Exhibit 2.2
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MEMBERS' AGREEMENT
BY AND AMONG
NORTEL NETWORKS INC.,
VOLT INFORMATION SCIENCES, INC.,
NUCO I, LTD.,
VOLT DELTA RESOURCE HOLDINGS, INC.
AND
VOLT DELTA RESOURCES, LLC
AS OF
AUGUST 2, 2004
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Table of Contents
Page
ARTICLE I
DEFINITIONS
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1.1 Certain Defined
Terms..........................................................................2
1.2 Terms
Generally................................................................................6
ARTICLE II
GOVERNANCE
2.1 Board of
Managers..............................................................................6
2.2 Company
Matters Requiring Super-Majority
Approval..............................................7
2.3
Officers.......................................................................................9
2.4 Financial
and Tax
Reporting....................................................................9
2.5 Inspection
of Facilities and
Records..........................................................10
2.6
Enforcement of Contribution
Agreement.........................................................10
2.7 Business
Opportunities Not Achieving Super-Majority
Approval..................................11
ARTICLE III
ADDITIONAL MEMBER RIGHTS AND OBLIGATIONS
3.1
Restrictive
Legend............................................................................11
ARTICLE IV
TRANSFER RESTRICTIONS
4.1
Limitations on
Transfer.......................................................................12
4.2 Tag-Along
Rights..............................................................................13
4.3 Transferee
Rights and
Obligations.............................................................14
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES
5.1
Implementation................................................................................14
5.2 Company
Covenant..............................................................................14
5.3
Implementation of Business
Plan...............................................................14
5.4
Non-Competition...............................................................................14
5.5 Members'
Trademarks and
Tradenames............................................................18
5.6 Banking
Matters...............................................................................18
5.7
Distributions.................................................................................18
5.8 Other
Activities of Members and
Affiliates....................................................19
5.9 Capital
Contributions.........................................................................19
5.10 Restriction on
Security
Interests.............................................................19
5.11 Relationship
Agreement
Payments...............................................................19
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5.12
Confidentiality...............................................................................19
ARTICLE VI
TERM AND TERMINATION
6.1
Termination...................................................................................20
6.2
Termination
Events............................................................................21
6.3 Put and
Call
Options..........................................................................21
6.4 Option
Closing................................................................................22
6.5 Audit
Rights..................................................................................22
6.6 Dispute
Resolution............................................................................23
6.7 No
Prejudice to
Rights........................................................................23
ARTICLE VII
MISCELLANEOUS
7.1
Expenses......................................................................................24
7.2
Notices.......................................................................................24
7.3
Headings......................................................................................25
7.4
Severability..................................................................................25
7.5 Entire
Agreement..............................................................................25
7.6
Assignment....................................................................................25
7.7 No
Third-Party
Beneficiaries..................................................................25
7.8
Amendment.....................................................................................25
7.9 Governing
Law.................................................................................26
7.10
Counterparts..................................................................................26
7.11 No
Presumption................................................................................26
7.12 No Special
Damages............................................................................26
7.13 Specific
Performance..........................................................................26
7.14 Performance by
Nuco and
Holdings..............................................................26
Exhibits:
Exhibit A:
Amended and Restated Operating Agreement
Exhibit B:
Articles of Organization
Exhibit C:
Business Plan
Exhibit D:
Initial VIS Managers, Initial Nortel Networks Manager and Initial
Officers of the
Company
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MEMBERS' AGREEMENT
This MEMBERS' AGREEMENT (the "Agreement") is made and entered into
as
of August 2, 2004, by and among Volt Delta
Resources, LLC, a Nevada limited
liability company (the "Company"), Nortel
Networks Inc., a Delaware corporation
("Nortel Networks"), Volt Delta Resource
Holdings, Inc., a Nevada corporation
("Holdings"), Nuco I, Ltd., a Nevada
corporation ("Nuco"), and Volt Information
Sciences, Inc., a New York corporation
("VIS" and together with Nortel Networks,
the "Members").
WHEREAS, VIS owns 100% of the issued and outstanding capital stock
of
Nuco, and Nuco owns 100% of the issued and
outstanding capital stock of
Holdings;
WHEREAS, Nortel Networks and Holdings have entered into an Amended
and
Restated Operating Agreement dated the date
hereof (the "Operating Agreement"),
a true and complete copy of which is
attached hereto as Exhibit A;
WHEREAS, the Company and Nortel Networks entered into a
Contribution
Agreement dated as of June 11, 2004 (the
"Contribution Agreement");
WHEREAS, upon the consummation of the transactions contemplated by
the
Contribution Agreement, Nortel Networks
shall beneficially own in the aggregate
Membership Interests (as defined in the
Contribution Agreement) representing
twenty-four percent (24%) of the issued and
outstanding Membership Interests of
the Company, VIS shall beneficially own in
the aggregate Membership Interests
representing seventy-six percent (76%) of
the issued and outstanding Membership
Interests of the Company and Holdings shall
be the record holder of such
Membership Interests beneficially owned by
VIS;
WHEREAS, it is a condition to the Closing that this Agreement and
the
other agreements, documents and instruments
entered into by the parties pursuant
to the terms hereof be in full force and
effect and that the parties hereto have
complied with their obligations hereunder
and thereunder;
WHEREAS, the Members and the Company desire to provide for the
management of the Company and the
respective rights and obligations of the
Members generally;
WHEREAS, VIS desires to make payments in the aggregate amount
of
$4,000,000 to Nortel Networks in
consideration of Nortel Networks entering into
the Relationship Agreement with the Company
dated as of the date hereof; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties, and subject
to the terms and conditions
contained herein, the parties hereto agree
as follows:
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ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. Capitalized terms used but not
defined
herein have the meanings ascribed to them
in the Contribution Agreement. As used
in this Agreement, the following terms
shall have the following meanings:
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Arbitrator" has the meaning set forth in Section 6.6(b).
"Articles of Organization" means the articles of organization of
the
Company in the form of Exhibit B.
"Audit Report" has the meaning set forth in Section 6.5(a).
"Authorized Officer" means any of the chief executive officer,
the
controller or the chief financial officer
of the Company.
"Beneficial Ownership" or "Beneficially Own" means, with respect to
any
Membership Interest, the ability to vote
and/or direct the disposition of such
Membership Interest.
"Beneficial Ownership Percentage" means, with respect to any Person
or
Persons, the percentage calculated by
dividing the total outstanding number of
Membership Interests (on a fully-diluted
basis) which are Beneficially Owned,
directly or indirectly, by such Person or
Persons (without double counting),
into the total outstanding number of
Membership Interests of the Company (on a
fully-diluted basis), as of the relevant
time for making such calculation, it
being understood that for purposes of this
definition, Membership Interests
which a Person has the right to acquire but
has not yet acquired shall not be
deemed to be Beneficially Owned.
"Board" means the Board of Managers of the Company.
"Business Plan" means the yearly business and operations plan,
including income statement, balance sheet
and cash flow statement, capital
expenditure budget and financial
projections for the Company. The Business Plan
for the two (2) year period following the
Closing Date is attached hereto as
Exhibit C.
"Cause" means, with respect to any Manager, (i) a final judgment of
a
court of competent jurisdiction that such
Manager has acted in breach of his or
her duty to the Company and such action was
not permitted by Section 5.8 hereof
or has committed an act of willful
misconduct, gross negligence or abuse of
authority, or (ii) that any Governmental
Authority has formally charged such
Manager with one or more felonious criminal
acts.
"Change in Control" means, with respect to any Person in the
Industry
Group, any of the following: (i) the sale,
lease, exchange, transfer or other
disposition, either directly or indirectly,
of assets constituting all or
substantially all of the assets of such
Person in the Industry Group and its
subsidiaries taken as a whole, to a Person
or group of Person that did not own,
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directly or indirectly, substantially all
of such assets prior to such transfer;
(ii) any merger, consolidation or other
business combination, or refinancing or
recapitalization of such member of the
Industry Group that results in the
holders of the issued and outstanding
voting securities of such member of the
Industry Group immediately prior to such
transaction beneficially owning or
controlling less than a majority of the
voting securities of the continuing or
surviving entity immediately following such
transaction; or (iii) any Person or
Persons acting together or which would
constitute a "group" for the purposes of
Section 13(d) of the Exchange Act, together
or with any Affiliates thereof
becoming the beneficial owner (as defined
in Rule 13d-3 of the Exchange Act) or
controlling, directly or indirectly, at
least 50% of the total voting power of
all classes of capital stock entitled to
vote generally in the election of
directors of such member of the Industry
Group, which Person or "group" did not
previously control, directly or indirectly,
at least 50% of such total voting
power.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Call Option" has the meaning set forth in Section
6.3(a).
"Company Event of Default" has the meaning set forth in Section
5.4(d).
"Competitive Products" has the meaning set forth in Section
5.4(b)(i).
"Contribution Agreement" has the meaning set forth in the recitals
to
this Agreement.
"Designated Division" has the meaning set forth in Section
5.4(c)(iv).
"Disclosing Party" has the meaning set forth in Section
5.12(a).
"Disputed Items" has the meaning set forth in Section 6.5(c).
"Distribution Payment Date" has the meaning set forth in
Section
5.7(a).
"Excess Cash" has the meaning set forth in Section 5.7(a).
"Exchange Act" means the United States Securities Exchange Act of
1934
(as amended, together with the rules and
regulations thereunder).
"Exit Payment" has the meaning set forth in Section 6.3(c).
"Expiration Date" has the meaning set forth in Section 6.5(a).
"Fair Value" means the product of (x) the LTM Revenue as of the
Put/Call Date multiplied by (y) seventy
percent (70%) of the Industry Average
Multiple.
"Holdings" has the meaning set forth in the preamble to this
Agreement.
"Industry Average Multiple" means the average LTM Revenue
Market
Multiples of the Industry Group as of the
Put/Call Date. In no event shall the
Industry Average Multiple exceed 1.8.
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"Industry Group" means Comverse Technology (CMVT), Convergys (CVG)
and
CSG Systems (CSGS). If, as of the date that
any determination of Fair Value is
made hereunder, there has been a Change in
Control of any Person in the Industry
Group that would make such Person's
business segments and source of revenue
generation less comparable to the Company
than it was on the Closing Date or any
Person in the Industry Group no longer
makes available the relevant publicly
available financial information, the
Members shall promptly agree on one or more
other comparable companies in lieu of such
Person. If the Members cannot agree,
the entities comprising the Industry Group
shall be resolved by an independent
investment banking firm of national repute
promptly selected by the agreement of
the Members. The Members shall use their
commercially reasonable efforts to
cause such investment banking firm to
select substitute Persons to comprise the
Industry Group that are comparable to the
original Industry Group enumerated
above within thirty (30) days of the date
of engagement of such investment
banking firm. The fees and expenses of such
investment banking firm shall be
divided equally between the Members.
"LTM" means the twelve (12) month period ended as of the most
recent
fiscal quarter ended.
"LTM Revenue" means the LTM revenue of the Company on a
consolidated
basis as determined in accordance with
GAAP.
"LTM Revenue Market Multiple" means, with respect to any Person in
the
Industry Group as of a particular date, (i)
the market capitalization of such
Person (i.e., the average of the last
closing stock price of such Person on the
twenty (20) immediately prior trading days
multiplied by the fully-diluted
number of shares outstanding of such Person
as of the most recent date
practicable) adjusted by deducting cash and
adding debt held by such Person as
of the most recent date practicable
(commonly known as the "Enterprise Value")
divided by (ii) the gross revenue reported
by such Person in its forms, reports
and documents filed with the Securities and
Exchange Commission or by a public
announcement or release as of the most
recent date practicable for the
immediately proceeding LTM.
"Manager" means a member of the Board of Managers of the
Company
designated pursuant to Section 2.1(a).
"Members" has the meaning set forth in the preamble to this
Agreement.
"Necessary Action" means, with respect to a specified result,
required
actions (to the extent such actions are
permitted by Applicable Law) reasonably
necessary to cause such result, including
(i) exercising voting rights with
respect to Membership Interests, (ii)
causing the adoption of member resolutions
and amendments to the Operating Agreement,
Articles of Organization or other
constituent documents, (iii) causing
Managers (to the extent such Managers were
nominated or designated by the Person
obligated to undertake the Necessary
Action) to act in a certain manner or
causing them to be removed in the event
they do not act in such manner, (iv)
executing agreements that are required to
cause such specified result, and (v)
making, or causing to be made, with any
Governmental Authority, filings,
registrations or similar actions that are
reasonably necessary or required to achieve
such specified result.
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"Net Income" means, with respect to the Company, the net income
(or
loss) after taxes of the Company and its
Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"Nortel Networks" has the meaning set forth in the preamble to
this
Agreement. All references to Nortel
Networks shall include Persons who acquire
Nortel Networks' Membership Interests
pursuant to a Permitted Transfer or with
the consent of the non-Transferring
Member(s) (as contemplated by Section
4.1(a)).
"Nortel Networks Manager" has the meaning set forth in Section
2.1(a).
"Nortel Networks Non-Compete Period" has the meaning set forth
in
Section 5.4(a).
"Nortel Networks Put Option" has the meaning set forth in
Section
6.3(a).
"Nuco" has the meaning set forth in the preamble to this
Agreement.
"Operating Agreement" has the meaning set forth in the recitals to
this
Agreement.
"Option" has the meaning set forth in Section 6.3(b).
"Option Closing" has the meaning set forth in Section 6.4.
"Option Floor" means $25,000,000, subject to adjustment pursuant
to
Section 4.2(e).
"Option
Interests" has the meaning set forth in Section 6.3(a).
"Permitted Transfer" means a Transfer to a Qualified Affiliate.
"Proposed Transfer" has the meaning set forth in Section
4.2(a).
"Proposed Transferee" has the meaning set forth in Section
4.2(a).
"Put/Call Date" has the meaning set forth in Section 6.3(b).
"Qualified Affiliate" means an Affiliate of any Person (a)
which
Affiliate has agreed in writing: (i) to be
bound, in respect of all Membership
Interests it Beneficially Owns, by the
provisions applicable to such Person in
this Agreement and any other agreement or
instrument executed and delivered by
such Person pursuant to the terms hereof
and (ii) prior to ceasing to be such a
Qualified Affiliate and without prejudice
to Permitted Transfers, to Transfer
its ownership in all securities issued by
the Company and rights and obligations
hereunder to such Person or to another
Qualified Affiliate of such Person; and
(b) as to which such Person (or the
guarantors of such Person under this
Agreement and any other agreement or
instrument executed by such Person pursuant
to the terms hereof) has agreed in writing
to guarantee the
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obligations of such Qualified Affiliate
hereunder and any other agreement or
instrument executed by such Qualified
Affiliate pursuant hereto.
"Recipient Party" has the meaning set forth in Section 5.12(a).
"Relationship Agreement" means the Relationship Agreement dated as
of
the date hereof between Nortel Networks and
the Company.
"Remainder Interests" has the meaning set forth in Section
4.2(d).
"Representative" has the meaning set forth in Section 5.12(a).
"Securities Act" means the United States Securities Act of 1933
(as
amended, together with the rules and
regulations thereunder).
"SIP" has the meaning set forth in Section 5.4(b)(ii).
"Statement" has the meaning set forth in Section 6.3(c).
"Super-Majority Vote" has the meaning set forth in Section 2.2.
"Tag-Along Right" has the meaning set forth in Section 4.2(a).
"Termination Event" has the meaning set forth in Section 6.2.
"TOPS" has the meaning set forth in Section 5.4(b)(i).
"Transfer" means, whether voluntary or involuntary, any
transfer,
assignment, sale, including by way of
merger or other business combination,
pledge or hypothecation.
"VIS" has the meaning set forth in the preamble to this Agreement.
All
references to VIS shall include Persons who
acquire VIS's Membership Interests
pursuant to a Permitted Transfer or with
the consent of the non-Transferring
Member(s) (as contemplated by Section
4.1(a)).
"VIS Manager" has the meaning set forth in Section 2.1(a).
1.2 Terms Generally. (a) Words in the singular shall include the
plural
and vice versa, and words of one gender
shall include the other genders as the
context requires, (b) the term "hereof,"
"herein," and "herewith" and words of
similar import shall, unless otherwise
stated, be construed to refer to this
Agreement and not to any particular
provision of this Agreement, and Article,
Section, paragraph, Exhibit and Schedule
references are to the Articles,
Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise
specified and (c) the word "including" and
words of similar import when used in
this Agreement shall mean "including,
without limitation," unless otherwise
specified.
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ARTICLE II
GOVERNANCE
2.1 Board of Managers. (a) From and after the Closing, the
Members
shall take all Necessary Action to cause
the Board to be comprised of five (5)
Managers, one (1) of whom shall be
designated by Nortel Networks (the "Nortel
Networks Manager") and four (4) of whom
shall be designated by VIS (each a "VIS
Manager").
(b) Each Member shall have the exclusive right from time to
time without meeting to appoint and remove its respective designees
to
the Board upon providing notice thereof to the other Member and
the
Company, as well as the exclusive right to fill vacancies created
by
reason of death,
removal or resignation of such designees; provided,
however, that any Manager may be removed for Cause by the Members
so
long as such Manager is replaced by another Manager designated by
the
Member which originally designated the Manager being replaced.
In
addition, to the extent a Member has the right to designate a
Manager
pursuant to Section 2.1(a), such Member shall have the right to
designate a replacement for such Manager. The Members shall take
all
Necessary Action to give effect to this provision. Notwithstanding
the
foregoing, after the second anniversary of the Closing Date, VIS
shall
have the right to require that Nortel Networks designate as the
Nortel
Networks Manager an individual that does not occupy a "line
position"
in one of Nortel Networks' lines of business. For the avoidance
of
doubt, the preceding sentence shall not prohibit Nortel Networks
from
designating as the Nortel Networks Manager a Finance employee or
a
Legal employee.
(c) The initial VIS Managers and the initial Nortel Networks
Manager designated pursuant to Section 2.1(a) shall be the
individuals
set forth on Exhibit D.
(d) The Board shall have full authority with respect to the
management of the Company and its Subsidiaries.
(e) The Members shall take all Necessary Action to cause,
subject to the Super-Majority Vote requirements of Section 2.2,
the
Board to form and appoint members to such committees as it
deems
appropriate and to delegate certain of the Board's powers to
such
committees; provided that each such committee shall include the
Nortel
Networks Manager.
(f) Except as otherwise provided herein and subject to the
Super-Majority Vote requirements of Section 2.2, the Members shall
take
all Necessary Action to cause the Board to approve decisions only
by
the affirmative vote of at least a majority of the Managers or
by
unanimous written consent of the Managers as required by
Applicable
Law.
(g) The Members shall take all Necessary Action to cause the
Board to meet at least once each quarter and any committees formed
by
the Board to meet as directed by the Board.
2.2 Company Matters Requiring Super-Majority Approval.
Notwithstanding
anything to the contrary in Section 2.1,
the Members shall take all
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Necessary Action to cause the Company not
to take, and the Company shall not
take, and shall take all Necessary Action
to cause its Subsidiaries not to take,
any of the following actions without the
affirmative vote of at least a majority
of the Board (including the affirmative
vote of the Nortel Networks Manager and
a majority of the other Managers) (such
vote, a "Super-Majority Vote") except to
the extent that the following actions are
contemplated by the Business Plan:
(a) except as provided in Section 2.7 hereof, approval of any
Contracts (other than the Ancillary Agreements) between or
involving
the Company or any of its Subsidiaries, on the one hand, and any
Member
or Affiliate thereof (other than Nortel Networks or any of its
Affiliates), on the other hand, as well as any amendment, consent
or
waiver with respect to such Contracts; provided, however, that
until
such time as the Company has obtained necessary third party
financing,
this provision shall not apply to loans from VIS or its Affiliates
to
the Company or its Subsidiaries, to the extent (i) such loans
bear
interest at rates no greater than those charged to VIS or such
Affiliate under its third party financing arrangements for loans
of
similar type, (ii) such loans would otherwise be permitted
hereunder
and (iii) no other fees or expenses are charged to the Company or
its
Subsidiaries in respect of such loans;
(b) removal of Managers other than for Cause except by the
Member which designated the Manager to be removed;
(c) approval of capital purchases, rental or lease agreements
of the Company or any of its Subsidiaries providing for one or
more
payments to be made in excess of $2,000,000; provided, however,
that
additional capital purchases required for the performance of
new
business awarded to the Company after the Closing Date shall not
be
subject to such limitation;
(d) providing loans, guarantees, or other extensions of credit
other than to customers for the purchase of products of the Company
or
any of its Subsidiaries in the ordinary course of business;
(e) amendment of the Operating Agreement, Articles of
Organization or other charter documents of the Company or any of
its
Subsidiaries;
(f) merger of the Company or any of its Subsidiaries into or
with, or an acquisition by the Company or any of its Subsidiaries
of
all or a substantial part of the business of, another Person;
(g) reorganization, reincorporation, conversion,
consolidation, combination or merger, or sale, transfer or
other
disposition of all or substantially all of the assets of the
Company or
any of its Subsidiaries;
(h) liquidation, dissolution, winding up or voluntary
bankruptcy of the Company or any of its Subsidiaries;
(i) any material change in the Business Plan or adoption of
any future Business Plans subsequent to the initial Business
Plan
attached hereto as Exhibit C;
(j) any change to the distribution requirement set forth in
Section 5.7;
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(k) issuance, purchase
or redemption by the Company or any of
its Subsidiaries of any of their respective securities and any
change,
increase or reduction in the capitalization of the Company or
its
Subsidiaries, except for an issuance of Membership Interests by
the
Company on or after the Put/Call Date, the closing of which
occurs
simultaneously with the Option Closing and the proceeds of which
(to
the extent necessary to fund the Exit Payment) are used solely to
fund
the Exit Payment and are paid to Nortel Networks simultaneously
with
such closing;
(l) incurrence, in one or more transactions, of any
indebtedness for borrowed money by the Company or any of its
Subsidiaries of an aggregate amount at any time in excess of
$2,000,000; provided, however, that (i) indebtedness incurred in
order
to fund the capital purchases referenced in the proviso in
Section
2.2(c) hereof and (ii) any indebtedness incurred by the Company on
or
after the Put/Call Date, the closing of which occurs
simultaneously
with the Option Closing and the proceeds of which (to the
extent
necessary to fund the Exit Payment) are used solely to fund the
Exit
Payment and are paid to Nortel Networks simultaneously with
such
closing, shall not be subject to such limitation;
(m) material restructuring of the business of the Company or
any of its Subsidiaries including, but not limited to, a single
or
series of related workforce reductions in excess of 25% of the
Company's total workforce;
(n) any exclusive license of the Intellectual Property Rights
of the Company or any of its Subsidiaries; provided, however, that
this
provision shall not apply to exclusive licenses for particular
geographic or industry markets or territories or exclusive licenses
for
customized software or products for particular customers,
industry
markets or territories;
(o) making or changing any material Tax election, initiating
or settling any Tax proceeding, or filing any material Tax
return;
(p) the appointment or removal of a Person as its auditor
(other than the auditors used by VIS so long as such auditors are
a
nationally recognized accounting firm), any change to its
revenue
recognition policies, or any other material change to its
accounting
policies other than as is required to comply with GAAP or to
conform to
VIS's accounting policies; or
(q) entering into any agreement to effect any of the above.
2.3 Officers. The officers of the Company shall include a
president,
one or more vice presidents, a treasurer, a
secretary and such subordinate
officers as the Board may appoint. The
officers shall be appointed by the Board,
and shall serve at the discretion of the
Board. The initial officers are
identified on Exhibit D.
2.4 Financial and Tax Reporting. (a) The Company shall deliver to
the
Members, as soon as available and in no
event more than ninety (90) days after
the end of each fiscal year, audited annual
consolidated financial statements
for the Company (including a balance sheet
and statements of income, changes in
financial position and changes in members'
equity) at and as of the end of such
fiscal year (including, commencing in 2005,
the respective
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consolidated financial statements in
comparative form as of the end of and for
the previous fiscal year) prepared in
accordance with GAAP.
(b) The Company shall deliver to the Members, as soon as
available and in no event more than forty-five (45) days after the
end
of each consecutive three-month period in each fiscal year,
quarterly
unaudited consolidated financial statements for the Company
(including
a balance sheet and statements of income, changes in financial
position
and changes in members' equity) at and as of the end of such
three-month period (including, commencing in 2005, the
respective
consolidated and consolidating financial statements in comparative
form
as of the end of and for the corresponding period in the
previous
fiscal year) prepared in accordance with GAAP, all of which shall
be
certified by an Authorized Officer.
(c) The Company shall deliver to the Members, as soon as
available and in no event less than thirty (30) days after the end
of
each month, a copy of the Company's consolidated monthly operating
and
management reports with variances and explanations, including
monthly
income statements.
(d) As soon as practicable, but in any event no later than
four (4) months after the date hereof, the Company shall engage,
a
nationally recognized accounting firm to serve as the Company's
independent auditors, which may be the auditors of VIS.
(e) The Company shall keep its and its Subsidiaries' books and
records in a manner necessary to comply with Applicable Law.
(f) The Company shall supply any Member upon request with
complete and accurate statements of any financial and other
information
regarding the Company and its Subsidiaries that such Member is
required
to file with any Governmental Authority or deliver to any
institutional
lender of such Member, and such Member shall be entitled to file
or
deliver such financial or other information notwithstanding the
provisions of Section 5.12 hereof; provided that any
institutional
lenders which are to receive such information pursuant to this
Section
2.4(f) shall have previously agreed to keep such information
confidential.
(g) As soon as practicable, but in no event later than March 1
after the end of each taxable year, the Company shall supply to
the
Members an IRS Form 1065, and other material Tax Returns, for
review.
The Company shall, promptly after the review of the Members
regarding
the IRS Form 1065 for any taxable year, supply a Schedule K-1 to
the
Members.
(h) The Company shall pay all costs incurred in connection
with the preparation and delivery of financial statements and
other
reports and documents to the Members pursuant to this Section
2.4.
2.5 Inspection of Facilities and Records. Each Member shall have
the
right to inspect the facilities of the
Company and to examine the books of
account and records of the Company at all
reasonable times during usual business
hours upon reasonable advance notice to the
Company. Such right may be exercised
through any agent, employee or
representative of
10
<PAGE>
such Member designated by it, or by an
independent public accountant. The Member
conducting such examination or inspection
shall bear all costs and expenses
incurred in connection therewith.
2.6 Enforcement of Contribution Agreement. Notwithstanding any
other
provision of this Agreement, the
enforcement by the Company or Nortel Networks
of any of their respective rights,
remedies, claims and causes of action against
the other party under or with respect to
the Contribution Agreement and/or any
ancillary agreements, documents or
instruments relating thereto, and the defense
by the Company or Nortel Networks against
any rights, remedies, claims or causes
of action of the other party under or with
respect to the Contribution Agreement
and/or any ancillary agreements, documents
or instruments relating thereto,
including without limitation, claims for
indemnification, the initiation and
defense of litigation, the settlement of
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