sur-Yvette, registered with the Corporate
Register of Evry under Identification Number 317 866 374 (hereafter referred to
as “Interdata” or as the “ Company”). 6,097 shares of INTERDATA on 6,100 are
owned by PEDRENA; and

 

·                  holds no participating shares in any other company.

 

Being said that

 

(a) INTERDATA :

 

·                  has only one subsidiary : J3Tel, a French “société anonyme”,
with a share capital of €85,371.45, whose registered office is located ZA
Courtaboeuf — Miniparc Bâtiment 10 — 6, avenue des Andes — 91940 Les Ulis,
registered with the Corporate Register of Evry under Identification Number
325 476 695 (hereafter referred to as “J3Tel “). 5,598 shares of J3Tel on 5,600
are owned by INTERDATA; and

 

·                  holds no participating shares in any other company.

 

(b) J3Tel holds no participating shares.

 

PEDRENA, INTERDATA and J3Tel are hereafter referred to collectively as “the
Companies”; INTERDATA and J3Tel are hereafter referred to collectively as “the
French Companies”.

 

(5)                                 Whereas, prior to the execution of the Share
Purchase Agreement:

 

· regarding the French Companies, the Beneficiary and its advisors have been
provided with information and certain documents prepared by the Warrantor and
the management of Interdata with respect to Interdata, J3Tel and their
Businesses, and the Beneficiary has been given the opportunity to meet with
Mr. Thierry Poulain (Director — “Président Directeur Général”- of INTERDATA and
CEO — “Directeur Général Délégué” of J3TEL) and Mr. Jean Philippe Nouvel (CFO -
“Directeur Administratif et Financier”- of Interdata). The Beneficiary
acknowledges that, in entering into the Share Purchase Agreement and this
Agreement, the Beneficiary and its advisors have performed satisfactory due
diligence with respect to Interdata, J3Tel and their Businesses and the
Beneficiary has relied upon its own review and analysis of the information and
documents made available to it and its advisors in the context of their above
mentioned due diligence. The performance of a satisfactory due diligence
regarding the French Companies by the Purchaser does not waive or decrease the
financial liability of the Warrantor that may result from the Agreement.

 

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· regarding PEDRENA, the Beneficiary and its advisors have been provided with
certain information and documents prepared by the Warrantor. Due diligences were
performed on the basis of a limited scope and during a short time period; this
fact, however, is not relevant for purposes of MRV’s obligations and liabilities
under this Agreement and the Share Purchase Agreement. The performance of a
satisfactory due diligence regarding PEDRENA by the Purchaser does not waive or
decrease the financial liability of the Warrantor that may result from the
Agreement.

 

NOW, THEREFORE, in consideration of the mutual undertakings herein contained,
the Warrantor represents, warrants, and undertakes the following:

 

1.                                      DEFINITIONS

 

As used in this Agreement, the following terms have the following meaning:

 

Acquisition:

 

shall mean the acquisition of the Shares by the Beneficiary.

 

 

 

Agreement:

 

shall have the meaning set forth in the recitals above.

 

 

 

Balance Sheets:

 

shall have the meaning set forth in Section 2.8 below.

 

 

 

Beneficiary:

 

shall have the meaning set forth in the recitals above.

 

 

 

Business(es):

 

shall mean (i), for Interdata and J3Tel, the network integration business, (ii),
more specifically for J3Tel, the network testing and audit business in the field
of networks and telecoms and (iii), for PEDRENA, the activity of holding
company.

 

 

 

Calendar Day:

 

shall mean the 24-hour day, including Saturdays, Sundays, and National Bank
Holidays in France.

 

 

 

Claim:

 

shall have the meaning set forth in Section 4.1 below.

 

 

 

Company:

 

shall have the meaning set forth in the Recitals above.

 

 

 

French Companies:

 

shall mean the Company and J3Tel, its sole subsidiary.

 

 

 

Companies:

 

shall mean PEDRENA and the French Companies.

 

 

 

Completion Date:

 

shall mean the date of the completion of the Acquisition.

 

 

 

IP Rights:

 

shall mean name of the Companies, patents, trademarks, service marks, copyright
(including economic rights, moral rights and neighboring rights), software
(including but not limited to source codes, programs and algorithms), domain
names, know-how, data bases, corporate names, trade names, shop signs and any
other names (including but not limited to patronymics), and any other intangible
rights, registered or not, and including applications/requests to benefit from
such rights, as well as any right or any kind of protection with similar or
equivalent results as they may exist worldwide.

 

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Knowledge of the Warrantor:

 

shall mean any matters of which the Warrantor has, in its capacity as majority
shareholder of the Companies, knowledge or notice or could reasonably be
expected to have knowledge in such capacity in accordance with the rights to
information of a shareholder pursuant to French and Dutch corporate laws.

 

 

 

Loans:

 

shall have the meaning set forth in Section 2.14 below.

 

 

 

Loss/Losses:

 

shall mean any damages, losses, liabilities, claims, deficiencies, costs,
expenses and expenditures, additional tax liabilities, if any, due to the
indemnification or other recoveries under the Agreement, including, to the
extent permitted by law, lawyer’s fees, giving rise to indemnification, but
excluding any loss of future revenues, income or profits, or any loss of
opportunity.

 

 

 

Material Adverse Effect:

 

shall mean any circumstance, change, development, event or state of facts that
(considered together with all other circumstances, changes, developments, events
or states of facts) is, or could reasonably be expected to be or to become,
materially adverse to the financial condition, business, results of operations,
assets, liabilities or operations of Interdata and/or J3Tel; provided, however,
that “Material Adverse Effect” shall not include the effect of any circumstance,
change, development, event or state of facts: (a) affecting the industries in
which Interdata operates generally, (b) generally affecting the European
economies, (c) directly and exclusively resulting from any public announcement
of this Agreement (provided such public announcement is not caused by Interdata
in breach of this Agreement) or the pendency of the transactions contemplated
hereby, (d) resulting from acts of war (whether or not declared), sabotage or
terrorism, military actions or the escalation thereof, (e) resulting from any
breach of this Agreement by the Purchaser, (f) resulting from any changes after
the date of this Agreement in applicable law, regulations or rules or
accountancy principles, including GAAP, (g) transaction expenses, (h) the
payment of any amounts due to, or the provision of any other benefits to, any
officers or employees under employment contracts, non-competition agreements,
employee benefit plans, severance arrangements or other arrangements in
existence as of the date of this Agreement and disclosed in the Schedules,
(i) the taking of any action reasonably required to cause compliance with the
terms of, or the taking of any action required by, this Agreement, (j) any
breach by the Company of this Agreement, or (k) the taking of any action by the
Company or any of the Company’s Affiliates, or the taking of any action approved
or consented to in writing by the Company.

 

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Notification of the Claim:

 

shall have the meaning set forth in Section 4.1 below.

 

 

 

Ordinary Course of Business:

 

shall mean the ordinary course of business consistent with past custom and
practice.

 

 

 

Party / Parties:

 

shall have the meaning set forth in the recitals above.

 

 

 

PEDRENA:

 

shall mean PEDRENA ENTERPRISES B.V., a Dutch company with a share capital of €
100,000 whose registered office is located Shouwburgplein 30-34-3012 C1
Rotterdam, registered in the Corporate Register of Rotterdam under
Identification Number 24294182.

 

 

 

Person:

 

shall mean any individual, partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture, fiducie, any
unincorporated organization, any other business entity, or governmental entity
or any department, agency or political subdivision thereof.

 

 

 

Pledge(s) and/or Lien(s):

 

shall mean any mortgage, pledge, lien, charge, security interest, option, and
restriction on use or other encumbrance.

 

 

 

Rejection:

 

shall have the meaning set forth in Section 4.2 below.

 

 

 

Representations and Warranties:

 

shall have the meaning set forth in Section 3.1 below.

 

 

 

Share Purchase Agreement:

 

shall have the meaning set forth in the recitals above.

 

 

 

Section(s):

 

shall mean the articles of this Agreement, unless otherwise required by the
circumstances.

 

 

 

Shares:

 

shall mean the shares of PEDRENA purchased by the Beneficiary from MRV pursuant
to the Share Purchase Agreement.

 

 

 

Warrantor:

 

shall have the meaning set forth in the recitals above.

 

 

 

Working Day:

 

shall mean any day other than a Saturday, a Sunday, or a National Bank Holiday
in France.

 

2.                                    REPRESENTATIONS AND WARRANTIES OF THE
WARRANTOR

 

Except as disclosed to the Beneficiary in the schedules (the “Schedules”) to
this Agreement, the Warrantor hereby represents and warrants the following
representations and warranties, it being understood that such representations
and warranties shall be deemed made on the Completion Date unless otherwise
specified in this Agreement.

 

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2.1                               General Representations

 

The Companies have full legal authority and all rights (1) to operate their
Businesses and (2) to own and use the assets or goods that they own and use, as
such Businesses are presently operated and such assets are currently owned and
used.

 

The prior due diligence procedures carried out by the Beneficiary and its
advisors shall not be understood as a waiver of any of the undertakings and
obligations of the Warrantor under this Agreement in accordance with its terms
and conditions.

 

Neither the approval of the Companies’ accounts by the shareholders nor the
discharge given to the corporate officers of the Companies shall involve any
novation or dispensation to the undertakings and obligations of the Warrantor
under this Agreement in accordance with its terms and conditions.

 

2.2                               Acquisition of the Shares

 

The sale by MRV of the Shares to the Beneficiary and the performance by the
Warrantor of its obligations under the Share Purchase Agreement and this
Agreement shall not constitute a breach (1) of any provision provided by any
shareholders’ agreement binding to the Warrantor or to the Companies or (2) of
any law, administrative decree, or regulation applicable to them, or (3) of any
final and binding court order, which shall prevent the purchase by the
Beneficiary of the Shares pursuant to the Share Purchase Agreement or which may
negatively affect the Warrantor’s ability to perform its obligations under this
Agreement, except for any such breaches that, individually or in the aggregate,
do not (a) have a Material Adverse Effect or adversely affect its ability to
consummate the transactions contemplated hereby, (b) subject the Companies or
the Businesses to any material liability and (c) adversely affect Companies’
ability to conduct their respective Businesses after the Completion Date as
presently conducted.

 

The Acquisition shall not have any negative consequences on the Companies’ legal
status, their rights and obligations vis-à-vis third parties, and shall not give
rise to any of the following, except for any such events that, individually or
in the aggregate, do not (a) have a Material Adverse Effect or adversely affect
their ability to consummate the transactions contemplated hereby, (b) subject
the Company or the Business to any material liability and (c) adversely affect
Company’s ability to conduct the Business after the Completion Date as presently
conducted: (1) cancellation, or revocation of any subsidy, (2) reconsideration
of an administrative authorization or preferential tax treatment, (3) early
termination or significant change in any material customer contract, (4) early
repayment of any loan or funding granted to the Companies, (5) payment by the
Companies of any penalty or compensation, (6) change, cancellation, or
revocation of any of the required licenses/permits or authorizations necessary
for a valid operation of the Business by the Companies, (7) right from anyone to
be released from a surety-ship, guaranty, or comfort letter, or any similar
commitment that such person would have undertaken as a surety or based on the
Companies’ undertakings, and (8) institutional or contractual constitution of
pledges or any security concerning the assets of the Companies.

 

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Neither the Warrantor nor PEDRENA nor, to the Knowledge of the Warrantor, the
French Companies are being subject to any pending judicial or administrative
proceeding (including bankruptcy) that would (1) prevent or forbid the
completion of the Acquisition, (2) have material adverse consequences on the
Companies’ financial situation, or (3) create an easement, security, or any
other rights or restrictions of any kind, and in the benefit of a third party,
over any asset whatsoever of the Companies.

 

The Warrantor has been granted all requisite powers and authority to execute the
Agreement as well as all necessary documents for the completion of the
Acquisition.

 

2.3                               Incorporation — By-laws — Corporate bodies

 

The Company is a French “société anonyme” duly incorporated, having its
registered office at 5 bis, chemin des Graviers — 91190 Gif-sur-Yvette (France),
registered in the Corporate Register of Evry (France) under identification
Number 317 866 374, validly existing, and in good standingunder the Laws of
France.

 

J3Tel is a French “société anonyme” duly incorporated, having its registered
office at ZA Courtaboeuf — Miniparc Bâtiment 10 — 6, avenue des Andes — 91940
Les Ulis, registered in the Corporate Register of Evry under Identification
Number 325 476 695, validly existing, and in good standing under the Laws of
France.

 

PEDRENA is a Dutch Company with a share capital of € 100,000, whose registered
office is located Shouwburgplein 30-34 — 3012 Cl Rotterdam, registered in the
Corporate Register of Rotterdam under Identification Number 24294182, validly
existing, and in good standing under the Laws of Netherlands.

 

The Companies’ by-laws as well as the organization and functioning of their
respective corporate bodies are consistent with applicable laws and regulations
and all decisions by such corporate bodies in connection with the authorization
of the Acquisition have been validly made in accordance with applicable laws and
regulations when they were made as well as with the by-laws of the Companies in
effect at such time.

 

Certified copies of updated Certificates of the Corporate Register of each of
the Companies are attached under Schedule 2.3. All registers and accounting
records of the Companies are updated and have been truly and fairly kept.

 

The Companies are not in a pending legal process of being wound-up and. No
circumstance can legally justify a request for nullity, dissolution or
winding-up of the Companies.

 

2.4                               Share capital - Securities

 

2.4.1 Interdata

 

The Company’s share capital amounts to five hundred thirty thousand nine hundred
ninety five Euros (€530,995). It is divided into six thousand one hundred
(6,100) shares with an approximate nominal par value of eighty seven Euros and
five cents (€87.05) each, which are fully paid up, and of the same category.

 

The list of the shareholders of the Company on the execution date of this
Agreement is attached under Schedule 2.4.1.

 

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Except the 6,100 Interdata shares here above mentioned, there are no other
securities issued by the Company that give entitlement, either immediately or in
the future, to a portion of the stated capital or voting rights in the Company,
and notably but without limitation, through convertible or exchangeable
securities, repayment, subscription, presentation and exercise of a bond. There
is no decision of the Shareholders’ meeting of the Company giving authority to
proceed with a capital increase, or any other transaction/operation regarding
the share capital. No buy-back or cancellation by the Company of its own shares
has been decided or authorized.

 

6,097 Interdata shares are the due property of PEDRENA. The Company’s shares
transfer register truthfully represents the entirety of share transfer
transactions that were carried out up to this date.

 

Interdata shares have been duly authorized and validly issued.

 

Interdata shares are free from any Pledge and/or Liens and adverse claims.

 

They are not subject to any options, undertakings, preemptive rights,
agreements, or restrictions of any kind, be it with respect to their use or
transfer, or to the rights attached thereof.

 

Since 2007, the Company has not distributed any dividends except for those
mentioned under Schedule 2.4.1 bis or made any advance payments on dividends,
and has not declared or paid any distribution, whether of cash, stock or other
property.

 

More generally, none of the shares issued by the Company are subject to any
provision that would give rise to rights different from those of the other
shares, be it with respect to voting rights, or with respect to share of
profits.

 

Public offering of the shares of the Company has never been conducted by the
latter.

 

2.4.2 J3Tel

 

J3Tel’s share capital, at this date, amounts to eighty five thousand three
hundred seventy one Euros and forty five cents (€85,371.45). It is divided into
five thousand six hundred (5,600) shares with an approximate nominal par value
of fifteen Euros and twenty four cents (€15.24) each, which are fully paid up,
and of the same category.

 

The list of the shareholders of J3Tel at Completion Date, prior to the
Acquisition, is attached under Schedule 2.4.2.

 

Paragraphs 3 to 10 of Section 2.4.1 above regarding the Company apply mutatis
mutandis to J3Tel (“Interdata shares” and “Company” being replaced by “J3Tel
shares” and “ J3Tel”, as the case may be) .

 

On the Completion Date, J3Tel’s share capital is regularly and completely owned
by the Company. The J3Tel’s shares transfer register truthfully represents the
entirety of share transfer transactions that were carried out up to this date.

 

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2.4.3 PEDRENA

 

To this date, PEDRENA’s share capital amounts to one hundred thousand Euros
(€100,000), of which twenty thousand Euros (€20,000) has been issued, divided
into two hundred (200) issued common shares with a nominal value of one hundred
Euros (€100) each, which are fully paid up, and of the same category.

 

PEDRENA’s share capital is regularly and completely owned by MRV. The Shares are
the due property of the Warrantor. The PEDRENA’s shares transfer register
truthfully represents the entirety of share transfer transactions that were
carried out up to this date.

 

Paragraphs 3 to 10 of Section 2.4.1 above regarding the Company apply mutatis
mutandis to PEDRENA (“Interdata shares” and “Company” being respectively
replaced by “Shares” and “PEDRENA”, as the case may be).

 

2.5                               Subsidiaries and participations

 

PEDRENA does not hold, directly or indirectly, any shares or participation, or
interests in any entity, or any other interests in any company or business,
except INTERDATA and J3Tel. The French Companies do not hold, directly or
indirectly, any shares or participation, or interests in any entity, or any
other interests in any company or business other than, for INTERDATA, its
holding of J3TEL.

 

The Companies are not a partner or a member of any group, association,
commercial institution, or in a partnership of any kind, and through which it
might be held unlimitedly liable.

 

2.6                               The Companies’ corporate purpose and Business

 

The Businesses as presently carried out by the Companies comply with their
respective corporate purpose stipulated in their by-laws and with all laws and
regulations applicable to the operations of the Companies, except for any such
failure or breach that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

 

The Companies operate their Businesses in only one place, which is located at
their respective registered office (i.e. Gif-sur-Yvette (91190) - 5bis, chemin
des Graviers for the Company, at Les Ulis (91940) — Avenue des Andes for J3Tel),
and at Shouwburgplein 30-34 — 3012 Cl Rotterdam for PEDRENA.

 

The Companies are in possession of all valid permits, licenses and
authorizations required for the ownership of their assets and for the pursuit of
their Businesses, other those which would not have a Material Adverse Effect. To
the Knowledge of the Warrantor, there does not exist any event that could cause
the cancellation or the suspension of said permits, licenses or authorizations
or which may constitute a breach of applicable law or regulations or of any of
their contractual obligations, except for such any breach that, individually or
in the aggregate, do not have a Material Adverse Effect.

 

The Companies are the valid owner of their respective properties and assets
which are not subject to any lease agreement, management agreement, option to
sell or any pledge, security or guarantee of any kind, except for those
mentioned in the Statement of pledges and encumbrances (“Etat des Privilèges et
Nantissements”) set out in Schedule 2.6.

 

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2.7          Default / Bankruptcy

 

The Companies are not subject to insolvency and are not currently subject to
bankruptcy proceedings or any other proceedings taken pursuant to the laws
governing prevention, and settlement of insolvency (such as the appointment of a
mediator) or the triggering of any of the bankruptcy and insolvency proceedings
(“procedures collectives”) or similar ones.

 

2.8                               Financial situation

 

The French Companies’ balance sheets (i.e., balance sheet, income statements,
and appendix), which were closed on December 31, 2011, respectively approved by
a Shareholders’ meeting of the Company dated June 29, 2012, by a Shareholders’
meeting of J3Tel dated June 29, 2012, and certified by the French Companies’
Statutory Auditors, as well as the PEDRENA financial statements for the fiscal
year ended December 31, 2011 approved by the Warrantor in its capacity as sole
shareholder of PEDRENA (the “Balance Sheets”) are attached under Schedule 2.8
(a).

 

The Balance Sheets have been drawn-up according to the generally accepted
accounting principles applicable in France for French Companies and in the
Netherlands for PEDRENA and in accordance with generally accepted accounting
principles and practices consistently applied and consistent with the books and
records of the Companies and represent truthfully and accurately the financial
situation of the Companies in all material respects on the date of the Balance
Sheets and for the period covered by such Balance Sheets.

 

Since, there were no changes in such accounting rules and methods compared to
the ones that the Companies have applied for the previous fiscal years.

 

The Statutory auditors’ reports on the Balance Sheet are attached under Schedule
2.8 (b).

 

All accounting records and books of the Companies are up-to-date, and have been
regularly and truthfully kept.

 

The Balance Sheets list all of the Companies’ assets and liabilities required to
be disclosed under generally accepted accounting principles applicable in France
for French Companies and in the Netherlands for PEDRENA and all necessary
provisions have been made, in accordance with applicable accounting rules.

 

2.9                               Assets

 

Each of the Companies is the valid owner of each and every item referred to in
the balance-sheet assets that appear in the Balance Sheets.

 

Each of the Companies has properly managed and maintained its assets, notably
the equipment and the tools, and has fulfilled all obligations regarding the
proper maintenance of such assets, except for any such breach that, individually
or in the aggregate, do not have a Material Adverse Effect.

 

These assets are not subject to any Pledge and/or Lien, and are not subject to
any purchase option, undertaking, agreement, or claim of any kind to the benefit
of third parties.

 

There are no such rights on the assets as to limit their enjoyment or absolute
ownership; similarly, for PEDRENA, and to the Knowledge of the Warrantor for the
French Companies, the Companies have made no undertakings to grant any such
rights.

 

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The Warrantor has provided the Beneficiary with Statements of pledges and
encumbrances, which are attached under Schedule 2.6.

 

2.10                        Stocks

 

PEDRENA has no stocks.

 

The French Companies’ stocks which exist are of good quality.

 

These stocks are free from any Pledge and/or Lien.

 

Their pricing and depreciation were completed in all material respects by the
French Companies under similar rules and methods as those used for the previous
fiscal years.

 

These rules and methods are in conformity in all material respects with
customary professional practices and allowed by the French Tax Administration.

 

2.11                        Property — leases

 

The Companies have unfettered and exclusive enjoyment, as lessee or owner, of
all immovable and of all movables, tangible or intangible property, that the
Companies use in the operation of their Businesses.

 

The Companies have duly complied with reasonable and proper efforts regarding
the maintenance of their assets, according to the reasonably expected practices
of a professional operating in the same sector, except for any breach that,
individually or in the aggregate, do not have a Material Adverse Effect.

 

Immovable property

 

The Company has full ownership right on the premises located at 5 bis, chemin
des Graviers — 91190 Gif-sur-Yvette (France), in which the Company runs its
Business and has registered its registered office. The title of property is
attached under Schedule 2.11(i).

 

These premises do not contain risks as regard asbestos (“amiante”), lead
(“plomb”), xylophageous insects (“insectes xylophages”), except with respect to
the farm and to the extent it has not a Material Adverse Effect.

 

The Company has built:

 

(i)                                     a building in 2009/2010 under a building
permit number 091272 071105602 delivered by the Gif-sur-Yvette Town Council on
February 12th , 2008, a copy of which is attached under Schedule 2.11 (ii).

 

(ii)                                  an unloading dock in 2011 under a building
permit number 091272 1010059 delivered by the Gif-sur-Yvette Town Council on
January 19th, 2011, a copy of which is under Schedule 2.11 (iii).

 

The Company has not subscribed a “dommages-ouvrage” insurance policy for the
works mentioned at (i) and (ii) here-above.

 

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The Company declares that all the “entrepreneurs” which have worked on the works
mentioned at (i) and (ii) here-above have subscribed appropriate insurance
policies as regard to their liability. These entrepreneurs have been fully paid
for their respective duties.

 

The Company approved and took delivery of works mentioned at (i) and
(ii) here-above without reserve.

 

The Company has never been aware of any material damage concerning the works
mentioned at (i) and (ii) here-above. These works have been regularly done, have
given rise to a “déclaration d’achèvement et de conformité” and have been
declared with the administrative authorities; in particular, there are in
conformity with the building permits. The building permits of the works
mentioned at (i) and (ii) here-above are not subject to any claim for annulment
or cancellation of the building permit, except the claim mentioned under
Schedule 2.11 (ii) which is not significant and could be settled without risk
for the Beneficiary.

 

The Company does not lease its premises to any third party.

 

PEDRENA and J3Tel have no ownership right on any immovable assets.

 

Lease agreements (« baux/locations ») — Leasing agreements (« crédits baux»)

 

The Company is not a party to a lease agreement or a contract (leasing, location
agreement, etc.) entailing the allocation or the use of its immovable
assets/premises.

 

J3Tel operates its Business at its registered office, under a lease agreement
dated August 6th, 1996 and its amendment dated November 22nd, 2004 (the “Lease
Agreement RO”), a copy of which is attached under Schedule 2.11 (iv). J3Tel has
never entered into any other lease agreement or any contract (leasing, location
agreement, etc.) entailing the allocation or the use of immovables
assets/premises.

 

The Lease Agreement RO is valid and enforceable.

 

The Lease Agreement RO is not subject to any claim for annulment or cancellation
based on a fact intervened prior to the date of the Agreement. No notice related
to a termination or to any other substantial change of the Lease Agreement RO
has been received respectively by J3Tel.

 

On the date of the Agreement, J3Tel has no unpaid liabilities related to Lease
Agreement RO.

 

Besides, the Companies entered into lease agreements or leasing agreements set
out in Schedule 2.11(v) concerning the movable assets necessary to their
respective Businesses.

 

Each of the Companies has regularly performed its obligations under the lease
agreements, except for any such failure or breach that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
and leasing agreements referred to in this Article and set out in Schedules 2.11
(iv) and (v). To the Knowledge of the Warrantor regarding the French Companies,
there is no justification for the lessor to request an increase of the rents
(except for the Lease Agreement RO’s annual reevaluation as per the construction
cost index).

 

No event has occurred that would prevent the operation or the quiet enjoyment of
the premises rented by J3Tel.

 

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All potential works required to comply with the provisions of the Lease
Agreement RO or mandated by administrative authorities have been carried out on
these immovables, and have been paid for within the time period required by said
authorities. All administrative authorizations or similar ones have been
granted.

 

2.12                        Intellectual property

 

The Companies have rights, either through original ownership, or through the
grant of a license or assignment, over the IP Rights used and/or necessary for
the operation of their respective Business (those IP Rights being hereinafter
referred to as the “Companies’ IP Rights”) and listed under Schedule 2.12.

 

The Companies’ IP Rights are duly protected and in force. To the Knowledge of
the Warrantor, each of the Companies has exercised all reasonable and due care
to protect the integrity of the Companies’ IP Rights, except for any such
failure that, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.

 

Those of the Companies’ IP Rights that are subject to an application for
registration were duly registered or filed (or are in the process of being
registered or filed) with the competent institutions in the name of the
Companies. Where and when applicable, fees regarding the necessary renewal were
paid.

 

Each of the Companies is the exclusive owner (by way of assignment or original
ownership) or exclusive licensee of the Companies’ IP Rights listed under
Schedule 2.12.

 

To the Knowledge of the Warrantor, neither the Companies’ IP Rights nor the
exercise thereof infringes or violates any rights of a third party.

 

No license or right whatsoever has been granted by the Companies to third
parties on any of the Companies’ IP rights.

 

The software and software packages used by each of the Companies are the
Companies’ property, or are covered by rights of ordinary use granted to the
benefit of the Companies.

 

2.13        Accounts receivable

 

The accounts receivable mentioned in the Balance Sheets refer to services
provided and sales made in the Companies’ Ordinary Course of Business. Each of
the Companies has provided for proper provisions in the said accounts for all
depreciation of these receivables, in accordance with accounting principles.

 

Regarding PEDRENA, and to the Knowledge of the Warrantor regarding the French
Companies, no account receivable which has occurred after the Balance Sheets is
the subject of a dispute.

 

2.14        Debts and Loans

 

The Companies have no obligation in connection with any loan, overdraft
permission, advance, and/or debt of any kind towards any bank (the “Loans”).
There is no shareholders’ loan at Completion Date.

 

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Each of the Companies has fully paid-off any and all principal amount and
interests related to any Loans.

 

On the date of the Balance Sheets, each of the Companies had no obligation or
debt (due, outstanding, certain, or other, resulting, without limitation, from a
factoring agreement, leasing agreement, or pending litigation) other than those
obligations or debts (i) referred to, or accounted for through provisions in the
Balance Sheets and (ii) not required to be recorded on the Balance Sheets under
generally accepted accounting principles applicable in France for French
Companies and in the Netherlands for PEDRENA.

 

The Acquisition does not give rise to any accelerated payment of any loan to the
benefit of the Companies’ creditors.

 

2.15                        Warranty and off-balance sheet commitments

 

Statements of registration, privileges and encumbrances of each of the Companies
issued within the last three months are attached to this Agreement under
Schedule 2.6.

 

The Companies have not granted any loans or any particular advantage, or comfort
letter or similar commitment to any Person.

 

2.16        Archives

 

The Companies keep archives regarding their Businesses at their respective
registered office.

 

Regarding PEDRENA, these archives contain all the necessary documents to manage
any claims made by third parties, and concern a period of time no shorter than
the statute of limitations provided by the laws in force.

 

2.17                        Insurance

 

Each of the Companies has validly subscribed insurance coverage required for the
operation of its Business and/or for the protection of the immovables and
movables that it uses.

 

Regarding PEDRENA, and to the Knowledge of the Warrantor regarding the French
Companies, each of the Companies paid all premiums regarding the insurance
policies subscribed by the Companies required to be paid to such date.

 

The policies subscribed by the Companies, a list of which is set out in Schedule
2.17, make adequate coverage for the risks related to the Businesses of the
Companies.

 

The Companies always complied with the insurance policies subscribed and
completed, and have complied in due time with all contractual or legal
formalities required by such insurance policies, except for any such failure or
breach that, individually or in the aggregate, do not have a Material Adverse
Effect.

 

The Companies did not suffer any damage which was not covered by an insurance
policy subscribed by the Companies during the fiscal years closed on
December 31, 2009, December 31, 2010 and December 31, 2011 or during the
time—period between January 1st, 2012 and the Completion Date.

 

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2.18                        Tax law-, Labor law-, Customs law-related
requirements

 

Each of the Companies has filed in timely, accurate and complete manner, all tax
law-, labour law-, customs law-related returns as provided by the laws and
regulations in force. Each of the Companies has paid, within the terms provided
by the legislation and regulations in force, any and all tax and similar
charges, penalties, payroll tax or any tax-like levy, and social contributions
owed by each of the Companies, both in principal and interest.

 

There is currently no pending litigation involving the Companies regarding any
tax law-, labour law-, customs law-related issue except those listed in Schedule
2.18. In particular, the Companies are not subject to a pending investigation,
verification, control or any other similar procedure from any tax, labour or
customs administration and have not been informed in writing of such
investigation, verification, control or any other similar procedure.

 

The Companies have duly booked in the Balance Sheets all their obligations
towards relevant French tax, labour and customs administrations.

 

Each of the Companies has always complied with all legal and administrative
filing requirements with respect to the relevant French and Netherlands tax,
labour and customs administrations, except for any such failure or breach that,
individually or in the aggregate, does not have a Material Adverse Effect.

 

Each of the Companies has also complied with all filing requirements that could
arise, as the case may be, from its Business operated abroad, except for any
such failure or breach that, individually or in the aggregate, does not have a
Material Adverse Effect.

 

The Companies do not benefit from an agreement or a particular tolerance
establishing a payment extension regarding their tax obligations.

 

The provisions in the Balance Sheets were made under applicable accounting
rules in force, and are adequate to cover any risk or any tax, due right,
assessment, contribution, charge, interest or penalty recoverable from the
Companies.

 

The Companies are not, and have never been part of a tax consolidation group.

 

The Companies have not been granted any favourable tax or social regime
including any tax or social exemption in an undue manner, and have complied with
all conditions provided by the laws and regulations governing the grant and
upholding of said regimes and exemptions, except for such any breach that,
individually or in the aggregate, do not have a Material Adverse Effect.

 

The Companies have never concluded an act or been a party to a transaction with
other Entities of their group which may be recovered, rejected, or redefined on
the ground that it was an attempt to evade or weaken their tax, social, or
customs obligations.

 

The Warrantor declares as far as PEDRENA is concerned that the here above
derogations “except for any such (failure or) breach that, individually or in
the aggregate, do not have a Material Adverse Effect” do not apply to
representations and warranties regarding PEDRENA.

 

Besides, the Warrantor declares and represents that:

 

·                  PEDRENA has never been part of a sale, purchase, trade,
participation or transfer of any kind before the date of the Agreement for which
PEDRENA has paid no registration fees, transfer fees or tax of any kind and that
the latter may be contractually or legally obliged to pay prior or following the
date of Agreement;

 

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·                  the Acquisition cannot entail itself, in any way, taxation
for PEDRENA or the Beneficiary or a loss of tax loss carried forward or more
generally a loss of any benefit, tax or social rights;

 

·                  PEDRENA has not been granted any tax, social or customs
regime conditional on the compliance with any undertaking by PEDRENA, or which
may be questioned due to the Acquisition or to any act or omission realized
prior to the Agreement;

 

·                  PEDRENA has not been granted, under a transaction prior to
the Acquisition, any suspension, carry over or any tax deferment.

 

2.19        Personnel

 

Compliance with the legislation and regulations in force

 

PEDRENA has never employed employees.

 

The French Companies are in compliance with French labour law and (1) the terms
and conditions of all applicable company agreements and schemes as well as
(2) the provisions of all employment contracts and the applicable collective
agreements, except for any such failure or breach that, individually or in the
aggregate, does not have a Material Adverse Effect.

 

It is specified that the Company is governed by internal regulations (“règlement
intérieur”), in force since January, 21st 2001. New internal regulations have
been drafted in January 2012, but have never become effective. The Company
complies in this respect with all French regulations relating to internal
regulations and employees’ surveillance, except for any such failure or breach
that, individually or in the aggregate, does not have a Material Adverse Effect.

 

There is no company custom or unilateral undertaking in force within the
Companies.

 

The Companies have no delay in the payment of sums due to (i) the employees,
corporate officers, former or ongoing, and to (ii) any social or tax
administration or social agency, and more generally no delay in the payment of
any contribution or sum employment-related.

 

Unlimited-term and fixed-term employment contracts, and full-time and part-time
employment contracts have been entered into in accordance with French employment
law and applicable contractual provisions.

 

All contracts entered into between the Company and third parties, including
subcontracting agreements or agreements with outside consultants, or any other
contractual agreement involving the work of a third party, cannot be construed
as employment contracts under the French labour law in effect on the Completion
Date.

 

List of personnel — directors and employees - at Completion Date

 

Schedule 2.19 (i) contains (1) the names of all directors and employees of the
Companies, as well as (2) the type of employment contracts (unlimited-term
employment contract, fixed-term, full-time, part-time employment
contract, etc.), (3) the amount of their annual compensation, (4) the list of
applicable benefits in kind or complementary benefits, (5) their date of birth,
seniority within each of the Companies, and (6) hierarchical position.

 

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There are no benefits or compensation of any kind, other than those listed under
said Schedule. In particular, since, the French Companies have granted no
severance payments other than those compulsory under French labour law or the
applicable collective bargaining agreement. No employment contract provides for
a notice period exceeding provisions of French labour law or the applicable
collective bargaining agreement.

 

There are no agreements with either a director or an employee intending to
ensure future benefits or salary raises based on a preset formula, with the
exception of a retention bonus agreement that was entered into with employees
listed under Schedule 2.19 (ii), for the sole purpose of this Acquisition.

 

Duration of the contracts

 

Apart from the employment contracts mentioned under Schedule 2.19 (i), the
French Companies are not bound by any other indefinite or fixed term employment
contracts.

 

None of the French Companies’ employees are subject to a dismissal or mutual
termination procedure or have communicated in writing his/her intention to
resign other than Gilles Blondeau, whose termination date is scheduled for
September 7, 2012.

 

The French Companies do not presently employ any temporary employees.

 

Staff representatives

 

The list of the Staff representatives of the French Companies (“Délégation
Unique du Personnel” and “Délégués du Personnel”) is attached under Schedule
2.19 (iii).

 

Pensions — Retirement

 

The French Companies are not bound by commitments other than those resulting
from the strict enforcement of legal and contractual provisions, and which may
result in the duty for the Companies to pay for a retirement or a pension plan
to their retired or still active employees or directors above those resulting
from the strict enforcement of said legal and contractual provisions.

 

Social security — Welfare (“prévoyance”) — Healthcare — Supplementary Pension
Schemes

 

The Companies are and have always been in compliance with payment obligations of
social contributions to the French social security scheme and complementary
welfare and healthcare schemes regarding their employees and corporate officers,
and the contributions relating to healthcare, welfare, pensions were paid at due
date.

 

The decisions taken by the Companies to implement such schemes have regularly
been notified through an official letter and given to the relevant employees.

 

The Companies have not entered into a complementary healthcare plan (“mutuelle”)
in favour of their employees.

 

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Disputes — Litigation

 

There are no pending claims against the Companies asserted in writing by any
employees/directors or pending litigations between the Companies and their
employees/directors, except for those listed in Schedule 2.19 (iv).

 

There are no pending proceedings between the Companies and any of their
employees/directors that have not been accounted for through provisions in the
accounts, except for those listed in Schedule 2.19 (iv).

 

Since January 2010, neither strike nor work stoppage has taken place within the
French Companies.

 

The Companies are not subject to a pending control or investigation procedure or
a reassessment procedure which has been notified in writing by the French labour
inspectorate or the French social security authorities (“URSSAF”) or similar
authority in the Netherlands.

 

2.20        Contracts — Agreements

 

The Companies have not entered into, or are not bound by any provision of, any
contract or agreement other than those executed in connection with their
Businesses.

 

All contracts entered into by the Companies were validly executed and are not in
violation of any legal or regulatory provision, or any court or administrative
decision/order, if any, issued against the Companies, except for any such
failure or breach that, individually or in the aggregate, does not have a
Material Adverse Effect.

 

None of the contracts executed by the Companies provide for a change of control
clause except for those mentioned under Schedule 2.20 (i), and except for any
such provisions that, individually or in the aggregate, do not have a Material
Adverse Effect.

 

The Companies have not received any written notification according to which a
client, a supplier, or a subcontractor responsible for a significant part of the
Companies’ revenues or Business, intends to (1) stop or reduce its transactions
with the Companies in a significant manner, either immediately or in the future,
and/or (2) modify the legal or financial conditions thereof, except for the
termination notice sent by IXIA to J3Tel informing J3Tel that IXIA has decided
to terminate the agreement entered into by and between IXIA and J3Tel
(“International distribution agreement”).

 

There are no particular agreements between the Companies and the Warrantor, or
between the Companies and any of its directors, officers, or employees, except
for those indicated in Schedule 2.20 (ii).

 

2.21                        Environment — Safety — Regulatory provisions
governing corporations

 

The Companies exercise their activity in accordance with the regulations in
force. They do not exercise a regulated activity requiring a permit, a license
or an approval to operate their Businesses.

 

The Companies have not been notified in writing by any administrative or
regulatory authority alleging that the Companies do not comply with the
legislations, regulations or orders by any institution or administrative
authority that govern the Companies with respect to environment or safety
issues.

 

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2.22        Disputes — Litigation

 

There are no pending legal or arbitration proceedings or any other amicable or
court-based conciliation proceeding or any filing of any kind or any judicial or
administrative investigations concerning the Companies, except those listed
under Schedule 2.18 and Schedule 2.19 (iv).

 

2.23        Management of the Companies since December 31, 2011

 

Except as may be (a) required by a contractual or a legal undertaking or
obligation existing on the date of execution of this Agreement, (b) required
pursuant to the Share Purchase Agreement or this Agreement or (c) consented to
in writing by the Beneficiary, from 31 December 2011 until the date of execution
of this Agreement, Companies (i) have carried on their respective Businesses in
the Ordinary Course of Business and (ii) have not:

 

·                               made any significant change in the Companies’
financial or commercial situation, and in their Businesses and operation of
their Businesses;

 

·                               made any decision or take any action or measure
materially affecting the Business of the Companies, or any waiver of any right
of substantial value;

 

·                               taken any measure entailing the decrease in
value of the Companies’ assets;

 

·                               made any transfer of ownership, except when made
in the Ordinary Course of Business, of any of the Companies’ assets affecting
the continuity of their Businesses;

 

·                               made any expense unusual regarding its amount or
origin;

 

·                               regarding the French Companies, made any
modification of the employees’ wages other than (i) the ones resulting from the
application of laws, regulations, and agreements in force regarding the
employment issues, and (ii) the ones occurring in accordance with the Companies’
prior habits, provided that they occur in the Ordinary Course of Business;

 

·                               regarding the French Companies, made any hiring
of an employee whose gross annual wage would exceed fifty thousand Euros (€
50,000) (with the exception of Mr. Jean-Marc Odet) or any termination of a key
employee (with the exception of Mr. Gilles Blondeau);

 

·                               regarding PEDRENA, made any employment;

 

·                               made any change in the accounting methods and
principles observed by the Companies;

 

·                               incurred any additional financial debt out of
the Ordinary Course of Business;

 

·                               made any transfer of any of the Shares and
Company and J3Tel’s shares;

 

·                               granted any pledges, encumbrances, security, or
any right for third parties on the goodwill, or any assets of the Companies;

 

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·          made any distribution of dividends, profits, reserves or any advance
distribution, except the distribution by J3Tel to its shareholders of dividends
for an aggregate amount of €3,001,600.00 paid on July 2, 2012;

 

·          made any acquisition of an asset except in the Ordinary Course of
Business.

 

2.24        No other representations and warranties

 

Except as expressly set forth in this Agreement or in Section 7.1 of the Share
Purchase Agreement or in another written agreement, neither the Warrantor nor
any Person acting on its behalf, including MRV, makes any other representation
or warranty, either express or implied, of any kind whatsoever with respect to
the Shares, Interdata, J3Tel, their Businesses and/or the Acquisition and/or any
other matter relating to the Shares, Interdata, J3Tel, their Businesses and/or
the Acquisition. Without limiting the foregoing, and subject to the
representations, warranties, covenants, understandings and obligations of the
Warrantor contained in this Agreement and in Section 7.1 of the Share Purchase
Agreement and in the other written agreements, the Beneficiary acknowledges that
neither the Warrantor nor any Person acting on its behalf makes any
representation or warranty with respect to (i) the future relations of Interdata
and J3Tel with any of their respective customers, suppliers or other business
relations or (ii) the future financial condition or business prospects of
Interdata and/or J3Tel.

 

The Beneficiary further acknowledges, that neither the Warrantor nor any Person
acting on its behalf, makes any representation or warranty with respect to any
financial projections, business plans, budgets or forecasts relating to
Interdata, J3Tel and/or their Businesses. The Beneficiary shall make its own
evaluation of the adequacy and accuracy of all projections furnished to it
and/or its advisors in connection with the Acquisition and shall not have any
claim against the Warrantor or any Person acting on its behalf with respect to
such adequacy and/or accuracy.

 

Without limiting the foregoing, the Warrantor and the Beneficiary acknowledge
that, as one of the conditions precedent to the Acquisition, MRV Communications
- Boston Division, Inc. (“OCS”), a subsidiary of MRV and Interdata shall enter
into a distribution agreement securing supply for OCS equipment bought by
Interdata and J3Tel, which will contain specific undertakings and obligations
from OCS.

 

3.             PURPOSE AND SCOPE OF THE WARRANTY

 

3.1          Purpose of the Warranty

 

The Warrantor warrants, on the Completion Date, that the representations and
warranties made in the Agreement and in the Schedules (the “Representations and
Warranties”) are accurate, true and sincere.

 

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3.2          Terms of indemnification

 

Subject to the terms, conditions and limitations of this Agreement, the
Warrantor shall indemnify and hold harmless the Beneficiary from and against any
and all Losses suffered by the Beneficiary or any of the Companies and shall pay
to the Beneficiary the amount of any and all Losses actually suffered and
effectively paid by the Beneficiary or any of the Companies as a result of:

 

(a)           any breach of any Representation or Warranty made by the Warrantor
contained in this Agreement or the Share Purchase Agreement; or

 

(b)           any breach of any covenant, agreement, undertaking or other
obligation of the Warrantor contained in the Share Purchase Agreement and this
Agreement.

 

The Parties hereto acknowledge and agree that, from and after the Completion
Date, the right to indemnification under this Section 3.2 shall be the
Beneficiary’s sole and exclusive remedy for any breach of (i) any Representation
or Warranty made by the Warrantor contained in this Agreement or in the share
Purchase Agreement or (ii) any covenant, agreement, undertaking or other
obligation of the Warrantor contained in this Agreement or in the Share Purchase
Agreement, in all cases subject to the limitations contained in this Agreement
under Section 3.3.

 

The Beneficiary shall use, and continue to use, all commercially reasonable
endeavors to avoid or reduce the effects or likely the effects of any Loss. Any
right of the Beneficiary to pursue a Claim for a Loss shall be conditional on
the Beneficiary so using all commercially reasonable endeavors. The Beneficiary
shall comply with any reasonable written request received from the Warrantor to
take any particular course of action in mitigation of a potential Loss.

 

The Parties hereto acknowledge and agree that if any changes to applicable law
or regulation would occur subsequent the Completion Date which would lead to the
increase of any Loss or lead the Warrantor to incurring any additional liability
under the Representations and Warranties or pursuant to any covenant, agreement,
undertaking or other obligation of the Warrantor contained in the Share Purchase
Agreement and this Agreement then such increase of any Loss and/or additional
liability shall not be subject to indemnification under this Agreement or the
Share Purchase Agreement.

 

Any indemnification, when and if due to the Beneficiary in accordance with the
terms, conditions and limitations of this Agreement, shall be paid at the choice
of the Beneficiary, either to one of the Companies or to the Beneficiary in the
form of a price reduction of the Shares.

 

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3.3          Limitations to the Warranty

 

Calculation of Losses

 

In calculating the amount of any Loss which may be due and payable by the
Warrantor under Section 3.2 as a result of any Claim, there shall be deducted,
if applicable:

 

(a)           the amount of any indemnification or other recoveries (including
insurance proceeds) payable to the Beneficiary or to any of the Companies by any
third party with respect to such Loss;

 

(b)           the amount of any insurance proceeds which would have been
recoverable by the Beneficiary or any of the Companies with respect to such Loss
had the insurance coverage of the Companies in effect immediately prior to the
Completion Date not been modified by the Warrantor or any of the Companies at or
subsequent to the Completion Date;

 

(c)           the amount of any reserve or provision included in the Balance
Sheets of the Companies for such Loss;

 

(d)           for such Loss, the amount of any corresponding tax savings or
benefit, including any tax reduction, credit or loss carry back or carry
forward, available to the Purchaser or any of the Companies; and

 

(e)           in the case of a Loss suffered or incurred by one of the
Companies, the amount of any corresponding gain or benefit, including the
reduction or discharge of any liability, accruing to the other one in relation
to such Loss.

 

For the purpose of computing the amount of any Loss, only the Loss actually
sustained by the Beneficiary or any of the Companies shall be taken into
account, to the exclusion of any price/earnings or similar multiplier or
valuation factor.

 

In the event that the availability or amount of any deduction referred to in
this Section 3.3 is determined only after payment by the Warrantor of the amount
otherwise required pursuant to Section 3.2, the Beneficiary shall repay to the
Warrantor promptly after such determination any such payments that the Warrantor
would not have had to make pursuant to this Agreement had such determination
been made at or prior to the time of such payment.

 

The Warrantor undertakes to pay, on top of the amount of the Loss, all fees and
expenses incurred by the Beneficiary and/or one of the Companies for filing or
upholding a claim for Indemnity (the “Enforcement Expenses”).

 

Triggering threshold

 

No amount shall become due and payable by the Warrantor in respect of the
Beneficiary’s Claims, unless and only to the extent that after application of
the provisions of this Agreement, the cumulated amount of Losses against which
the Beneficiary is entitled to receive an indemnification in respect of one or
several Claims exceeds one hundred thousand Euros (€100,000). Below this
threshold, the Beneficiary shall not be entitled to any indemnification under
this Agreement.

 

Cap on the Indemnification

 

Notwithstanding any other provisions of this Agreement and the Share Purchase
Agreement, the maximum aggregate amount of Losses and Enforcement Expenses under
this Agreement and the Share Purchase Agreement that may be taken into account
in order to determine any right to indemnification in favor of the Beneficiary
or the Companies shall not, in any event, exceed a global cap amounting to three
million Euros (€3,000,000).

 

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Nothing in this Section 3.3 will have the effect of limiting or restricting any
liability of the Warrantor in respect of a Loss arising as a result from any
fraud or willful misconduct by the Warrantor.

 

No Double Recovery

 

Any liability pursuant to this Agreement shall be determined without duplication
of recovery and the Warrantor shall not be required to make any payment more
than once on account of the same events, facts, matters, circumstances or
omissions.

 

Subsequent Events

 

The Warrantor shall not have any liability for Losses which result from or arise
out of:

 

(a)           actions taken by or on behalf of, or omissions of, the Beneficiary
or any of the Companies after the Completion Date, including (i) changes in
accounting methods or policies except if the accounting methods or policies
applied before the date hereof did not comply with French GAAP (or similar in
Netherlands GAAP for PEDRENA) to the extend necessary so that non-compliance be
remedied, (ii) changes in the insurance coverage of any of the Companies or
(iii) the granting of any extensions or waivers with respect to any statute of
limitations applicable to claims which might be made against the Beneficiary or
any of the Companies;

 

(b)           any event, fact, matter, circumstance or omission which gives
right to an indemnification right for the Beneficiary or any of the Companies
under any representations and/or warranties, other than the Agreement, of which
it is a beneficiary in effect at the time of such event, fact, matter,
circumstance or omission, being said that this exclusion will apply only if the
Beneficiary has been granted a full indemnification under the other
representation and/or warranty;

 

(c)           any event, fact, matter, circumstance or omission which is
permitted under this Agreement or the Share Purchase Agreement or which has been
specifically agreed in writing by the Beneficiary.

 

3.4          Term

 

Shall only be considered for indemnification by the Warrantor pursuant to this
Agreement, Claims on any Loss that are duly notified by the Beneficiary to the
Warrantor at the latest ninety (90) Working Days:

 

· After the expiry of the legal prescription period in force, for any Loss in
connection with the representations and warranties contained in this Agreement
under Sections 2.18 and 2.19 covering the following matters: labor law, social
security law, tax law and customs;

 

· After 31st December 2013 concerning any other Losses relating to any other
representations contained herein.

 

The Beneficiary shall benefit from this Agreement at any time up to the last day
of the abovementioned time periods, regardless of whether the amounts at stake
and possibly due pursuant to a Claim are known or determinable on the last day
of the said time period, so long as (1) an investigation in connection with tax,
labor law, customs or corporate law issues conducted by any agency, or a dispute
with a third party has arisen or any fact triggering a Loss, and (2) the
Beneficiary has informed the Warrantor in accordance with the terms and
conditions of this Agreement.

 

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Furthermore, this Agreement shall remain in effect, even after the expiry of the
abovementioned time period, until the determination and payment of all amounts
that the Warrantor may have to account for, due to the Claims addressed to them
before the deadlines.

 

4.             PERFORMANCE OF THE WARRANTY

 

4.1          Terms and Conditions of the Claims by the Beneficiary against the
Warrantor

 

The Beneficiary undertakes to notify the Warrantor of any fact, event, or any
claim resulting from any third party (including but not limited to the Tax
administration), whether or not subject to a legal proceeding, and directed
against the Companies, and which may result in an indemnification by the
Warrantor pursuant to this Agreement. The Beneficiary shall make such
notification within ninety (90) Working Days from (1) the date on which the fact
or event has come to the Beneficiary’s knowledge, or (2) from the first receipt
by the Beneficiary of the claim (such fact, event, or dispute being collectively
referred to as the “Claim”, whereas the notification thereof being referred to
as the “Notification of the Claim”).

 

The Notification of the Claim shall describe and assess the exact amount of the
Claim, should such amount be known at the time of the Notification, and shall be
made along with all written proof in the Beneficiary’s possession then.

 

The above-mentioned ninety (90) Working Day period shall be reduced to twenty
(20) Working Days in the event of a notification that is subject to a mandatory
time limit such as a notification or notice of tax or labor audit.

 

The absence of Notification of the Claim by the Beneficiary within the
above-mentioned time periods shall not exempt the Warrantor from its obligations
under this Agreement, if the Beneficiary complies with all other material
provisions of this Agreement and unless the default prevented the Warrantor to
assert its rights to avoid or limit the payment of any indemnification pursuant
to this Agreement. In this case only, the Warrantor will be exempt from its
obligation to pay the indemnification related to the interested Claim for the
amount corresponding to the Loss sustained due to the said default. Under no
circumstances, and if the Beneficiary complies with all other provisions of this
Agreement, the absence of Notification of Claim by the Beneficiary within the
above-mentioned time period may question the right of the Beneficiary to claim
other Claims.

 

4.2          Terms and Conditions of the Warrantor’s response to the Claim

 

The Warrantor shall have, at most, thirty (30) Working Days upon receipt of the
Notification of the Claim referred to in the previous Section, to notify the
Beneficiary in response, of (1) the acceptance of the Warrantor as regards the
Claim, or (2) its rejection, in all or in part, of such Claim (the “Rejection”),
while awaiting for additional information. The above-mentioned thirty (30)
Working Day period shall be reduced to ten (10) Working Days in the event of a
notification that is subject to a mandatory time limit such as a notification or
notice of tax or corporate law investigation.

 

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Should the Beneficiary not be given any response by the Warrantor within said
time limit, the Warrantor is deemed to have validly notified a Rejection to the
Beneficiary.

 

In the event that the Warrantor duly notifies a Rejection to the Beneficiary
within the said time limit, the Beneficiary and the Warrantor shall have sixty
(60) Working Days upon the date of such Rejection by the Beneficiary, to settle
amicably the dispute regarding the nature and the amount of the Claim involved.
At the expiration of that period, and in the absence of an agreement between the
Parties, the dispute shall be submitted, by any moving Party, to the Commercial
Court having jurisdiction to hear the dispute.

 

For the computation of the time periods indicated here above, the date of
receipt or of the first presentation for delivery shall be included.

 

4.3          Time when the indemnification is due

 

Any sum due by the Warrantor in respect of the Agreement shall be paid,
according to the Beneficiary, to the latter or to one of the concerned Companies
within fifteen (15) Working Days as from the date of calculation of the amount
of the Loss which will result from:

 

(1)           An express acceptance of the Claim by the Warrantor, within the
time limit provided by the provisions of Section 4.1;

 

(2)           A settlement agreement between the Parties on a Claim in
accordance with Article 2044 of the French Civil Code; or

 

(3)           The notification of a final and binding Court order, or the
execution of a settlement agreement in accordance with Article 2044 of the
French Civil Code:

 

(a)           In the event of a dispute with a third party on the validity of
such third party’s Claim against one of the Companies, in which case the
Warrantor shall indemnify the Beneficiary only after the Companies or the
Beneficiary have been compelled to pay the corresponding amounts to the third
party; provided however that in the event of a dispute with an agency of any
kind, the Warrantor shall have the possibility to challenge such payment upon
the condition that the Warrantor sets up sufficient guarantees necessary to
obtain the stay of payment, until the dispute is finally settled; or

 

(b)       In the event of a dispute between the Warrantor and the Beneficiary on
the validity of the Claim.

 

4.4          Procedure

 

Should the Agreement be performed, the Warrantor shall be entitled to demand
that the Beneficiary and/or the Companies initiate, join, or carry out a legal
proceeding, and bring all legal actions that the Warrantor would deem helpful in
connection with a Claim involving a dispute with any third party whatsoever.

 

The Companies shall conduct the corresponding proceedings. In that case, they
shall bear alone the fees for the attorneys that they shall freely appoint.

 

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In the event the Warrantor declares, in the time-period mentioned at
Section 4.2, its intent to intervene in the defence or transaction concerning
the Claim, the Parties undertake to make their best efforts to adopt a common
strategy for the defence. If the Parties agree to let the Warrantor conduct the
defence or the transaction, the latter undertakes to lead the defence for the
exclusive interests of the Companies, and notably to avoid any fact or act which
could damage the reputation of the Companies. If the Parties do not agree, the
Warrantor undertakes to let the lead of the defence or of the transaction to the
Beneficiary. The Warrantor shall bear the fees of its attorney(s).

 

4.5          Guarantee of the guarantee

 

MRV will use its reasonable best efforts to obtain a Representations and
Warranties insurance policy within 90 days following the Completion Date on
terms and conditions similar to its prior sale transaction (the “Seller’s
Policy”). In the event that (i) MRV does not obtain the Seller’s Policy within
90 days following the Completion Date and (ii) MRV’s cash and cash equivalents
is less than US$ 20 million as of the end of any fiscal quarter ending on or
before December 31, 2013, then MRV shall deposit into an escrow account with a
mutually acceptable financial institution 1.5 million Euros (or US$ equivalent)
to secure its indemnification obligations under this Agreement. If the escrow
account is established pursuant to this Section 4.5, the escrow account shall be
released to MRV on the first business day following December 31, 2013 (or
following January 31 2014 if the cash or cash equivalent is less than US$ 20
million for the first time at the end of the quarter ending December 31, 2013),
other than any amounts that remain the subject of any unresolved claims. In the
event that the escrow account is established, the escrow account shall remain in
place through December 31, 2013 even if MRV’s cash and cash equivalents balance
exceeds US$ 20 million at any time.

 

5.             MISCELLANEOUS

 

5.1          Severability

 

If any provision of this Agreement should be or become invalid or unenforceable,
it shall not bear any consequences on the validity of the remaining obligations,
whatsoever, under this Agreement. The Parties shall negotiate in good faith the
substitution for any such invalid provision by a suitable provision which, as
far as is legally possible, comes nearest to such invalidated provision’s sense
and purpose as contemplated by the Parties.

 

5.2          No Waiver

 

Failure to enforce, in all or in part, any of the rights arising under the
provisions of this Agreement shall not constitute a waiver of such rights or of
any rights flowing therefrom.

 

5.3          Assignments

 

Neither Party may transfer or assign, or undertake to transfer or assign, its
rights and obligations provided by the provisions of this Agreement, except in
the event of a transfer by the Beneficiary of all or part of the Purchased
Shares to a company in which it holds controlling participation within the
meaning of Article L. 233-3 of the French Commercial Code.

 

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Furthermore, and without any kind of formal conditions, the Warrantor’s
obligations shall remain the same in the event of a modification, change,
liquidation and/or complete transfer of ownership regarding the assets, the
premises, or the Business of the Companies.

 

5.4          Successors or assigns

 

The Agreement shall be binding on the Warrantor’s heirs, successors, and assigns
or legal beneficiaries.

 

5.5          Notices

 

Except as set forth in other specific provision listed under the Agreement, any
notification, request, or communication made in connection with this Agreement
shall, either be discharged through personal and hand to hand delivery, or sent
by registered mail with acknowledgment of receipt to the recipient Party (or
equivalent in foreign countries), at the addresses mentioned hereinabove and
shall be deemed received (1) upon delivery in the event of a personal and hand
to hand delivery, or (2) five (5) Working Days upon dispatch when sent by
registered mail.

 

Either Party may at any time, through written notification, inform the other
Party of any change in address, which shall come into force fifteen (15) Working
Days following the date of receipt of such notification, within the meaning of
the first subsection of this Article.

 

Except other specific provision listed under the Agreement, the count of the
time periods provided for by the Agreement is made on the exact number of days
elapsed and, for months, from date to date, save as otherwise provided in the
Agreement.

 

5.6          Governing Law and Jurisdiction

 

This Agreement shall be construed, governed, interpreted, and applied in
accordance with the laws of France.

 

Any dispute arising from, or in connection with, this Agreement shall be
submitted to the exclusive jurisdiction of the Commercial Court of Paris.

 

5.7          Costs and fees

 

The Parties shall bear and pay for their respective expenses and outlays
incurred in view of performing the Agreement and carrying out the transactions
contemplated under its provisions, including, and without limitation, the costs
and fees for their respective counsel.

 

5.8          Entire agreement and modification

 

The Parties hereto acknowledge that this document (including its Schedules) sets
forth the entire agreement and understanding of the Parties, and supersedes all
prior written or oral agreements or understandings with respect to the subject
matter hereof, except for the Share Purchase Agreement which the Agreement shall
at all times be read in conjunction with.

 

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No modification of this Agreement shall be deemed to be valid unless in writing
and signed by both Parties.

 

List of Schedules:

 

Schedule 2.3:

 

Certified copies of updated Certificates of the Corporate Register of each of
the Companies

Schedule 2.4.1:

 

List of the shareholders of the Company on the execution date of the Agreement,
prior to the Acquisition

Schedule 2.4.1 bis:

 

Dividends distributed by the Companies since 2007

Schedule 2.4.2:

 

List of the shareholders of J3Tel at Completion Date, prior to the Acquisition

Schedule 2.8 (a):

 

Balance Sheets

Schedule 2.8 (b):

 

Statutory auditors’ reports on the Balance Sheets

Schedule 2.9:

 

Assets subject to Pledge and/or Lien and/or purchase option, undertaking,
agreement, or claim of any kind to the benefit of third parties

Schedule 2.11 (i):

 

Company’s title of property for the premises located at Gif-sur-Yvette (France)

Schedule 2.11 (ii):

 

Building permit number 091272 071105602 delivered by the Gif-sur-Yvette Town
Council the February12sd, 2008

Schedule 2.11 (iii):

 

Building permit number 091272 1010059 delivered by the Gif-sur-Yvette Town
Council on January 19th, 2011

Schedule 2.11 (iv):

 

Lease Agreement RO

Schedule 2.11 (v):

 

French Companies’ lease agreements or leasing agreements concerning the movable
assets

Schedule 2.12:

 

List of the Companies’ IP Rights

Schedule 2.17:

 

List of insurance subscribed by the Companies

Schedule 2.18:

 

Litigation involving the Companies

Schedule 2.19 (i):

 

List of personnel at Completion Date

Schedule 2.19 (ii):

 

Retention bonus agreement

Schedule 2.19 (iii):

 

List of the Staff representatives of the Companies (“Délégation Unique du
Personnel” and “Délégués du Personnel”)

Schedule 2.19 (iv):

 

Claims, disputes, pending litigations between the Companies and their employees

Schedule 2.20 (i):

 

Contracts executed by the Companies with a change of control clause

Schedule 2.20 (ii):

 

Agreements between the Companies and the Warrantor, or between the Companies and
any of its directors, officers, or employees

 

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IN WITNESS THEREOF, each Party hereto has duly executed this Agreement in two
(2) originals, under the conditions mentioned herein above.

 

On August 1, 2012

 

 

 

 

 

In Paris (France).

 

 

 

 

 

 

 

 

/s/ Barry Gorsun

 

 

MRV COMMUNICATIONS INC.

 

 

 

 

 

Represented by Barry GORSUN

 

 

 

 

 

 

 

 

/s/ Jerome LeFevre

 

 

IJ Next

 

 

 

 

 

Represented by Holding Baelen Gaillard

 

 

 

 

 

Represented by Mr Jérôme LEFEVRE

 

 

 

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