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Exhibit 4.(a)(iv)
ADDENDUM TO XXXXX/CELESTICA CONTRACTS
THIS ADDENDUM, effective December 21, 1999, is an addendum to the agreements
listed below and is entered into between: -
(1) XXXXX NETWORKS N.V. whose registered office is Transpolis, Schipol
Airport, Xxxxxxx Xxxxxx 00, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx;
("Xxxxx") and
(2) CELESTICA IRELAND LIMITED a limited company incorporated in Ireland whose
registered office is at 00/00 Xxxxx Xxxx Xxxx, Xxxxxx 0 ("Celestica")
together Xxxxx and Celestica are the "Parties".
The agreements to which this is an addendum are as follows:-
(1) The Manufacture and Supply Agreement (as amended by letter agreement dated
March 16, 1998) dated February 23, 1998 entered into between Xxxxx and
Celestica Ireland B.V. (the "Manufacturing Agreement");
(2) The Guarantee and Indemnity dated February 23, 1998 entered into
between Xxxxx, Celestica and Celestica Ireland B.V. (the "Guarantee");
(3) The Payment Agreement dated February 23, 1998 entered into, inter alia,
between Xxxxx and Celestica (the "Payment Agreement")
Together these 3 agreements are referred to as the "Agreements" and this
document as the "Addendum".
WHEREAS the Parties entered into the Agreements on February 23, 1998. In the
case of the Manufacturing Agreement and the Guarantee, Celestica Ireland B.V.
was also party to these agreements. By an assignment agreement dated June 17,
1998 a transfer was effected as of March 23, 1998, whereby Celestica Ireland
B.V. assigned all its rights and obligations under the Agreements (where
applicable) to Celestica;
WHEREAS Celestica has become concerned about its exposure to Xxxxx under the
terms of the existing Agreements;
WHEREAS Xxxxx acknowledges Celestica's concern and although Xxxxx has no
contractual obligation to do so Xxxxx agrees to this Addendum to attempt to
alleviate Celestica's concerns as a gesture of good faith in recognition of the
relationship between the Parties .
IN CONSIDERATION of the promises made below the Parties agree to enter into this
Addendum to amend the terms of the Agreements as follows:-
1. EXCESS AND RESIDUAL INVENTORY:-
1.1 Xxxxx will pay to Celestica the sum of two million US Dollars ($2m) on or
before January 6, 2000. This is an advanced payment to Celestica based
upon the Parties assessment of the maximum amount of monies owed by Xxxxx
to Celestica under the Residual and Excess Inventory provisions in the
Manufacturing and Supply Agreement for the purchase of the Residual and
Excess inventory. Celestica and Xxxxx undertake that they will work
together to define and agree, before January 21, 2000, the actual level of
Excess and Residual Inventory, and therefore the amount due from Xxxxx to
Celestica as per the Manufacturing and Supply Agreement.
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1.2 In order to ensure agreement is reached under 1.1 above as soon as
practicable any items that are still in dispute by January 20, 2000 will
be escalated to the GM of Celestica and VP Operations of Xxxxx.connect for
resolution by January 21, 2000.
1.3 In the event the amount of the agreed Excess and Residual Inventory
exceeds two million US dollars ($2m) Xxxxx will pay Celestica the
difference to purchase the inventory within 10 working days of the said
agreement.
1.4 In the event the amount of agreed Excess and Residual Inventory is less
than two million US Dollars ($2m) Xxxxx will deduct this from the next
scheduled recovery payment to Celestica.
1.5 In the event that Celestica needs some of the product purchased by Xxxxx
under this clause 1 in order to meet their obligations to Xxxxx under the
Manufacture and Supply Agreement Celestica will re-purchase all such
inventory at the same prices as paid by Xxxxx. Payment by Celestica to
Xxxxx will be due at the end of the month following the month of invoice.
1.6 In the event that agreement required in clause 1.1 is not reached by
January 21, 2000 despite both parties having made all reasonable efforts
Xxxxx will withhold fifty percent (50%) of any disputed amounts Xxxxx
considers is owing to it under clause 1.4 from the next payment to
Celestica under the Manufacturing and Supply Agreement until this matter
is resolved.
2. ADVANCE PAYMENT OF RECOVERIES
2.1 Assuming Celestica meets its obligations in Clause 1 above, Xxxxx agrees
to make cash payments in advance of the recovery schedule to Celestica of
one million, five hundred thousand US dollars ($1.5m) on February 28, 2000
and of one million, five hundred thousand US dollars ($1.5m) on March 31,
2000. Both these payments are advances on the Minimum Recovery due to
Celestica under the Guarantee.
2.2 Before May 1, 2000 Xxxxx and Celestica will agree on the remaining level
of the Minimum Recovery payable by Xxxxx to Celestica under the terms of
the Guarantee. This will then be divided into monthly payments due from
Xxxxx to Celestica each month for the period from May 2000 to February
2001 as per the terms of the Guarantee.
3. REVIEW OF CELESTICA'S EXPOSURE
3.1. Xxxxx and Celestica jointly undertake to formulate, agree and enact a
series of operational initiatives to minimise Celestica's net exposure at
any given point in time (defined for the purposes of this Addendum as
Receivables plus Inventory on hand plus non-cancellable purchase orders,
less the Product Discount Amount and interest thereon). The target for the
joint team is to ensure that by March 31st, 2000 the net exposure
Celestica currently perceives is reduced by $3.7m. Going forward from
April 1st, 2000, Xxxxx will use all reasonable efforts to meet targets for
Celestica's net exposure agreed as part of the Management reviews
described in 3.3 below.
3.2. The actions that Xxxxx and Celestica agree upon shall form part of the
normal monthly operations review between Xxxxx and Celestica.
3.3. In addition to the operations review mentioned in 3.2 above there will be
a separate Management review each month, initiated by Celestica, to review
the following:
- Status report on Celestica's net exposure and the programme to
maintain it at or below agreed target levels.
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- Update on Madge's financial strength. Xxxxx will supply information
to Celestica in this regard only if there is a Non Disclosure
Agreement, acceptable to Xxxxx in force at the time of disclosure;
and
- Review of the top level operational issues between Xxxxx and
Celestica, focusing in particular on any areas where one party
considers that the contractual commitments of the other party as set
out in the Agreements or this Addendum are not being met. Such
issues will be discussed and resolved as they arise.
3.4 The monthly review referred to in 3.3 will be attended in person or by
telephone by (a minimum of) the GM Celestica Ireland Limited, CFO Xxxxx
NV, CEO Xxxxx.connect, VP Operations Xxxxx.connect and the Treasurer
Celestica Inc.
4. MINIMUM REVENUE REQUIREMENT REMOVED
4.1 Upon receipt of payment by Xxxxx under 2.1, Celestica agrees to delete all
references in the Agreements to the Minimum Revenue requirement to be
achieved by Xxxxx. Any clauses in the Agreements which refer to the
Minimum Revenue or the requirement that Celestica receives at least two
hundred million US Dollars (US$200,000,000) in revenue (for example as per
the definition of "Total Recovery Period" in the Guarantee) shall hereby
have that wording deleted and the rest of the specific clause, as far as
relevant, will remain in full force and effect.
5. PAYMENT OF THE PREMIUM
5.1 Celestica will issue a certificate to Bank of Nova Scotia pursuant to
clause 3.3 of the Payment Agreement, for payment by February 22, 2001 to
Xxxxx of the Product Discount Amount plus interest, provided that Xxxxx
has paid to Celestica the Minimum Recovery required under the terms of the
Guarantee (as amended by this Addendum) by February 15, 2001, with no
portion of the Product Discount Amount payable prior to this date.
5.2 This sum will be payable in one lump sum, will not be dependant upon Xxxxx
achieving any minimum revenue numbers nor upon Xxxxx continuing to give
recoveries to Celestica after this date.
5.3 The Parties agree that as part of the management review process in clause
3.3 above when the perceived exposure is reduced and normal EMS to
Customer trading conditions are resumed, the Parties will discuss the
possibility of Celestica releasing the Product Discount Amount prior to
February 28, 2001.
5.4 In the event that Xxxxx has not met the Minimum Recovery required under
the Agreements as of February 15, 2001 Celestica will issue a certificate
to the Bank of Nova Scotia only for that amount of the Product Discount
Amount plus interest that is due to Xxxxx as determined on a pro-rata
basis by assessment of the actual Recovery received as of February 15,
2001 against the Minimum Recovery. The balance of the Product Discount
Amount plus interest will revert to Celestica as originally allowed for in
section 3.7 of the Payment Agreement.
SIGNED by the Parties and Effective the date appearing at the start of this
Addendum:-
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For and on behalf of Xxxxx Networks NV /s/ Xxxxxxx X. Xxxxxx
By M Xxxxxx, CEO of Xxxxx.connect ------------------------
For and on behalf of Celestica Ireland Limited /s/ Xxx X'Xxxxxxxxx
By D X'Xxxxxxxxx, XX of Celestica Ireland Limited ------------------------
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