EXHIBIT 3.8
CONFIDENTIAL MATERIALS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
STOCK PURCHASE AGREEMENT
DATED AS OF
JANUARY 8, 2002,
BETWEEN
NEC CORPORATION
- and -
NEC MIYAGI, LTD.
- and -
NEC YAMANASHI, LTD.
- and -
1325091 ONTARIO INC.
- and -
CELESTICA INC.
TABLE OF CONTENTS
STOCK PURCHASE AGREEMENT
ARTICLE I
PURCHASE & SALE/CLOSING
1.1 Transfer of the Transferred Business.................................1
1.2 Transfer of Stock by Seller..........................................3
1.3 Purchase of the Stock by Buyer; Purchase Price.......................3
1.4 Purchase Price Adjustment............................................4
1.5 Repayment of Intercompany Loan.......................................6
1.6 The Closing..........................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Organization, Directors, Officers, Related Matters...................7
2.2 Stock................................................................7
2.3 Financial Statements; Dividends; Liabilities.........................8
2.4 Litigation...........................................................9
2.5 Compliance with Law; Permits.........................................9
2.6 Consents and Approvals...............................................9
2.7 Taxes...............................................................10
2.8 Contracts...........................................................10
2.9 Real and Personal Property..........................................10
2.10 Authorization; No Conflicts.........................................12
2.11 Insurance...........................................................12
2.12 Labor Matters.......................................................12
2.13 Environmental.......................................................13
2.14 Absence of Changes..................................................15
2.15 Inventory, Machinery and Equipment..................................15
2.16 No Other Representations or Warranties..............................15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization, Directors, Officers, Related Matters..................16
3.2 Litigation..........................................................16
3.3 Consents and Approvals..............................................16
3.4 Authorization; No Conflicts.........................................17
3.5 Financial Capability................................................17
3.6 Company.............................................................17
ARTICLE IV
COVENANTS OF SELLER AND BUYER
4.1 Access of Buyer.....................................................18
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4.2 Access of Seller....................................................19
4.3 Conduct of Business.................................................19
4.4 Employee Matters....................................................19
4.5 Retention of Books and Records......................................21
4.6 Cooperation in Audits...............................................21
4.7 Registrations, Filings and Consents.................................21
4.8 Taxes...............................................................21
4.9 Environmental Investigation.........................................22
4.10 Changes in PRO FORMA Projected Financial Statements.................25
4.11 Future Business.....................................................25
ARTICLE V
CONDITIONS OF PURCHASE
5.1 General Conditions..................................................25
5.2 Conditions to Obligations of Buyer..................................26
5.3 Conditions to Obligations of Seller.................................27
ARTICLE VI
TERMINATION OF OBLIGATIONS
6.1 Termination of Agreement............................................28
6.2 Effect of Termination...............................................28
ARTICLE VII
INDEMNIFICATION
7.1 Obligations of Seller...............................................29
7.2 Indemnification Obligations of Buyer................................29
7.3 Survival of Representations and Warranties and Environmental
Indemnity; Knowledge of Breach......................................30
7.4 Procedures..........................................................30
7.5 Adjustments to Losses...............................................31
7.6 Limitation on Indemnification by Seller.............................32
7.7 Limitation on Indemnification by Buyer..............................32
7.8 Exclusive Remedy....................................................32
7.9 Treatment of Payments...............................................33
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments; Waivers.................................................33
8.2 Schedules; Exhibits; Integration....................................33
8.3 Best Efforts; Further Assurances....................................33
8.4 Governing Law.......................................................34
8.5 No Assignment.......................................................34
8.6 Headings............................................................34
8.7 Counterparts........................................................34
8.8 Public Disclosure...................................................35
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8.9 No Consequential Damages............................................35
8.10 Parties in Interest.................................................35
8.11 Notices.............................................................35
8.12 Expenses and Attorneys Fees.........................................36
8.13 Governing Language..................................................36
8.14 Dispute Resolution..................................................37
8.15 Parent Guaranty.....................................................37
ARTICLE IX
DEFINITIONS
9.1 Definitions.........................................................38
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of January 8, 0000,
xxxxxxx Xxxxxxxxx Xxx., xx Xxxxxxx, Xxxxxx corporation ("Parent"), 1325091
Ontario Inc., an Ontario, Canada corporation and a wholly owned subsidiary of
Parent ("Buyer") and NEC Corporation, a Japanese kabushiki kaisha, NEC Miyagi,
Ltd., a Japanese kabushiki kaisha, and NEC Yamanashi, Ltd., a Japanese kabushiki
kaisha (collectively, "Seller").
R E C I T A L S
WHEREAS, Buyer has created a wholly owned subsidiary as a Japanese
kabushiki kaisha named Celestica EMS Kabushiki Kaisha ("Company");
WHEREAS, Buyer intends to cause the Company to issue shares of common stock
of Company to the Predecessor Companies and the Predecessor Companies intend to
acquire such shares from Company;
WHEREAS, Seller intends that, concurrently with the acquisition of such
shares by the Predecessor Companies, the Predecessor Companies will transfer the
Transferred Business to Company in accordance with the Corporate Separation
Procedure of the Japanese Commercial Code;
WHEREAS, Predecessor Companies desire, after the completion of the
foregoing, to sell, and Buyer desires to buy, the Stock for the consideration
described herein, and to consummate the other transactions described herein; and
WHEREAS, Parent desires to guarantee all of Buyer's obligations to Seller
hereunder.
A G R E E M E N T
In consideration of the mutual promises contained herein and intending to
be legally bound the parties agree as follows:
ARTICLE I
PURCHASE & SALE/CLOSING
1.1 TRANSFER OF THE TRANSFERRED BUSINESS.
(a) CREATION OF COMPANY. Promptly after execution of this Agreement, Buyer
shall provide evidence of Company's incorporation and proper registration as a
kabushiki kaisha having two hundred (200) issued and outstanding common shares
and capitalization of ten million (10,000,000) Japanese yen with the Tokyo Legal
Affairs Office of to Seller.
(b) SECURING OF GOVERNMENT PERMITS AND CONSENTS. Buyer shall take all
actions reasonably required, and Seller shall provide such assistance as shall
reasonably be required by Buyer, in order to obtain the Permits listed in
Schedule 2.5(c).
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(c) COMPLIANCE WITH KAISHA BUNKATSU PROCEDURES. Buyer, Seller, and
Predecessor Companies, as appropriate, shall take, and Buyer shall cause Company
to take all actions necessary to be taken on their respective parts in order to
transfer the Transferred Business from Predecessor Companies to Company in
accordance with the NEC Separation Agreement and otherwise to comply with the
requirements of the Corporate Separation Procedure of the Japanese Commercial
Code and other applicable laws in connection with the Kaisha Bunkatsu. Such
actions shall include but not be limited to preparing and finalizing the NEC
Separation Agreement and all related agreements, documents and certificates as
soon as practicable, issuing all necessary notices, and making available
documents in the respective head offices of Predecessor Companies and Company
pursuant to the Corporate Separation Procedure of the Japanese Commercial Code.
Buyer and Seller shall approve and execute the NEC Separation Agreement at least
one month prior to the scheduled Bunkatsu Day.
(d) BUNKATSU DAY. The Bunkatsu Day shall be on March 1, 2002, provided that
the conditions set forth below in Sections 1.1(e) and (f) have been satisfied or
waived in writing, or on such later business day on or prior to September 1,
2002 as Seller and Buyer may agree.
(e) DELIVERY OF STOCK TO SELLER. Buyer shall cause Company to issue, sell
and deliver 280,000 common shares of Company to each of the Predecessor
Companies (202,000 shares to NEC Miyagi and 78,000 shares to NEC Yamanashi) on
the Bunkatsu Day provided that Company shall not issue the Stock to the
Predecessor Companies unless the following conditions are met;
(i) No Action shall have been instituted and remain pending or
threatened on the Bunkatsu Day before any court or governmental entity that
threatens in any way to prevent, enjoin or set aside the transfer of the
Transferred Business by the Predecessor Companies to Company or the acquisition
by the Predecessor Companies of the Company's shares, or the result of which
could prevent or make illegal the consummation of such transfer or acquisition;
(ii) Each of the covenants and agreements of Seller in this Agreement
to be performed by Seller in connection with the Kaisha Bunkatsu on or prior to
the Bunkatsu Day shall have been duly performed in all material respects; and
(iii) All actions necessary to be taken by Seller to cause the
Transferred Business to be transferred to Company on the terms and conditions of
the NEC Separation Agreement shall have been completed.
(f) TRANSFER OF TRANSFERRED BUSINESS. Subject to satisfaction of the
following conditions, the Predecessor Companies shall transfer the Transferred
Business to Company in accordance with the NEC Separation Agreement on the
Bunkatsu Day:
(i) No Action shall have been instituted and remain pending or
threatened on the Bunkatsu Day before any court or governmental entity that
threatens in any way to prevent, enjoin or set aside the transfer of the
Transferred Business by the Predecessor Companies to Company or the acquisition
by the Predecessor Companies of the Company's
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shares, or the result of which could prevent or make illegal the consummation
of such transfer or acquisition;
(ii) Each of the representations and warranties of Buyer set forth in
Section 3.6 of this Agreement shall be true and correct; and
(iii) Each of the covenants and agreements of Buyer in this Agreement
to be performed by Buyer in connection with the Kaisha Bunkatsu on or prior to
the Bunkatsu Day shall have been duly performed in all material respects; and
(iv) All actions necessary to be taken by Company to carry out the
transfer of the Transferred Business to Company shall have been completed.
On the Bunkatsu Day, upon transfer of the Transferred Business, the Predecessor
Companies shall promptly file, and Buyer shall cause Company to promptly file
appropriate registrations of alteration with their respective Legal Affairs
Offices (homukyoku). Buyer shall cause the directors of Company who hold such
offices on the date immediately prior to the Bunkatsu Day to resign from their
offices as of the Bunkatsu Day. Buyer shall be responsible for all liabilities
of Company incurred prior to the Bunkatsu Day.
(g) TRANSFER RESTRICTIONS. Until the Closing Date, neither Seller nor Buyer
may directly or indirectly give, sell, assign, transfer, mortgage, hypothecate,
bequeath, devise or otherwise transfer, or place in trust, create or permit an
Encumbrance to exist on or otherwise encumber or dispose of any Equity
Securities of Company held by such party.
(h) STOCK BUY BACK. If this Agreement is terminated after the Bunkatsu Day
for any reason, Buyer shall sell and deliver to Seller and Seller shall purchase
from Buyer all of the Equity Securities of Company held beneficially or of
record by Buyer at an aggregate purchase price equal to Buyer's paid in capital
of ten million (10,000,000) Japanese yen. Such purchase price shall be paid in
cash promptly after termination of this Agreement in immediately available funds
to an account designated by Buyer.
1.2 TRANSFER OF STOCK BY SELLER.
Subject to the terms and conditions of this Agreement and, in particular,
the completion of the Kaisha Bunkatsu in accordance with the NEC Separation
Agreement and in accordance with Section 1.1 hereof, Seller agrees to sell the
Stock and deliver the Stock to Buyer at the Closing by delivering the
certificates evidencing the Stock to Buyer and properly endorsing the
certificates for transfer to Buyer or its nominee and otherwise in a form
acceptable for transfer on the books of Company.
1.3 PURCHASE OF THE STOCK BY BUYER; PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, Buyer agrees to
acquire the Stock from the Predecessor Companies and Buyer agrees to pay an
aggregate amount equal to (i) (Y) 10.718 billion constituting the target net
asset value of Company (the "TARGET NET ASSET VALUE" plus (ii) (Y)10.08 billion
constituting the premium over such target net asset value (the "Premium") less
(iii) the amount of the Company's Unfunded Pension Liabilities as determined in
accordance with Schedule 4.4(b) (the sum of the Target Net Asset Value and the
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CONFIDENTIAL MATERIALS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
Premium less the Unfunded Pension Liabilities being the "Purchase Price"). At
the Closing, the Buyer shall pay to the Seller an amount (the "Initial
Purchase Price") in cash equal to the Purchase Price amount less **** (the
"Deferred Purchase Price"). The Initial Purchase Price shall be paid by wire
transfer of immediately available funds to an account designated by Seller
prior to the Closing. The paid up capital of the Company of (Y)10 million
(less all liabilities incurred by Company prior to the Bunkatsu Date) shall
be deducted from the Company's net asset value in determining the Initial
Purchase Price.
(b) Within sixty (60) days following the first anniversary of the date
on which the Purchase and Supply Agreement becomes effective (the year marked
by such anniversary being referred to as the "Measurement Year"), the Buyer
shall deliver to the Seller a notice setting forth, in Japanese yen, the
total revenues (the "Received Revenues") recognized by Buyer during the
Measurement Year pursuant to the Purchase and Supply Agreement in respect of
the manufacture of Products (excluding, for greater certainty, "New Products"
as defined therein) set forth in Schedule C to the Purchase and Supply
Agreement. In the event that the Received Revenues are less than or equal to
****, the Seller shall not be entitled to receive any portion of the Deferred
Purchase Price, the Seller's rights thereto shall be forever extinguished and
the Buyer shall be released from any obligations to make such payment or any
portion thereof. In the event that the Received Revenues are equal to or
greater than ****, the Seller shall be entitled to receive and Buyer shall be
required to pay the entire Deferred Purchase Price. In the event that the
Received Revenues are greater than **** but less than ****, the Seller shall
be entitled to receive a portion of the Deferred Purchase Price, determined
in accordance with the following formula, and the Seller's rights to receive
the balance of the Deferred Purchase Price and the Buyer's obligation to pay
the balance of the Deferred Purchase Price shall be forever extinguished,
cancelled and discharged:
(RECEIVED REVENUES - ***
Any amount payable to Seller as aforesaid shall be paid in immediately
available funds no later than the ninetieth (90th) day following the end
of the Measurement Year.
1.4 PURCHASE PRICE ADJUSTMENT.
(a) CLOSING DATE INITIAL PURCHASE PRICE ADJUSTMENT. Not less than five (5)
days prior to the Closing Date, Seller shall deliver to Buyer (i) an estimated
balance sheet of Company as of the Closing Date (the "Estimated Closing Date
Balance Sheet") prepared in good faith in accordance with GAAP consistently
applied (except to the extent that GAAP permits a deferred accrual of the
Unfunded Pension Liabilities) (including a good faith estimate of the net assets
of Company as of the Closing Date (adjusted to reverse the effect of purchase
accounting rules that require the value of assets to be written up to their fair
market value on the Bunkatsu Day on the determination of the book value of the
Transferred Assets and to include the full amount of the Unfunded Pension
Liabilities determined in accordance with Schedule 4.4(b)) (the "Estimated
Closing Date Net Assets"). The Estimated Closing Date Balance Sheet shall
reflect any dividends or other distributions declared on or prior to the Closing
Date and payable on or after the Closing Date to Seller. The Initial Purchase
Price payable on the Closing Date shall be adjusted yen for yen as follows: (i)
if the Estimated Closing Date Net Assets exceeds Target Net Asset Value less the
Unfunded Pension Liabilities, the Initial Purchase Price payable on the Closing
Date shall be increased by the amount of such excess, or (ii) if the Estimated
Closing
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Date Net Assets is less than the Target Net Asset Value less the Unfunded
Pension Liabilities, the Initial Purchase Price shall be decreased by
the amount of such deficit.
(b) POST CLOSING INITIAL PURCHASE PRICE ADJUSTMENT. The Initial Purchase
Price shall be subject to adjustment after the Closing Date according to this
Section 1.4(b).
(i) As soon as practicable, but in no event later than forty-five (45)
days after the Closing Date, Buyer shall prepare and shall deliver to Seller an
audited balance sheet of the Company as of the Closing Date (the "Final Closing
Date Balance Sheet"), including a calculation of the net assets of Company as of
the Closing Date adjusted to reverse the effect of purchase accounting rules
that require the value of assets to be written up to their fair market value on
the Bunkatsu Day on such calculation and to include the full amount of the
Unfunded Pension Liabilities determined in accordance with Schedule 4.4(b) (the
"Closing Date Net Assets"), together with a report thereon from an
internationally recognized firm of independent certified public accountants
reasonably satisfactory to Seller stating that the Final Closing Date Balance
Sheet fairly presents the value of the net assets of Company as of the Closing
Date prepared in accordance with GAAP applied consistently with the preparation
of the Estimated Closing Date Balance Sheet. In the event that Buyer fails to
timely deliver the Final Closing Date Balance Sheet for any reason whatsoever,
the Estimated Closing Date Balance Sheet shall be deemed to be and shall be
final, binding and conclusive on Buyer and Seller and the Initial Purchase Price
shall no longer be subject to adjustment.
(ii) Seller shall have a period commencing upon delivery of the Final
Closing Date Balance Sheet to Buyer and expiring thirty (30) business days after
such delivery date to review the Final Closing Date Balance Sheet. Seller and
Seller's independent certified public accountants ("Seller's Accountants") shall
have full access during regular business hours and upon reasonable notice to all
relevant books and records and employees of Company to the extent necessary to
complete their review of the Final Closing Date Balance Sheet. In the event
Seller disputes that the Closing Date Net Assets was determined in accordance
with GAAP consistently applied with the Estimated Closing Date Balance Sheet,
Seller shall, within thirty (30) business days after delivery of the Final
Closing Date Balance Sheet, deliver a notice to Buyer (the "Adjustment Dispute
Notice"), setting forth in reasonable detail the component or components which
are in dispute and the basis of such dispute. If the parties fail to resolve any
such dispute within thirty (30) business days after receipt by Buyer of the
Adjustment Dispute Notice, the parties shall submit the dispute to Deloitte
Touche Tohmatsu (the "Reviewing Accountant") to review the Closing Date Net
Assets set forth on the Final Closing Date Balance Sheet. Each party hereby
represents and warrants that neither party nor any of its Affiliates uses the
Reviewing Accountant as its accountant or has any material relationship
therewith. The parties shall make available to the Reviewing Accountant all work
papers and all other information and material in their possession relating to
the matters in the Adjustment Dispute Notice. The Reviewing Accountant's
authority shall be limited to determining whether the component or components of
Closing Date Net Assets set forth on the Final Closing Date Balance Sheet which
have been so disputed by the Seller were calculated in accordance with GAAP
consistently applied with the Estimated Closing Date Balance Sheet and, if
necessary, determining the adjustments required to such Closing Date Net Assets
to cause it to be calculated in accordance with GAAP consistently applied with
the Estimated Closing Date Balance Sheet. The Reviewing Accountant shall be
instructed by the parties to use its best efforts to deliver to
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the parties its determination as promptly as practicable after such submission
of the dispute to the Reviewing Accountant. The parties hereby expressly
agree that the determination of the Reviewing Accountant shall be considered
to be an award made in an arbitration proceeding and shall be final and binding
on the parties (absent fraud or manifest bad faith by the Reviewing
Accountant). The Closing Date Net Assets on the Final Closing Date Balance Sheet
as determined by Buyer (if not disputed), or as modified (if at all) by
agreement of Buyer and Seller or by decision of the Reviewing Accountant, shall
be the "Final Closing Date Net Assets". Each party shall bear its own expenses
and the fees and expenses of its own representatives and experts, including its
independent accountants, in connection with the preparation, review, dispute (if
any) and final determination of the Final Closing Date Net Assets. The parties
shall share equally in the costs, expenses and fees of the Reviewing Accountant.
(iii) Within five (5) days following determination of the Final
Closing Date Net Assets, the Initial Purchase Price shall be adjusted yen for
yen and payment shall become due as follows: (i) if the Final Closing Date Net
Assets exceeds the Estimated Closing Date Net Assets, the Initial Purchase Price
shall be increased by the amount of such excess and Buyer shall pay over such
excess to Seller in accordance with Section 1.4(b)(iv) below, or (ii) if the
Final Closing Date Net Assets is less than the Estimated Closing Date Net
Assets, the Initial Purchase Price shall be decreased by the amount of such
deficit and Seller shall pay over such deficit to Buyer in accordance with
Section 1.4(b)(iv) below.
(iv) The payment of any adjustment provided for in this Section 1.4(b)
shall be made by wire transfer of immediately available funds. Any such payment
shall also include interest on the amount of such payment, calculated at the
short term prime rate then offered by most Japanese city banks (toshi ginko) as
according to the most recent financial and economic statistics (kinyu keizai
toukei) reported by the Bank of Japan.
1.5 REPAYMENT OF INTERCOMPANY LOAN.
At the Closing, Buyer will, concurrently with paying the Initial
Purchase Price, cause the Company to repay in full all amounts due under the
Intercompany Loan, including all accrued interest thereon.
1.6 THE CLOSING.
(a) Subject to Section 1.6(b), the Closing shall take place on March 31,
2002, provided that the conditions in Article 5 have been satisfied or waived,
or on such later business day on or prior to September 30, 2002 as Seller and
Buyer may agree.
(b) In the event the Closing is scheduled to occur on a day in which banks
in Japan are not open for business, (i) at least fifteen (15) days prior to the
Closing Date, Buyer and Seller shall establish a joint account (RENMEI KOUZA) at
Deutsche Bank AG, Tokyo Branch (the "Joint Account Bank") in which funds may be
withdrawn only with the instructions of Buyer, NEC Corporation and the
Predecessor Companies (the "Joint Account"); (ii) on or prior to the first
business day preceding the scheduled Closing Date, Buyer shall deposit the
Initial Purchase Price and the amount required to repay the Intercompany Loan
(collectively, the "Deposit Amount") into the Joint Account to be held in escrow
until the Closing; and (iii) at the Closing,
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Buyer shall provide Seller with evidence reasonably satisfactory to Seller
that the conditions set forth in clause (ii) above have been satisfied, place an
appropriate corporate seal (GINKO-IN) (or if acceptable to the Joint Account
Bank, an authorized signature) on an irrevocable written instruction to the
Joint Account Bank to transfer on the first business day after the Closing Date
the Deposit Amount in the Joint Account to an account designated by Seller, and
deliver such written instruction to Seller. Buyer shall execute an assignment
(the "Assignment") of its interest in the Joint Account to Seller in form and
substance reasonably acceptable to both parties. Any interest accruing on the
Deposit Amount in the Joint Account shall belong to Buyer. Buyer and Seller
shall execute such documents and provide such information as may be reasonably
requested by the Joint Account Bank in order to establish the Joint Account and
consummate the transactions contemplated by this Section 1.6(b) and
Section 1.6(c).
(c) In the event that, notwithstanding the fact that Buyer has deposited
the Deposit Amount into the Joint Account pursuant to Section 1.6(b), the
Closing does not take place on the scheduled Closing Date, Seller shall place an
appropriate corporate seal (GINKO-IN) on an irrevocable written instruction to
the Joint Account Bank to transfer on the first business day after the scheduled
Closing Date the funds deposited in the Joint Account to an account designated
by Buyer, and deliver such written instruction to Buyer, on the scheduled
Closing Date. Seller shall execute an assignment of its interest in the Joint
Account to Buyer in form and substance reasonably acceptable to both parties.
Any interest accruing on the amount in the Joint Account shall belong to Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, warrants and agrees as of the date hereof and as of the
Closing Date (unless otherwise made as of a specific date) as follows:
2.1 ORGANIZATION, DIRECTORS, OFFICERS, RELATED MATTERS.
(a) As of the date hereof and the Closing Date, (i) each Seller is a
corporation duly organized and validly existing under the laws of Japan; and
(ii) each Seller has all necessary corporate power and authority to execute,
deliver and perform this Agreement and any related agreements to which it is a
party.
(b) Company is a corporation duly organized and validly existing under the
laws of Japan. Company has all necessary corporate power and authority to own
its properties and assets and to carry on the Transferred Business as currently
conducted by NEC Yamanashi, and NEC Miyagi. SCHEDULE 2.1 correctly lists the
current directors and executive officers of the Predecessor Companies as of the
date hereof.
2.2 STOCK.
At the Closing, Predecessor Companies shall own all of the outstanding
Stock beneficially and of record. Since the Bunkatsu Day, Company has not issued
any Equity Securities to any person. As of the Closing Date, the Stock is owned
free and clear of any Encumbrance. At the Closing, Buyer will acquire title to
and complete ownership of the Stock,
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free of any Encumbrance. The authorized capital stock of Company as of the
Closing Date consists of 1,120,800 shares of common stock, without par value, of
which 280,200 shares are issued and outstanding. There are no outstanding
Contracts or other rights to subscribe for or purchase, or contracts or other
obligations to issue or grant any rights to acquire, any Equity Securities of
Company, or to restructure or recapitalize Company. There are no outstanding
Contracts of Seller or Company to repurchase, redeem or otherwise acquire any
Equity Securities of Company. All Equity Securities of Company are duly
authorized, validly issued and outstanding and are fully paid and nonassessable.
The share certificates which will be delivered by the Seller to the Buyer at the
Closing shall be the sole, genuine and valid share certificates of the Company
representing Stock.
2.3 FINANCIAL STATEMENTS; DIVIDENDS; LIABILITIES.
(a) HISTORICAL FINANCIAL STATEMENTS. Seller has delivered to Buyer
unaudited selected balance sheet data for NEC Yamanashi and NEC Miyagi dated
September 30, 2001 and the selected cost of goods sold data for the six (6)
month period then ended (the "September 30, 2001 Financial Statements"). Except
as set forth in Schedule 2.3(a), such balance sheet and cost of goods sold data
have been prepared in conformity with GAAP applied on a basis consistent with
Seller's past practice (except for changes, if any, required by GAAP and
disclosed therein, and except for the absence of notes and normal recurring
adjustments).
(b) PRO FORMA PROJECTED FINANCIAL STATEMENTS. Seller has delivered to Buyer
certain unaudited PRO FORMA projected financial data, including selected cost of
goods data for NEC Yamanashi and NEC Miyagi for the six month period ended March
31, 2002 and the fiscal year ended March 31, 2003 relating to the Transferred
Business. The PRO FORMA Projected Financial Statements of the Transferred
Business for the fiscal year ended March 31, 2003 (the "PRO FORMA Projected
Financial Statements") have been prepared in good faith based on assumptions
made in good faith and which are reasonable in the Seller's opinion. The
preparation and content of the Pro Forma Projected Financial Statements have
been reviewed by General Manager, Planning Division, and Optical Networks
Operations Unit of NEC Corporation, for and on behalf of NEC Corporation.
(c) NO DIVIDENDS. Except as set forth in SCHEDULE 2.3(c), whether or not in
the ordinary course of business, there has not been, occurred or arisen any
declaration setting aside or payment of any dividend or other distribution
(whether in stock, property or any combination thereof) since September 30,
2001, in respect of any of the Equity Securities, NEC Yamanashi or NEC Miyagi
and since the Bunkatsu Day, in respect of Company.
(d) LIABILITIES. Company does not have any liabilities of the type required
to be reflected as liabilities on a balance sheet prepared in accordance with
GAAP, whether accrued, absolute, contingent or otherwise, except such
liabilities that (i) are reflected or disclosed in the financial statements
referred to in Section 2.3(a) or (b), (ii) were incurred after September 30,
2001 in the ordinary course of business of the Transferred Business by NEC
Yamanashi, NEC Miyagi or Company or are consented to by or approved by Buyer
pursuant to Section 4.3 hereof or are set forth in SCHEDULE 4.3 and reflected in
the Estimated Closing Date Balance Sheet or the Final Closing Date Balance
Sheet. Except as otherwise disclosed herein (including the Schedules hereto) or
the Estimated Closing Date Balance Sheet or Final Closing Date Balance
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Sheet, the Predecessor Companies do not have, and the Company will not have
on the Closing Date any other liabilities that are material to the Transferred
Business of the Company; provided that this representation and warranty shall
not apply to and there shall be no breach of this representation and warranty to
the extent that any such liability is either disclosed or is not required to be
disclosed or is a breach under the terms of another representation and warranty
in Article II of this Agreement which specifically addresses the subject matter
of such liability (which subject matters include, for illustration purposes, the
following: litigation; compliance with law; Permits; taxes; consents and
approvals; and Contracts).
2.4 LITIGATION.
Except as set forth in SCHEDULE 2.4, there are no Actions, judgements,
orders, writs, decrees, injunctions, proceedings or investigations pending or,
to Seller's Knowledge, threatened in writing, against Company or the Predecessor
Companies in respect of the Transferred Business, in, before, or by, any court
or governmental entity.
2.5 COMPLIANCE WITH LAW; PERMITS.
(a) Company has conducted its business in compliance in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority.
(b) As of the Closing Date, Company has all permits, governmental licenses,
registrations and approvals (collectively "Permits") necessary or required by
law or the rules and regulations of any governmental entity having jurisdiction
over Company to carry on the Transferred Business except where the failure to
obtain such Permit or Permits would not impede the operation of the Transferred
Business in any material respect. All of the Permits are in full force and
effect and no notice has been received by either of the Predecessor Companies,
by the Seller or by the Company relating to, and to Seller's Knowledge, no
grounds exist which would give rise to, termination, cancellation, withdrawal or
amendment of any such Permits. Each of the Predecessor Companies and the Company
is in material compliance with the terms and conditions of all such Permits.
(c) SCHEDULE 2.5(c) lists all Permits necessary or required by law or the
rules and regulations of any governmental entity having jurisdiction over
Company to carry on the Transferred Business except where the failure to obtain
such Permit or Permits would not impede the operation of the Transferred
Business in any material respect.
2.6 CONSENTS AND APPROVALS.
As of the date hereof and the Closing Date, except as set forth in SCHEDULE
2.6, the execution, delivery and performance of this Agreement and any related
agreements by Seller, and the transfer of the Transferred Business contemplated
to occur on or prior to the Closing Date pursuant to the NEC Separation
Agreement, will not require any consent, waiver, authorization or approval of,
or the making of any filing with or giving of notice to, any Person except for
any consents, waivers, authorizations or approvals which are not material to the
operation of the Transferred Business.
-10-
CONFIDENTIAL MATERIALS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
2.7 TAXES.
Except for that set forth in SCHEDULE 2.7 annexed hereto all tax returns
required to be filed by any Predecessor Company, or the Company have been filed
or will have been filed prior to the Closing Date, and all Taxes shown to be due
and payable on such tax returns have been or will have been paid when required
by law. Such tax returns and documents are materially correct and have been
prepared in accordance with applicable laws, and each of the Predecessor
Companies and the Company, as appropriate, has paid or challenged in each case
on a timely basis, all taxes, including fees and contributions. Each of the
Predecessor Companies and the Company, as appropriate, has withheld all taxes
required to have been withheld and paid in connection with the amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.
2.8 CONTRACTS.
SCHEDULE 2.8 lists each Contract related to the Transferred Business to
which Company will become a party or to which it or any of its properties is
subject or by which any thereof is bound that is deemed a Material Contract
under this Agreement. The following Contracts shall be deemed to be "Material
Contracts": any Contract that (a) obligates Company to pay more than **** in
any fiscal year or entitles Company to receive more than **** in any fiscal
year; (b) financing documents, loan agreements, capital leases or agreements
providing for the guaranty of such obligations of any party other than
Company in each case in excess of **** (c) is between Seller or any Affiliate
of Seller, on the one hand, and Company on the other hand; (d) upon the
consummation of the transactions contemplated by this Agreement requires a
payment arising or becoming due from Company to Seller, any Affiliate of
Seller or any other Person; or (e) involves a term of more than 12 months.
Neither Company nor Seller is in default in any material respect under, or in
violation in any material respect of, any Material Contract. True, correct
and complete copies of all of the Material Contracts have been made available
to Buyer. All such Material Contracts are legal, valid, binding and
enforceable against the Predecessor Companies and will, at the Closing, be
enforceable against the Company and are in full force and effect.
2.9 REAL AND PERSONAL PROPERTY.
(a) The Predecessor Companies have, and, effective on or before Closing,
Company will have title to or other right to use, free of Encumbrances, all
items of Real Property, including fees, leaseholds and all other interests in
real property, and such other assets and properties that are required for the
conduct of the Transferred Business, except for (a) Encumbrances that: (i)
secure the Intercompany Loan and will be discharged forthwith upon repayment of
the Intercompany Loan on Closing; (ii) are incidental to the conduct of the
Transferred Business and do not materially adversely detract from the value of
properties, rights or assets used in the conduct of the Transferred Business;
(iii) constitute statutory liens of landlords, carriers, warehousemen,
mechanics, repairman, workmen and materialmen and other liens imposed by law, in
each case in the ordinary course of business; (iv) are liens for taxes,
assessments, water or sewer rents or governmental charges or claims which are
not yet delinquent or can be paid without penalty or are being contested in good
faith and by appropriate proceedings; (v) are covenants, easements, rights of
ways, restrictions, encroachments and other
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imperfections or defects in title, in each case which do not interfere in
any material respect with the conduct of the Transferred Business as presently
conducted or result in a material diminution in value of such assets; or (vi)
are set forth on SCHEDULE 2.9, (collectively, "Permitted Encumbrances") and (b)
assets and properties not material to or required for the Transferred Business
that were disposed of since September 30, 2001 in the ordinary course of
business.
(b) The Predecessor Companies have maintained, and up to the Closing will
continue and Seller will cause the Company to continue to maintain, all such
assets in all material respects in accordance with good and prudent maintenance
practices. All buildings, structures, improvements and appurtenances situated on
the Real Property relating to the Transferred Business are in good operating
condition and in a state of good maintenance and repair except for routine
maintenance and repair and ordinary wear and tear, are adequate and suitable for
the purposes for which they are currently being used and, at Closing, the
Company will have adequate rights of ingress and egress for the operation of the
Transferred Business in the ordinary course. None of such buildings, structures,
improvements or appurtenances (or any equipment therein), nor the operation or
maintenance thereof, violates any restrictive covenant or encroaches on any
property owned by others in any material respect. Without limiting the
generality of the foregoing:
(i) no alteration, repair, improvement or other work has been ordered,
directed or requested in writing to be done or performed to or in respect of the
Real Property or to any of the plumbing, heating, elevating, water, drainage or
electrical systems, fixtures or works by any government agency with authority,
which alteration, repair, improvement or other work has not been completed, and
to Seller's Knowledge, no written notification having been given to it, or to
the Company of any such outstanding work being ordered, directed or requested,
other than those which have been complied with;
(ii) all accounts for work and services performed and materials placed
or furnished upon or in respect of the Real Property have been fully paid and
satisfied and no person is entitled to claim a lien against the Real Property,
or any part thereof, other than in respect of current accounts in respect of
which the payment due date has not yet passed and Permitted Encumbrances under
Section 2.9(a)(ii);
(iii) the Real Property is fully serviced, there are no outstanding
levies, charges or fees assessed against the Real Property by any public
authority (including development or improvement levies, charges or fees)
and there is nothing owing in respect of the Real Property to any municipality
or to any other commission or entity owning or operating a public utility for
water, gas, electrical power or energy, steam or hot water, or for the use
thereof, other than current accounts in respect of which the payment due date
has not yet passed and Permitted Encumbrances under Section 2.9(a)(iii); and
(iv) no part of the Real Property has been taken or expropriated by
any competent authority nor, to Seller's Knowledge, has any notice or proceeding
in respect thereof been given or commenced.
(c) Except as otherwise disclosed in Schedule 2.9(c), other than the
Yamanashi Property and the Miyagi Property, there are no other real properties
owned , leased, operated or
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used, now or in the past, by the Predecessor Companies for which liability
would result to the Company or Buyer under Environmental Law and none of the
properties described in Schedule 2.9(c) are or were used in connection with the
Transferred Business.
2.10 AUTHORIZATION; NO CONFLICTS.
The execution, delivery and performance of this Agreement and any related
agreements by Seller have been duly and validly authorized as of the date hereof
by all necessary corporate action on the part of Seller. As of the date hereof
and the Closing Date, this Agreement and any related agreements constitute the
legally valid and binding obligation of Seller, enforceable against Seller in
accordance with their respective terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or limiting creditors rights generally. Neither the execution
and delivery by Seller of this Agreement or any related agreements nor the
consummation of the transactions contemplated hereby or thereby violate any
provision of the organizational documents of any Seller, or Company or any law,
statute or regulation or any injunction, order or decree of any government
entity or court to which any Seller or Company is subject or any Material
Contract to which any Seller or Company is a party or by which it is bound nor
will they result in a creation of any Encumbrance upon any of the Shares or the
Transferred Assets.
2.11 INSURANCE.
SCHEDULE 2.11 lists all insurance policies which will be held by Company on
the Closing Date. All such insurance policies are and will remain until the
Closing Date, in full force and effect and neither any Seller nor the Company is
on or prior to the Closing Date in default under any such policy. Seller has
provided copies of all such insurance policies to Buyer.
2.12 LABOR MATTERS.
(a) Except as set forth in SCHEDULE 2.12(a), neither of the Predecessor
Companies is, and Company will not be, a party to any collective bargaining
agreement or any employment agreement or other agreement, plan or arrangement
providing for severance payments to any employee upon termination of employment
or which provide benefits upon a change in control of the Company. As of the
date hereof, there is no organized labor strike pending, or to the Seller's
Knowledge, threatened in writing against any of the Predecessor Companies,
Seller or the Company. There is no work stoppage, slow down or lockout pending
involving the general employee population at any of the facilities of the
Transferred Business or, to the Seller's Knowledge, threatened in writing
involving any one or more of Seller, the Predecessor Companies, the Transferred
Business or the Company.
(b) Except as set forth in Schedule 2.12(b) there are no claims pending or,
to Seller's Knowledge, threatened relating to the Affected Employees for
compensation for any injury, disability or illness resulting from their
employment.
(c) Schedule 2.12(c) contains the name, job title, current monthly gross
rate of pay and date and amount of last salary increase of each of the Affected
Employees as at November 30, 2001. All benefits, in cash or in kind, routinely
provided to the Affected Employees as at November 30, 2001 are also described in
Schedule 2.12(c). Except with respect
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to the number of Affected Employees since November 30, 2001, there has been
no material change to the information contained in Schedule 2.12(c) and the
information contained in Schedule 2.12(c) remains true and correct in all
material respects. The Predecessor Companies have been and, from and after the
Bunkatsu Day, the Company and the Predecessor Companies will be, in full
compliance with all statutory or regulatory requirements with respect to the
Affected Employees. There are no complaints, claims or charges outstanding, or,
to the Seller's Knowledge, anticipated, nor are there any orders, decisions,
judgments or convictions against or in respect of the Predecessor Companies, the
Company or Seller in connection with the Transferred Business or the Affected
Employees under any employment legislation. All required accruals for salaries
and benefits (including pension benefits) have been accurately reflected on the
books and records of the Predecessor Companies and the Company in respect of the
Transferred Business.
2.13 ENVIRONMENTAL
(a) Except as disclosed in Schedule 2.13 (a), to Seller's Knowledge, the
Predecessor Companies, Company and the Transferred Business are and at all
relevant times have been in compliance in all material respects with all
applicable laws, statutes, regulations, orders, codes, decrees, rules, rulings,
requirements, Environmental Permits (as defined below) and Special Governmental
Requests (as defined below) of any government, court or governmental authority
in each case relating to pollution, Hazardous Materials (as defined below),
protection of human health or safety or the environment (including, without
limitation, ambient air, surface water, groundwater or land surface) or
protection of worker health or safety (including, without limitation those that
may come into effect from time to time hereafter on or before the tenth
anniversary of the Closing Date) (collectively, "Environmental Laws"),
(including, without limitation all permits, registrations, approvals, consents,
filings or other authorizations whatsoever required under applicable
Environmental Laws ("Environmental Permits") and issued in connection with the
Transferred Business or any asset used in the operation thereof, all of which
issued Permits are listed in Schedule 2.13(a) under the heading "Environmental
Permits"). "Special Governmental Requests" shall mean written administrative
guidance and requests specifically addressed to the Company and guidelines, in
each case, which, if also specifically addressed to other comparable
manufacturing businesses in Japan, are generally followed or reasonably expected
to be generally followed by a reasonably significant number of such businesses.
(b) Except as disclosed in Schedule 2.13(b), to Seller's Knowledge, none of
the Seller, the Predecessor Companies, Company or any agent of any of them has
received any formal governmental or written third party complaint, notice of
violation, notice of investigation or notice of potential liability or other
notification or request pursuant to Environmental Laws or otherwise with respect
to matters relevant to the protection of the environment, Hazardous Materials,
protection of human (including worker) health or safety or pollution with regard
to the Transferred Business.
(c) Except as disclosed in Schedule 2.13(c), to Seller's Knowledge, there
are no governmental or administrative actions or requests or judicial
proceedings pending or threatened under any Environmental Laws to which Company,
the Predecessor Companies or (with respect to the Transferred Business) Seller
is named as a party or with respect to Company, the
-14-
Predecessor Companies or Seller, with respect to the Transferred Business,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, under any Environmental Law (pending or
threatened) with respect to Company, the Predecessor Companies or the
Transferred Business. To Seller's Knowledge, no conditions or circumstance exist
and no acts or omissions have occurred at, on, from, either of the Yamanashi
Property or the Miyagi Property or affecting either such Property, the Company,
the Predecessor Companies or the Transferred Business which could reasonably be
expected to result in any material investigation, lawsuit, arbitration or
regulatory suit or action alleging harm, injury or non-compliance with any
Environmental Laws, rules or regulations or requiring any cleanup or other
action with respect to the presence of, release of or liability relating to
Hazardous Materials.
(d) Except as disclosed in Schedule 2.13(d), to Seller's Knowledge, there
is no past or present action or condition with respect to Company, the
Predecessor Companies, or the Transferred Business that could reasonably form
the basis of a claim that such operations or facilities are not in compliance in
all material respects with applicable Environmental Laws.
(e) Except as disclosed in Schedule 2.13(e), to the Seller's Knowledge,
there has been no spill of, and there is not present except in compliance with
Environmental Law, any Hazardous Materials at, on, under, in or from either of
the Yamanashi Property or the Miyagi Property. Hazardous Materials means all
contaminants, pollutants, wastes, chemicals and other hazardous materials and
includes all materials and substances controlled or regulated under or by any
Environmental Law or with respect to which any liability may arise or be imposed
under any Environmental Law;
(f) Except as disclosed in Schedule 2.13(f), to the Seller's Knowledge,
there are and have been no polychlorinated biphyenyls ("PCBs"),
asbestos-containing materials, mercury, lead paint or painted surfaces,
underground or above ground storage tanks or wetlands, at, on, under, in or from
the Yamanashi Property or the Miyagi Property;
(g) Each of the Seller, the Predecessor Companies and the Company has
provided or made available to Buyer a copy of all documents, reports, studies,
and its data relevant to environmental or occupational health or safety matters
at or in connection with the Company, the Predecessor Companies or the
Transferred Business and have provided a description of all information with
respect to such matters to the extent such are in the possession of the Seller,
the Predecessor Companies or the Company;
(h) All wastes from the Transferred Business or otherwise generated by the
Predecessor Companies or the Company have been disposed of in accordance with
all Environmental Laws and all documents relating to the disposal of such wastes
currently in place, or in place at any time in the past and which Seller
currently has in its possession including the waste hauler, the disposal site
and the nature of the wastes hauled by and to the same have been provided or
made available to Buyer.
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2.14 ABSENCE OF CHANGES
Except as set forth in Schedule 2.14, since September 30, 2001, the
Predecessor Companies or the Company, as the case may be, have carried on the
Transferred Business in the ordinary course of business consistent with past
practices.
2.15 INVENTORY, MACHINERY AND EQUIPMENT.
(a) The September 30, 2001, Financial Statement accurately reflects the
value of the inventory determined in accordance with GAAP used by the
Predecessor Companies in the Transferred Business as of such date and represents
all of the inventory of the Transferred Business on such date.
(b) At the Closing Date, Company will have no Obsolete Material or Excess
Material (in each case, as defined in the Purchase and Supply Agreement) or
finished goods inventory.
(c) The Transferred Assets will include all machinery and equipment that is
necessary for the conduct by the Company of the Transferred Business.
2.16 NO OTHER REPRESENTATIONS OR WARRANTIES.
Seller has invited Buyer and Parent to perform, and Buyer and Parent have
performed certain due diligence and business investigations with respect to the
Predecessor Companies, with the intention that Buyer and Parent form their own
conclusions regarding the condition and value of the Predecessor Companies,
pursuant to the parties' express intention that the sale of the Stock be without
representation or warranty by Seller, express or implied, except as expressly
set forth herein and in any agreements, certificates, documents or instruments
delivered pursuant hereto. Each of Buyer and Parent has been given such access
to the premises, books, records and officers of Company and NEC Yamanashi and
NEC Miyagi and has had the opportunity to review such other data and other
information with respect to the business and properties of Company and NEC
Yamanashi and NEC Miyagi as each of Buyer and Parent has deemed necessary in its
sole judgment to evaluate the transactions with Seller contemplated by this
Agreement it being understood and agreed that such access and review and the
knowledge resulting therefrom should not be construed to amend, modify or
mitigate any of the representations and warranties contained herein or in any
agreements, certificates, documents or instruments delivered pursuant hereto
which remains in full force and effect in accordance with the terms thereof.
Except for the representations and warranties contained in this Article 2, none
of Seller, any Affiliate of Seller, or any other Person makes or has been
authorized to make any express or implied representation or warranty, and Seller
and its Affiliates hereby disclaim any express or implied representation or
warranty, whether by Seller or any of its Affiliates or any of their respective
officers, directors, employees, agents, stockholders, subsidiaries (direct or
indirect), partners, advisors, or representatives or any other Person, in
connection with the delivery or disclosure to Buyer, Parent or any of their
respective officers, directors, employees, agents, advisors or representatives
or any other Person of any documentation or other information regarding Seller
or Company. Without limiting the generality of the foregoing, except as
otherwise provided in Article 2 of this Agreement, Seller and its Affiliates
have not
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made, and shall not be deemed to have made, any representations or
warranties (i) in the Confidential Information Memorandum relating to the sale
of Company prepared by Deutsche Banc Alex. Xxxxx on behalf of Seller and
supplied to Buyer prior to the date hereof (the "Confidential Information
Memorandum"), (ii) in any presentation of the business of Company in connection
with the transactions contemplated hereby, whether written or oral, (iii) in any
financial projection or forecast relating to Company, or (iv) in any other
documents or information, whether written or oral, with respect to Company. No
statement contained in the Confidential Information Memorandum, or made in any
such presentation or contained in any such financial projection or forecast or
other documents or information shall be deemed a representation or warranty
hereunder or otherwise unless provided for in Section 2 of this Agreement. With
respect to any such projection or forecast delivered to Buyer, each of Buyer and
Parent acknowledges that (i) there are uncertainties inherent in attempting to
make such projections and forecasts, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it, and (iv) unless otherwise contemplated in this Agreement, it
shall have no claim against Seller with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents, warrants and agrees as follows as of the date hereof and
as of the Closing Date:
3.1 ORGANIZATION, DIRECTORS, OFFICERS, RELATED MATTERS.
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the Province of Ontario, Canada. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the Province of Ontario, Canada. Each of Buyer and Parent has the necessary
corporate power and authority to execute, deliver and perform this Agreement and
any related agreements to which it is a party.
3.2 LITIGATION.
There are no Actions, judgments, orders, writs, decrees, injunctions,
proceedings or investigations pending or, to Buyer's knowledge, overtly
threatened in writing, against Buyer or Parent at law, in equity or otherwise,
in, before, or by, any court or governmental agency or authority which could
reasonably be expected to prohibit or to have a material adverse effect on
Buyer's or Parent's ability to perform its obligations under this Agreement or
any related agreements and consummate the transactions contemplated hereby or
thereby.
3.3 CONSENTS AND APPROVALS.
Except as set forth in SCHEDULE 3.3, the execution, delivery and
performance of this Agreement and any related agreements by Buyer and Parent,
will not require any consent, waiver, authorization or approval of, or the
making of any filing with or giving of notice to, any Person, except for any
consents waivers, authorizations or approvals which are not material to the
operation of the Transferred Business.
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3.4 AUTHORIZATION; NO CONFLICTS.
The execution, delivery and performance of this Agreement and any related
agreements by Buyer and Parent have been duly and validly authorized by all
necessary corporate action on the part of Buyer and Parent. This Agreement and
any related agreements constitute the legal, valid and binding obligation of
Buyer and Parent, enforceable against such party in accordance with their
respective terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally. Neither the
execution and delivery by Buyer or Parent of this Agreement or any related
agreements nor consummation of the transactions contemplated hereby or thereby
will violate any material provision of the organizational documents of Buyer or
Parent or any law, statute or regulation or any injunction, order or decree of
any government entity or court to which Buyer or Parent is subject except to the
extent, in each case, that such a violation would not prohibit or materially
impair Buyer's or Parent's ability to perform its obligations under this
Agreement.
3.5 FINANCIAL CAPABILITY.
Buyer has access to sufficient funds to purchase the Stock and repay in
full all amounts due under the Intercompany Loan, on the terms and conditions
contained in this Agreement and will have such funds on the Closing Date.
3.6 COMPANY.
Buyer represents, warrants and agrees that (unless otherwise made as of a
specific date) as of the date hereof and the Bunkatsu Day:
(a) Company is a corporation duly organized and validly existing under the
laws of Japan and has all necessary corporate power and authority to own its
properties and assets and to carry on the Transferred Business;
(b) The authorized capital stock of Company consists of 800 shares of
common stock, without par value, of which 200 shares are issued and outstanding,
all of which are duly authorized and validly issued and are fully paid and
nonassessable; all of such Equity Securities of Company are owned by Buyer free
and clear of any Encumbrance, except as contemplated in this Agreement there are
no outstanding Contracts or other rights to subscribe for or purchase, or
contracts or other obligations to issue or grant any rights to acquire, any
Equity Securities of Company, or to restructure or recapitalize Company and
there are no outstanding Contracts of Company to repurchase, redeem or otherwise
acquire any Equity Securities of Company. At the Bunkatsu Day, if the Kaisha
Bunkatsu becomes effective, Seller will acquire title to and complete ownership
of the Stock, free of any Encumbrance;
(c) Whether or not in the ordinary course of business, there has not been,
occurred or arisen any declaration setting aside or payment of any dividend or
other distribution (whether in stock, property or any combination thereof) in
respect of any of the Equity Securities of Company;
-18-
(d) Company does not have any liabilities of any type whether accrued,
absolute, contingent or otherwise, other than up to 10 million yen of
liabilities arising from or in connection with the actions contemplated to be
taken by Company hereunder and under the NEC Separation Agreement;
(e) Company has complied in all material respects with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
having jurisdiction over Company. As of the Bunkatsu Day: (i) Company shall have
obtained all Permits listed in SCHEDULE 2.5(c); (ii) Company shall be in
material compliance with the terms and conditions of all such Permits; and (iii)
all such Permits shall be in full force and effect and no notice shall have been
received by Company relating to, and to Buyer's knowledge, no grounds exist
which would give rise to, termination, cancellation, withdrawal or amendment of
any such Permits; and
(f) Prior to the Bunkatsu Day, Company shall not have entered into any
agreement other than the NEC Separation Agreement and Company's business shall
have been limited to performing those acts necessary to (i) obtain the Permits
listed in Schedule 2.5(c), and (ii) to perform its obligations under Section 1.1
hereof.
Buyer agrees and acknowledges that Seller shall rely upon the
representations and warranties provided in this Section 3.6 where necessary to
support for representations and warranties it makes in Article II regarding the
Company which, by their terms, are dependent for their truth and accuracy on the
truth and accuracy of these representations and warranties.
ARTICLE IV
COVENANTS OF SELLER AND BUYER
4.1 ACCESS OF BUYER.
(a) Until the Closing, Seller shall cause NEC Yamanashi and NEC Miyagi, and
from and after the Bunkatsu Day, Seller shall cause Company to, authorize and
permit Buyer and its representatives (which term shall be deemed to include its
independent accountants, environmental consultants, occupational health and
safety consultants and its counsel) to have reasonable access during normal
business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of their respective businesses, to all
of their respective properties (other than NEC Yamanashi's facilities in Otsuki,
Japan), books and records and all other information with respect to the
Transferred Business as Buyer may from time to time reasonably request.
(b) In the event of the termination of this Agreement, Buyer shall promptly
deliver (without retaining any copies thereof) to Seller, or (at Buyer's option)
certify to Seller that it has destroyed, all documents, workpapers and other
material obtained by Buyer or on its behalf from Seller, Company, NEC Yamanashi
or NEC Miyagi, or from any of their respective advisors, agents, employees or
representatives as a result hereof or in connection with the matters
contemplated by this Agreement, and all documents, workpapers and other
materials prepared by Buyer or its advisors, agents, employees or
representatives in connection with the matters contemplated by this Agreement,
in each case whether so obtained or prepared before or after the execution
hereof. Buyer and Parent shall at all times prior to the Closing Date, and in
the event
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of termination of this Agreement, cause any information so obtained or
prepared to be kept confidential and will not use, or permit the use of, such
documents, workpapers and other materials in its business or in any other manner
or for any other purpose except as contemplated hereby. All information provided
to, obtained by or prepared by Buyer or Parent and their respective advisors,
agents, employees or representatives shall be held by Buyer and Parent in
accordance with and subject to the terms of the Confidentiality Agreement dated
July 21, 2000, between Parent and NEC Corporation (the "Confidentiality
Agreement").
4.2 ACCESS OF SELLER.
(a) Until the Closing, Buyer and Parent shall permit, and until the
Bunkatsu Day cause Company to permit, Seller and its representatives (which term
shall be deemed to include its independent accountants and counsel) to have
reasonable access during normal business hours, upon reasonable notice and in
such manner as will not unreasonably interfere with the conduct of their
respective businesses, to all of their respective properties, as Seller may from
time to time reasonably request.
(b) In the event of the termination of this Agreement, Seller shall
promptly deliver (without retaining any copies thereof) to Buyer, or (at Buyer's
option) certify to Buyer that it has destroyed, all documents, workpapers and
other material obtained by Seller or on its behalf from Buyer or Parent, or from
any of their respective advisors, agents, employees or representatives as a
result hereof or in connection with the matters contemplated by this Agreement,
and all documents, workpapers and other materials prepared by Seller or its
advisors, agents, employees or representatives in connection with the matters
contemplated by this Agreement, in each case whether so obtained or prepared
before or after the execution hereof. Seller shall at all times prior to the
Closing Date, and in the event of termination of this Agreement, cause any
information so obtained or prepared to be kept confidential and will not use, or
permit the use of, such documents, workpapers and other materials in its
business or in any other manner or for any other purpose except as contemplated
hereby.
4.3 CONDUCT OF BUSINESS.
Prior to the Closing and except as (i) otherwise expressly contemplated by
this Agreement, (ii) set forth on SCHEDULE 4.3, or (iii) consented to or
approved by Buyer, Seller covenants and agrees that Seller shall cause Company
(from and after the Bunkatsu Day), NEC Yamanashi and NEC Miyagi to operate their
respective businesses in the ordinary course consistent with past practices.
4.4 EMPLOYEE MATTERS.
(a) During the period commencing on the Bunkatsu Day and ending on the
Closing Date, Seller shall cause the Predecessor Companies, at no margin or
other additional cost to Company, to second the Affected Employees to Company.
Prior to the Closing Date, Seller shall use best efforts to obtain written
consent of each of the Affected Employees (two original copies, with one
delivered to Seller and the other delivered to Company) with respect to (i) the
transfer of employment as of the Closing Date from their respective Predecessor
Company to Company and (ii) the terms and conditions of their employment by
Company (the "New
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Employment Conditions"). Buyer shall reasonably cooperate with
Seller in obtaining such consent from each of the Affected Employee. Seller
shall also use its best efforts to ensure that no Affected Employee will make an
objection under Article 4 of the Law Concerning Succession of Employment
Contracts upon Corporate Separation. The New Employment Conditions shall be
determined by Buyer with Seller's approval, each party acting reasonably prior
to not less than 15 days before the scheduled Closing Date; provided, however,
that (1) the New Employment Conditions for each Transferred Employee shall be
substantially similar in the aggregate to those applicable to such Transferred
Employees in effect on the day immediately preceding the Closing Date,
including, without limitation, those relating to compensation and benefits
(except with respect to Pension Plans provided to Transferred Employees and
health benefits provided by Predecessor Companies and NEC Corporation), and (2)
the terms of the New Employment Conditions shall comply with SCHEDULE 4.4(a). In
the aggregate, the benefits provided by Company under Pension Plans for the
Transferred Employees after Closing will be substantially similar to those
applicable to Transferred Employees in effect on the day immediately preceding
the Closing Date. Buyer agrees to comply with the terms of the New Employment
Conditions for each Transferred Employee on the terms set forth in Schedule
4.4(a). Seller shall take all necessary procedures to transfer the Transferred
Employees to Company on the Closing Date. Buyer shall cause Company not to
terminate the employment of any Transferred Employee on the Closing Date.
Notwithstanding the foregoing, the New Employment Conditions shall be sufficient
to comply with the terms of any applicable law, collective bargaining agreement
or similar labour agreement or arrangement, if any, applicable to any
Transferred Employees. Buyer shall continue the seniority (based on years of
service) of each of the Transferred Employees (as if such employees had been
employed by Company since their individual dates of hire by Seller or its
Affiliates) whose employment is continued by Company and while they remain
employed by Company for the purposes of retirement benefit, pension, vacation,
sick leave and other time off policies. Notwithstanding anything to the contrary
herein, subject however to Section 4.4(c) below, Buyer shall not be obligated to
continue to employ any Transferred Employee after the Closing Date.
(b) Seller shall be responsible for all obligations and liabilities under
the Pension Plans and other employee benefits currently provided by NEC
Yamanashi and NEC Miyagi to their employees (any of which shall be referred to
as a "Benefit Plan") in respect of (i) each employee or former employee of
Company or of Seller or its Affiliates (including any beneficiary or dependent
thereof), if any, who is not a Transferred Employee and (ii) EPF. Seller shall
ensure that as of the Closing Date, EPF payments will be made in accordance with
terms and conditions applicable thereto with respect to the Transferred
Employees. The allocation of liability between and the respective obligations of
Seller and Buyer with respect to Pension Plans and the bonus payable to
Transferred Employees in June 2002 shall be as set out in Schedule 4.4(b).
(c) Buyer agrees that for a period of five years after the Closing Date
Buyer shall consult with Seller prior to laying-off or otherwise terminating the
employment of any significant number of employees of Company.
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4.5 RETENTION OF BOOKS AND RECORDS.
After the Closing Date, Buyer shall cause Company to retain all books,
records and other documents pertaining to the Transferred Business or the
Company in existence on the Closing Date and to make the same available after
the Closing Date for inspection and copying by Seller or its agents at Seller's
expense, upon reasonable request and upon reasonable notice, for a period of
three years after the Closing Date (or such longer period as may be required by
the Purchase and Supply Agreement). No such books, records or documents shall be
destroyed by Buyer or Company without first advising Seller in writing and
giving Seller a reasonable opportunity to obtain possession thereof.
4.6 COOPERATION IN AUDITS.
After the Closing, Buyer will cause Company to cooperate fully in an audit
by Seller's independent accountants of the financial statements of Company
through periods commencing before but ending on or prior to the Closing Date
Without limiting the foregoing, such cooperation shall include in providing
access to records and personnel and such access to the premises of Company as is
customary in an audit.
4.7 REGISTRATIONS, FILINGS AND CONSENTS.
Prior to the Closing, Seller and Buyer shall cooperate and use their
respective best efforts to make all registrations, filings and applications, to
give all notices and to obtain any governmental or other consents (including the
consent of unions to which employees of Company belong), transfers, approvals,
orders, qualifications and waivers necessary or desirable for the consummation
of the transactions contemplated hereby. In the event all such consents,
transfers, approvals, orders, qualifications or waivers are not obtained on or
prior to the Closing, to the extent permitted by applicable law, Seller, Buyer
and Parent shall take all reasonable action necessary in order to provide Buyer
and Company with the benefits of such consents, transfers, approvals, orders,
qualifications and waivers, and so long as Buyer and Company are provided such
benefits in all material respects, the conditions of Section 5.2(c) and 5.3(b)
shall be deemed satisfied.
4.8 TAXES.
Except as otherwise provided herein, Buyer shall be responsible for all
sales, use, gross receipts, registration, business and occupation, transfer,
stamp duty, securities transactions, real estate, and similar Taxes (excluding
income Taxes for greater certainty) and notarial fees assessed or payable in
connection with the transfer of the Stock the transfer of the Transferred Assets
from the Predecessor Companies to the Company, the issuance of stock by Company
contemplated hereby and other transactions contemplated hereby, regardless of
whether such taxes become due or payable on or after the Closing Date and shall
be responsible for interest, penalties and additions to Taxes related to such
Taxes; provided, however, that the Buyer and Seller shall be equally responsible
for, and pay in a timely manner for and on behalf of Company, any Real Property
Acquisition Tax (fudosan shutoku zei) and any Regulation Tax (toroku menkyo zei)
imposed on the transfer of real property in the Kaisha Bunkatsu.
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4.9 ENVIRONMENTAL INVESTIGATION
(a) At its sole cost and expense, Buyer will cause an environmental
investigation (the "Investigation") to be conducted by a consultant suggested by
Buyer and satisfactory to Seller, acting reasonably (it being agreed by Seller
that Xxxxxx Associates Ltd. and/or any of its Affiliates and/or Taisei
Corporation are satisfactory)(the "Consultant") in, on, under and, to the extent
reasonably practicable, about each of the Yamanashi Property and the Miyagi
Property (the "Properties") with a view to discovering and recording the
environmental condition of the Properties and of other lands to the extent
affected by activities on or in connection with the Properties (including,
without limitation, offsite waste disposal) as well as any violations of or
non-compliance with Environmental Laws relating to either of the Properties or
operations at or connected with the Properties occurring at or before the time
of Closing. The Consultant will execute a confidentiality agreement with respect
to any information received or produced in connection with its engagement
pursuant to this Agreement. The Investigation will commence as soon as possible
with the intention that the Investigation be completed on or before March 15,
2002. The Investigation will include the completion of a Phase I Environmental
Site Assessment process complying with ASTM Standard E1527-97, enhanced to
address asbestos and asbestos containing materials and wetlands issues, with
such changes as are necessary to accommodate the fact that the Properties are
located where they are in Japan, and a Phase II Environmental Site Assessment
designed to address, confirm and delineate all potential environmental
conditions identified in the said Phase I Environmental Site Assessment The
reports to be produced recording matters relevant to the Phase I and Phase II
Environmental Site Assessments (the "Reports") shall, among other things,
determine and set out the location, extent and concentration of each Hazardous
Material on or from each of the Properties. Each of Seller and Company will make
available to the Consultant all environmental information in its possession or
under its control (or which with reasonable efforts could be in the possession
or under the control) of the Seller and any of its Affiliates. Seller and
Seller's Affiliates will co-operate reasonably with Buyer in connection with the
conduct of the Investigation, including, without limitation, making personnel
reasonably available. The information set forth in the Reports will constitute
the Baseline Condition for the Properties. Buyer will provide a copy of the
Reports to the Seller promptly upon them becoming available. Each of Seller and
Buyer agree to keep the Reports confidential except that each party will be
entitled to provide copies of the Reports to its Affiliates and advisors subject
to their agreement to keep the Reports confidential. In addition, Buyer shall
have the right to deliver the Report to those investment dealers, lenders and
others providing financial or other services to or in connection with the Buyer
or any of its Affiliates and, on a basis reasonably preserving confidentiality,
to those included in acquiring or occupying all or part of either of the
Properties and either the Buyer or the Seller may use or provide the Reports as
is required by law, by securities regulatory authorities and exchanges or in
connection with any dispute relating hereto. The confidentiality provisions of
this paragraph shall survive the Closing or any termination of this Agreement.
Seller will be liable for all action required by Environmental Law to remediate
or otherwise prudently deal with any environmental conditions, violations of or
non-compliance with Environmental Law connected to either of the Properties
identified in the said Reports and will retain responsibility for those
conditions, violations and other non-compliances included or referred to in the
Baseline Condition to the extent required by Environmental Law. Seller shall
indemnify, protect and defend Buyer Indemnified Parties against and save and
hold Buyer Indemnified Parties harmless from all Losses incurred or suffered by
Buyer Indemnified Parties as a result of, based upon, in connection with or
arising
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from (i) the remediation of or prudent dealing with all such environmental
conditions, violations or non-compliances or (ii) Seller's failure to comply
with its obligations under this Section 4.9(a).
(b) Seller shall and shall cause its employees and agents, to and shall,
where appropriate, cause the Company and the Company's employees and agents to,
authorize and permit Buyer and its representatives (including environmental
consultants, occupational health and safety consultants and its counsel) to have
reasonable access during normal business hours, upon reasonable notice and in
such manner as will not unreasonably interfere with the conduct of the business
of Seller to all of their respective properties and shall provide all
authorizations and other documents reasonably requested by Buyer in connection
with the Investigation. Seller shall have the right to have a representative of
Seller accompany Buyer or its representatives (including environmental
consultants, occupational health and safety consultants and its counsel) while
they are on the Properties. In connection with the Investigation, Buyer shall
provide Seller with a proposed work plan for any proposed physical testing or
drilling on or beneath the Properties and Buyer will use reasonable efforts to
accommodate any reasonable concerns or objections of Seller. Buyer will
indemnify, defend and hold Seller and the Predecessor Companies harmless for,
from and against any and all material claims, damages, costs, liabilities and
losses (including mechanics' liens) solely to the extent caused by or arising
out of the conduct of the Investigation or any entry in connection therewith as
authorized under this Section 4.9 by Buyer or its representatives (including
environmental consultants, occupational health and safety consultants and its
counsel), and if this Agreement is terminated, Buyer will restore and repair any
material damages caused by the Investigation and said entry. The foregoing
indemnification shall survive the Closing or any termination of this Agreement.
(c) The Seller and Buyer agree that Buyer shall be entitled to prove the
existence of any environmental conditions of or relating to the Properties or of
other lands affected by activities on or in connection with the Properties
(including, without limitation, offsite waste disposal) as well as any
violations of or non-compliance with Environmental Laws relating to either of
the Properties or operations at or connected with the Properties occurring at or
before the time of Closing not otherwise in the Baseline Condition and the
Seller shall be liable for all actions required by Environmental Law to
remediate or otherwise prudently deal with any such environmental conditions,
violations or non-compliances. Seller shall indemnify, protect and defend Buyer
Indemnified Parties against and save and hold Buyer Indemnified Parties harmless
from (i) all Losses incurred or suffered as a result of, based upon, in
connection with or arising from any or all such environmental conditions,
violations or non-compliances to the extent required by Environmental Laws
except to the extent such environmental conditions, violations or
non-compliances result from the acts of Buyer, its Affiliates, or its or their
representatives, employees or agents, including, without limitation, the
Consultant or (ii) Seller's failure to comply with its obligations under this
Section 4.9(c).
(d) Seller's obligation under Sections 4.9(a) and (c) shall be governed by
the following:
(i) Buyer shall inform Seller as soon as practicable upon receipt of
any Special Governmental Request, and provide to Seller the right to participate
in all material meetings and hearings, and to receive copies of material
communications with the applicable
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government, court or governmental authority in connection with the
investigation, fact-finding, formulation, determination and remediation
(including without limitation the type, manner and scope of such remediation) of
any Special Governmental Request or proposed Special Governmental Request.
(ii) Seller shall indemnify Buyer Indemnified Parties for the cost to
remediate the condition on the Properties giving rise to the alleged Losses as
required by applicable Environmental Laws. Buyer shall select the environmental
consultant or agent (subject to Seller's consent not to be unreasonably
withheld) used for any environmental assessment and remediation work, and Seller
shall have the right, acting reasonably in good faith and on a timely basis (so
as to avoid the possibility of increased liability), to approve the remediation
plan required (including without limitation requiring that the work be completed
in the most cost-effective manner, provided such plan complies with applicable
Environmental Laws), and to monitor the environmental assessment and remediation
work.
(iii) In the event that any remediation of or prudent dealing with
environmental conditions, violations or non-compliances for which the Seller is
liable under Section 4.9(a) or (c) is not completed prior to Closing, Seller
shall have the right of access to the Properties after the Closing on reasonable
notice and at reasonable times for the purpose of confirming that the subject
environmental conditions, non-compliances or violations were existing on or
before the Closing (where such conditions, violations or non-compliances are not
reflected with the Baseline Condition, it being a agreed that any disagreement
between the parties on that issue will be dealt with in accordance with Section
8.14 hereof) and monitoring any remediation and ancillary work under this
Section 4.9. In such circumstances, representatives of Seller would, if required
by Company, be accompanied by a Company representative and Seller will be
subject to other reasonable conditions in connection with such access relating
to matters such as confidentiality, indemnity and insurance.
(iv) Buyer and Company shall as soon as reasonably practicable notify
Seller of any circumstances that may give rise to Seller's obligation to
indemnify or remediate in this Section 4.9.
(e) In addition to the foregoing, Seller shall have the right, but not the
obligation, to elect in writing to remediate or undertake preventative action
("Anticipatory Remediation") with respect to any environmental conditions that
Seller determines may give rise to Seller's obligation to indemnify or remediate
under this Section 4.9 even if such environmental conditions do not then
constitute a violation or non-compliance with Environmental Laws or are not
otherwise required to be remediated or dealt with under Environmental Laws, such
election to be made by notice to Buyer specifying the environmental conditions
to be subjected to Anticipatory Remediation (an "AR Notice"). If Seller so
elects to undertake such Anticipatory Remediation, Seller and Buyer (each acting
reasonably) shall jointly select the environmental consultant and contractors to
be used in connection therewith and create a plan for such Anticipatory
Remediation. In connection with such Anticipatory Remediation work, Seller shall
have the right to access the Properties after the Closing in accordance with
Section 4.9(d) (iii) above except as set out below. Under no circumstances shall
Seller's right to undertake Anticipatory Remediation be construed to expand
Seller's obligations under this Section 4.9, to impose upon Seller the duty to
undertake Anticipatory Remediation, or give rise to liability on
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the part of Seller for failing, or electing not, to undertake Anticipatory
Remediation; provided that if Seller delivers an AR Notice, Seller shall be
obligated to proceed with the Anticipatory Remediation to completion unless the
Buyer agrees otherwise, such agreement not to be unreasonably withheld.
(f) Seller's obligations to Buyer Indemnified Parties hereunder shall not
be assigned by Buyer Indemnified Parties (except to other wholly-owned
subsidiaries of Parent and their respective Affiliates, directors, officers,
employees, agents and assigns) and no person other than Buyer, Buyer Indemnified
Parties or their respective permitted assigns shall be entitled to make any
claims against Seller under this Section 4.9.
4.10 CHANGES IN PRO FORMA PROJECTED FINANCIAL STATEMENTS.
Seller will notify Buyer immediately of any change that would, in Seller's
judgement, exercised in good faith, require a material change to be made to the
PRO FORMA Projected Financial Statements applying the principles used in the
preparation of the PRO FORMA Projected Financial Statements and will immediately
prepare and, forthwith upon their preparation, provide a copy of such revised
Pro Forma Projected Financial Statements to Buyer. In any event, Seller will, no
later than 10 days before the Closing Date, deliver to Buyer updated Pro Forma
Projected Financial Statements dated not more than 16 days before the Closing
Date.
4.11 FUTURE BUSINESS.
On or before the 10th day preceding the Closing Date, Buyer shall deliver
to Seller its good faith estimate of the additional third party revenue that
Buyer believes, based on good faith assumptions which are reasonable in Buyer's
opinion, can be introduced within a specified time frame after the Closing into
the manufacturing facilities to be owned by the Company as a result of the NEC
Separation Agreement.
ARTICLE V
CONDITIONS OF PURCHASE
5.1 GENERAL CONDITIONS.
The obligations of the parties to effect the Closing shall be subject to
the following conditions unless waived in writing by both parties:
(a) NO ORDERS; LEGAL PROCEEDINGS. No Action shall have been instituted and
remain pending or threatened on the Closing Date before any court or
governmental entity pertaining to the acquisition by Buyer of the Stock or the
repayment of the Intercompany Loan, or the result of which could prevent or make
illegal the consummation of such acquisition or repayment.
(b) PHASE II ENVIRONMENTAL SITE ASSESSMENT. The Reports with respect to the
Properties contemplated in Section 4.9(a) shall have been completed and
delivered to Buyer and Seller.
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5.2 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF SELLER.
(i) Each of the representations and warranties of Seller contained in
this Agreement (A) which are qualified by materiality shall be true and (B)
which are not qualified by materiality shall be true in all material respects,
in each case when made and as of the Closing Date, with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except representations and warranties that are made as of a
specific date need be true or true in all material respects, as the case may be,
only as of such date); and
(ii) each of the covenants and agreements of Seller and the
Predecessor Companies in this Agreement and the Schedules hereto to be performed
on or prior to the Closing Date (A) which are qualified by materiality, shall
have been duly performed and (B) which are not qualified by materiality, shall
have been duly performed in all material respects.
(b) CORPORATE SEPARATION (KAISHA BUNKATSU) PROCEEDINGS. Seller shall have
taken all actions required to be taken by it to effect the Kaisha Bunkatsu in
accordance with the Corporate Separation Procedure of the Japanese Commercial
Code and the procedures set forth in the NEC Separation Agreement. The transfer
of the Transferred Business shall be properly registered (bunkatsu toki) with
the Legal Affairs Bureau (homukyoku).
(c) CONSENTS. Subject to Section 4.7, all required consents, waivers,
authorizations, and approvals of third parties disclosed on Schedule 2.6 shall
have been obtained or deemed obtained or no longer required pursuant to the
Corporate Separation Procedure of the Japanese Commercial Code.
(d) DELIVERIES. Seller and Company shall have executed and delivered to
Buyer (i) the Purchase and Supply Agreement, (ii) the Shared Services Agreement,
(iii) the Intellectual Property Agreement, (iv) all other related agreements
required to give effect to this transaction, (v) certified copies of all
documents evidencing the due incorporation, organization and authority of the
Seller, the Predecessor Companies and the Company to enter into this Agreement,
the agreements referred to above and all other agreements, documents and
instruments related thereto and to perform their respective obligations
thereunder in accordance with the terms thereof, including, without limitation,
certified copies of articles of incorporation, authorizing resolutions and
certificates of incumbency of the Seller, the Predecessor Companies and the
Company, (vi) copies of all required consents, registrations, approvals and
waivers obtained in connection with the transfer by the Predecessor Companies of
the Transferred Business to the Company and the completion by the Seller and the
Company of the transaction of purchase and sale contemplated hereby (including
without limitation the consents of all Transferred Employees provided in
accordance with Section 4.4(a)), (vii) if requested by Buyer in writing prior to
Closing, the resignations of the current directors of the Company; and (viii) a
legal opinion of counsel to the Seller and the Company substantially in the form
of Exhibit E annexed hereto.
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(e) NO MATERIAL CHANGE. There has not been any material adverse change in
the condition (financial or otherwise), assets, liabilities or business of the
Transferred Business; provided that general economic changes and/or changes
affecting generally an industry in which Company operates shall not be deemed to
result in a material adverse change for purposes hereof unless any such change
or changes disproportionately affect the Company or the Transferred Business.
(f) EMPLOYEE CONSENT. Seller shall have obtained the consent referred to in
Section 4.4(a) from a sufficient number (determined by Seller and Buyer acting
reasonably and in good faith) of the Affected Employees who are listed in
Schedule 2.12(c) and hold a position of manager (kacho) or higher.
5.3 CONDITIONS TO OBLIGATIONS OF SELLER.
The obligations of Seller to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by Seller:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF BUYER.
(i) Each of the representations and warranties of Buyer contained in
this Agreement (A) which are qualified by materiality, shall be true and (B)
which are not qualified by materiality, shall be true in all material respects
when made and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except representations and warranties that are made as of a specific date need
be true or true in all material respects, as the case may be, only as of such
date);
(ii) Each of the covenants and agreements of Buyer in this Agreement
and the Schedules hereto to be performed on or prior to the Closing Date (A)
which are qualified by materiality, shall have been duly performed and (B) which
are not qualified by materiality, shall have been duly performed in all material
respects.
(b) CONSENTS. Subject to Section 4.7, any required consents, waivers,
authorizations, and approvals of third parties disclosed on Schedule 2.6 and
Schedule 3.3 and shall have been obtained or deemed obtained or no longer
required pursuant to the Corporate Separation Procedure of the Japanese
Commercial Code; and
(c) DELIVERIES. Buyer, the Parent and Celestica AG (as applicable) shall
have executed and delivered to Seller (i) the Purchase and Supply Agreement,
(ii) the Shared Services Agreement, (iii) Intellectual Property Agreement, (iv)
all other related agreements required to give effect to this transaction, (v)
certified copies of all documents evidencing the due incorporation, organization
and authority of the Buyer and the Parent to enter into this Agreement, the
agreements referred to above and all other agreements, documents and instruments
related thereto and to perform their respective obligations thereunder in
accordance with the terms thereof, including, without limitation, certified
copies of articles of incorporation, by-laws, authorizing resolutions and
certificates of incumbency of the Buyer and the Parent, (vi) copies of all
required consents, registrations, approvals and waivers obtained in connection
with the completion by the Buyer of the transaction of purchase and sale
contemplated hereby and
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(vii) a legal opinion of counsel to the Buyer and Parent substantially in the
form of Exhibit E annexed hereto.
(d) CORPORATE SEPARATION (KAISHA BUNKATSU) PROCEDURE. Buyer shall have
taken all action required to be taken by it to effect the Kaisha Bunkatsu in
accordance with the Corporate Procedure of the Japanese Commercial Code and the
procedures set forth in the NEC Separation Agreement. Company shall have issued
shares of its capital stock in accordance with Section 1.1(e) hereof.
ARTICLE VI
TERMINATION OF OBLIGATIONS
6.1 TERMINATION OF AGREEMENT.
Anything herein to the contrary notwithstanding, this Agreement and the
transactions contemplated by this Agreement shall terminate if the Closing does
not occur on or before the close of business on September 30, 2002 unless
extended by mutual consent in writing of Buyer and Seller and otherwise may be
terminated at any time before the Closing as follows and in no other manner:
(a) MUTUAL CONSENT. By mutual consent in writing of Buyer and Seller.
(b) CONDITIONS TO BUYER'S PERFORMANCE NOT MET. By Buyer by written notice
to Seller if any event occurs or condition exists which would render impossible
the satisfaction of one or more conditions to the obligations of Buyer to
consummate the transactions contemplated by this Agreement as set forth in
Section 5.1 or 5.2.
(c) CONDITIONS TO SELLER'S PERFORMANCE NOT MET. By Seller by written notice
to Buyer if any event occurs or condition exists which would render impossible
the satisfaction of one or more conditions to the obligation of Seller to
consummate the transactions contemplated by this Agreement as set forth in
Section 5.1 or 5.3.
(d) MATERIAL BREACH. By Buyer or Seller if there has been a material
misrepresentation or other material breach by Buyer, in the case of termination
by Seller, or by Seller, in the case of termination by Buyer, in its
representations, warranties, and covenants set forth herein; PROVIDED, HOWEVER,
that if such breach is susceptible to cure, the breaching party shall have ten
business days after receipt of notice from the other party of its intention to
terminate this Agreement if such breach continues in which to cure such breach.
6.2 EFFECT OF TERMINATION.
If this Agreement shall be terminated pursuant to Section 6.1, except as
may otherwise be agreed in writing by the parties, all further obligations of
the parties under this Agreement shall terminate without further liability of
any party to another; provided that the obligations of the parties contained in
Section 1.1(h), Section 4.1(b), Section 4.2(b), the confidentiality provisions
in Section 4.9(a)(Confidentiality), this Section 6.2, and Section 8.12
(Expenses) shall survive any such termination.
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ARTICLE VII
INDEMNIFICATION
7.1 OBLIGATIONS OF SELLER.
Subject to Section 7.3 and 7.6, effective as of the Closing, Seller agrees
to indemnify and hold harmless Buyer, Parent, Company and their respective
Affiliates, directors, officers, employees, agents and assigns (each, a "Buyer
Indemnified Party") from and against any and all losses, liabilities, claims,
damages, judgements, costs and expenses (including reasonable attorney's fees)
actually incurred or suffered (collectively, "Losses") as a result of, or based
upon or arising from:
(i) the breach or inaccuracy of any of the representations and
warranties made by Seller in Article 2 of this Agreement;
(ii) any breach of any of the covenants made by Seller in this
Agreement; and
(iii) liabilities arising out of or in connection with any business
carried on or engaged in by Seller or its Affiliates at any time (whether on,
prior to or after the Closing Date) other than the Transferred Business;
(iv) liabilities arising out of or in connection with any claims based
on defects in the manufacturing or design of products by Seller or any of its
Affiliates prior to the Closing Date;
provided that Seller shall not be required to indemnify or hold harmless
any Buyer Indemnified Party for any such Losses to the extent the Purchase
Price has been adjusted pursuant to Section 1.4 in connection therewith.
7.2 INDEMNIFICATION OBLIGATIONS OF BUYER.
For a period commencing as of the Closing Date and (x) ending upon the
expiration of the period specified in Section 7.3 with respect to 7.2(i) and
Section 7.2(ii) and (y) continuing indefinitely with respect to Section
7.2(iii), Buyer shall indemnify Seller, its Affiliates and their respective
directors, officers, employees, agents and assigns from and against any Losses
as a result of, or based upon or arising from:
(i) the breach or inaccuracy of any of the representations and
warranties made by Buyer in Article 3 of this Agreement;
(ii) any breach of any of the covenants made by Buyer in this
Agreement; and
(iii) the ownership of Company (including without limitation the
operation of the Transferred Business and the payment of liabilities of the
Transferred Business assumed by Company and in respect of which Seller is not
required to indemnify Buyer Indemnified
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CONFIDENTIAL MATERIALS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
Parties pursuant hereto other than by reason of Sections 7.3 or 7.6) from and
after the Closing Date.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND ENVIRONMENTAL
INDEMNITY; KNOWLEDGE OF BREACH.
(a) Notwithstanding any otherwise applicable statute of limitations, the
representations and warranties included in Articles 2 and 3 shall survive the
Closing for a period of **** after the Closing Date except that (i) the
representations and warranties contained in Sections **** shall survive the
Closing and shall remain in full force and effect ****, (ii) the
representations and warranties contained in Section **** shall survive until
**** set forth in the applicable **** or until the **** within the period of
the relevant **** and (iii) the representations and warranties contained in
Sections **** and *** shall survive until the **** of the Closing Date. In
addition, the indemnity contained in Sections **** shall survive the Closing
only until the **** of the Closing Date. If a claim or notice is given under
Article 7 with respect to any representation or warranty or with respect to
the indemnity in Section **** prior to the applicable expiration date, such
representation or warranty and/or indemnity shall continue ****.
(b) No party hereto shall be deemed to have breached any representation,
warranty, or covenant if (i) such party shall have expressly notified the other
party hereto in writing, of the particulars of the breach of, or, such
representation, warranty or covenant, or such breach is expressly referred to in
any Schedules hereto and (ii) such other party has permitted the Closing to
occur, and, for purposes of this Agreement, is thereby deemed to have waived
such breach or inaccuracy; provided, however, that a disclosure pursuant to this
Section 7.3(b) shall not prejudice the rights of the parties pursuant to Article
6 hereof not to consummate the transactions contemplated by this Agreement.
7.4 PROCEDURES
For purposes of this Section 7.4, any party with an indemnification
obligation under this Article 7 or Section 4.9 shall be referred to herein as an
"Indemnifying Party" and any party entitled to indemnification under this
Article 7 shall be referred to as an "Indemnified Party". All claims for
indemnification by any Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 7.4. In the event that any written claim
or demand for which an Indemnifying Party would be liable to any Indemnified
Party hereunder is asserted against or sought to be collected from any
Indemnified Party by a third party, such Indemnified Party shall promptly, but
in no event more than 15 days following such Indemnified Party's receipt of such
claim or demand, notify the Indemnifying Party of such claim or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and demand)
(the "Claim Notice"). The Indemnifying Party shall have 30 days from the
personal delivery or receipt of the Claim Notice (the "Notice Period") to
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notify the Indemnified Party (a) whether or not the Indemnifying Party
disputes the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such claim or demand and (b) whether or not it desires
to defend the Indemnified Party against such claim or demand. All costs and
expenses incurred by the Indemnifying Party in defending such claim or demand
shall be a liability of, and shall be paid by, the Indemnifying Party, subject
to the limitations set forth in Section 7.6 hereof. In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to defend the Indemnified Party against such claim or demand and
except as hereinafter provided, the Indemnifying Party shall have the right to
defend the Indemnified Party (i) by appropriate proceedings and (ii) use or
retain counsel in connection with such defense that is reasonably acceptable to
the Indemnified Party. The Indemnified Party shall make available to the
Indemnifying Party all information reasonably available to such Indemnified
Party relating to such claim or demand. In addition, the Indemnified Party and
the Indemnifying Party shall render to each other such assistance as may
reasonably be requested in order to ensure the proper and adequate defense of
any such claim or demand, or to prosecute claims against third parties for
contribution or on other theories of recovery related to such claim or demand.
The party in charge of the defense shall keep the other party fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto. If any Indemnified Party desires to participate in, but not
control, any such defense or settlement it may do so at its sole cost and
expense. In the event that the Indemnifying Party does not elect to defend the
claim, the Indemnified Party shall not settle a claim or demand without the
consent of the Indemnifying Party (which consent will not be unreasonably
withheld). The Indemnifying Party shall not, without the prior written consent
of the Indemnified Party, settle, compromise or offer to settle or compromise
any such claim or demand (i) on a basis which would result in the imposition of
a consent order, injunction or decree which would restrict the future activity
or conduct of the Indemnified Party or any subsidiary or Affiliate thereof
without the written consent of the Indemnified Party (which consent will not be
unreasonably withheld) and (ii) without obtaining (a) a release with respect to
such claim or demand and (b) the dismissal with prejudice of any litigation or
other proceeding with respect to such claim or demand, in each case for the
benefit of and in form and substance reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party elects not to defend the Indemnified Party
against such claim or demand, whether by not giving the Indemnified Party timely
notice as provided above or otherwise, then the amount of any such claim or
demand, or, if the same be contested by the Indemnified Party, then that portion
thereof as to which such defense is unsuccessful (and the reasonable costs and
expenses pertaining to such defense) shall be the liability of the Indemnifying
Party hereunder, subject to the limitations set forth in Section 7.6 hereof. To
the extent the Indemnifying Party shall control or participate in the defense or
settlement of any third party claim or demand, the Indemnified Party will give
to the Indemnifying Party and its counsel access to, during normal business
hours, the relevant business records and other documents, and shall permit them
to consult with the employees and counsel of the Indemnified Party. The
Indemnified Party shall use its commercially reasonable best efforts in the
defense of all such claims.
7.5 ADJUSTMENTS TO LOSSES.
The amount of any Loss entitling a party to indemnification under this
Article 7 shall be reduced by (i) the amount of any insurance proceeds actually
recovered by the Indemnified Party for such Loss, net of all costs and expenses
incurred in collecting such
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CONFIDENTIAL MATERIALS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
insurance proceeds (including, without limitation, reasonable attorneys'
fees) and (ii) the net tax benefit realized by the Indemnified Party in
connection with the Loss as a result of any reduction in taxable income
resulting from the deduction of the Loss.
7.6 LIMITATION ON INDEMNIFICATION BY SELLER.
In no event shall Seller be liable to any Buyer Indemnified Party for
any indemnity claim under Section 7.1(i) or (ii) (except for claims made for
breaches of the representations and warranties in Sections **** or for
breaches of the covenants and indemnities in Sections **** and **** which in
each case shall not be subject to any threshold) unless and until all such
claims for which indemnification is recoverable hereunder by all Buyer
Indemnified Parties exceed in aggregate **** of the **** (the "Threshold");
at which xxxx Xxxxxx shall be liable for all Losses which are the subject of
such claims, including those within the Threshold.
Notwithstanding anything to the contrary herein, in no event shall
Seller be liable to Buyer Indemnified Parties for any claims made under
Section 7.1(i) or (ii) (except for claims made for breach of the
representations and warranties in Sections **** and the covenants in Sections
**** in an aggregate amount that exceeds **** of the ****. Any increase or
decrease to the **** pursuant to Section **** shall be deemed to have no
effect on the previous sentence.
7.7 LIMITATION ON INDEMNIFICATION BY BUYER
In no event shall Buyer be liable to Seller Indemnified Parties for any
indemnity claim under Section 7.2(i) or (ii) (except for claims under
Sections **** unless and until all such claims for which damage are
recoverable hereunder by Seller Indemnified Parties exceed the Threshold at
which time Buyer shall be liable for all Losses which are the subject of such
claims, including those within the Threshold. Notwithstanding anything to the
contrary herein, in no event shall Buyer be liable to Seller Indemnified
Parties for any claims made under Section 7.2(i) or (ii) (except for claims
under Sections **** in an aggregate amount that exceeds **** of the ****.
7.8 EXCLUSIVE REMEDY.
This Article 7 and Sections 4.9(a), (b) and (c) shall be the exclusive
remedies of the parties hereto for damages under this Agreement and shall be
deemed to preclude the exercise of any other rights and the pursuit of other
remedies (whether in contract, tort or otherwise) in damages for the breach (or
alleged breach) of any representation, warranty, covenant or agreement contained
herein or made pursuant hereto (excluding the Ancillary Agreements); provided,
however, that these exclusive remedies for damages will not be construed to
preclude a party from bringing an action for specific performance or other
equitable remedy to require the other parties to perform its or their
obligations under this Agreement.
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7.9 TREATMENT OF PAYMENTS.
All payments made pursuant to this Article 7 and Sections 4.9(a) and (c)
shall be treated as adjustments to the purchase price for the Stock.
Notwithstanding anything in this Agreement to the contrary, neither Buyer nor
Parent shall be indemnified or reimbursed for any tax consequences arising from
the receipt or accrual of an indemnity payment hereunder, including, without
limitation, any such consequences arising from adjustments to the basis of any
asset resulting from an adjustment to the Purchase Price, or any additional
Taxes resulting from any such basis adjustment.
ARTICLE VIII
MISCELLANEOUS
8.1 AMENDMENTS; WAIVERS.
This Agreement and any schedule or exhibit attached hereto may be amended
only by agreement in writing of all parties. No waiver of any provision nor
consent to any exception to the terms of this Agreement shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
8.2 SCHEDULES; EXHIBITS; INTEGRATION.
Each schedule and exhibit delivered pursuant to the terms of this Agreement
shall be in writing and shall constitute a part of this Agreement, although
schedules need not be attached to each copy of this Agreement. This Agreement,
together with such schedules and exhibits, and the Confidentiality Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements and understandings of the
parties in connection therewith. The inclusion of any matter in any schedule to
this Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation to which it may relate, but shall
expressly not be deemed to constitute an admission by Seller, or otherwise
imply, that any such matter is material for the purposes of this Agreement.
8.3 BEST EFFORTS; FURTHER ASSURANCES.
(a) COMMITMENT TO BEST EFFORTS. Subject to the rights of Seller or Buyer,
as the case may be, under Section 6.1, (i) each party hereto shall use its best
efforts to cause all conditions to its obligations hereunder to be timely
satisfied and to perform and fulfil all obligations on its part to be performed
and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be effected substantially in accordance
with its terms as soon as reasonably practicable, (ii) each party shall
cooperate with the other party in such actions and in securing all requisite
consents, and (iii) each party shall promptly execute and deliver such further
documents and take such other actions as may be necessary or appropriate to
consummate or implement the transactions contemplated hereby or to evidence such
events or matters.
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(b) LIMITATION. As used in this Agreement, the term "best efforts" shall
not mean efforts which require the performing party to do any act that is
commercially unreasonable under the circumstances, to make any capital
contribution or to expend any funds other than in payment of reasonable
out-of-pocket expenses incurred in satisfying obligations hereunder, including
but not limited to the fees, expenses and disbursements of its accountants,
actuaries, counsel and other professional advisors.
(c) DISCUSSION WITH THIRD PARTIES. Notwithstanding anything to the contrary
contained herein, Seller may discuss and/or negotiate the sale of all or a
portion of the Stock of Company, the equity of NEC Yamanashi or NEC Miyagi, or
the Transferred Business, on terms similar or different to those contained in
this Agreement with third parties at any time after Seller has lawfully
terminated this Agreement pursuant to Section 6.1(c) or Section 6.1(d).
8.4 GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of Japan, without regard to conflicts of law principles.
8.5 NO ASSIGNMENT.
Neither this Agreement nor any rights or obligations under it may be
assigned by either party, by operation of law or otherwise. Notwithstanding the
foregoing, Buyer may assign, delegate or otherwise transfer any or all of its
rights or obligations under this Agreement and each of the related agreements to
any other directly or indirectly wholly owned subsidiary of Celestica Inc.,
provided that (i) Buyer gives to Seller at least five (5) days' prior written
notice thereof, including details of such transfer and financial information of
the transferee; (ii) prior to such transfer, the transferee expressly assumes in
writing all obligations and liabilities of Buyer hereunder and under each of the
related agreements pursuant to an assumption document that is in form and
substance reasonably satisfactory to Seller; (iii) prior to such transfer, Buyer
executes and delivers to Seller an unconditional guarantee of all of the
transferee's obligations under this Agreement and each of the related agreements
in form and substance reasonably satisfactory to Seller; and (iv) such transfer
would not have adverse Tax consequences for Seller or its Affiliates. No such
transfer shall release Buyer from liability for any breach by any transferee.
8.6 HEADINGS.
The descriptive headings of the Articles, Sections and subsections of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
8.7 COUNTERPARTS.
This Agreement and any amendments hereto may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
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8.8 PUBLIC DISCLOSURE.
Each of the parties to this Agreement hereby agrees with the other parties
hereto that, except as may be required to comply with the requirements of
applicable law, no press release or similar public announcement or communication
will be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto.
8.9 NO CONSEQUENTIAL DAMAGES.
Notwithstanding anything to the contrary elsewhere in this Agreement, no
party (or its Affiliates) shall, in any event, be liable to the other party (or
any other Person) for any punitive, indirect or consequential damages,
including, but not limited to, lost profits, loss of revenue, cost of capital or
loss of business reputation or opportunity relating to the breach or alleged
breach of this Agreement.
8.10 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure to the benefit of each
party, and nothing in this Agreement, express or implied, is intended to confer
upon any other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement except for Sections 7.l and 7.2 (which are intended
to be for the benefit of the Persons provided for therein and may be enforced by
such Persons). Nothing in this Agreement is intended to relieve or discharge the
obligation of any third person to any party to this Agreement.
8.11 NOTICES.
Any notice or other communication hereunder must be given in writing and
(a) delivered in person, (b) transmitted by facsimile, (c) mailed by certified
or registered mail, postage prepaid, receipt requested, or (d) delivered by an
international courier service, receipt requested, as follows:
IF TO BUYER, ADDRESSED TO:
1325091 Ontario Inc.
00 Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Vice President and General Counsel
Facsimile: (000) 000-0000
WITH A COPY TO:
Celestica Inc.
00 Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Senior Vice President, Mergers and Acquisitions
Facsimile: (000) 000-0000
IF TO PARENT, ADDRESSED TO:
Celestica Inc.
00 Xxxxxxxx Xxxxx, 0xx Xxxxx
-00-
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Vice President and General Counsel
Facsimile: (000) 000-0000
WITH A COPY TO:
Celestica Inc.
00 Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Senior Vice President, Mergers and Acquisitions
Facsimile: (000) 000-0000
IF TO SELLER, ADDRESSED TO:
Xx. Xxxxxxxx Xxxxx
Chief Manager, Optical Network Planning Division,
Optical Network Operations Unit, NEC Networks, NEC Corporation
1753 Xxxxxxxxxxx, Xxxxxxxx-xx
Xxxxxxxx, Xxxxxxxx 000-0000, Xxxxx
Facsimile: 044-435-5455
WITH A COPY TO:
Mr. Kazuiki Watariya
Senior Manager, Business Strategy
Planning Division, NEC Networks, NEC Corporation
0-0, Xxxxx 0-xxxxx, Xxxxxx-xx
Xxxxx 000-0000, Xxxxx
Facsimile: 00-0000-0000
or to such other address or to such other Person as either party shall have
last designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by facsimile, when transmitted to
the applicable number so specified in (or pursuant to) this Section 8.11, (ii)
if given by mail, seven days after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid, (iii) if given by
courier, three days after such communication is delivered to the courier
service, addressed as aforesaid, or (iv) if given by any other means, when
actually received at such address.
8.12 EXPENSES AND ATTORNEYS FEES.
Seller, Buyer and Parent shall each pay their own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including but not limited to the fees, expenses and
disbursements of their respective investment bankers, accountants and counsel.
8.13 GOVERNING LANGUAGE.
This Agreement (except for the NEC Separation Agreement and certain
Schedules) is in the English language, which language shall be controlling in
all respects.
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8.14 DISPUTE RESOLUTION.
(a) All disputes that may arise under or in relation to this Agreement
between either party hereto, that cannot be resolved amicably between the
parties within thirty (30) days of written notice of such dispute, shall be
submitted to arbitration in Tokyo, Japan under the Commercial Arbitration Rules
of the Japan Commercial Arbitration Association (the "JCAA").
(b) The arbitral tribunal for any such arbitration shall be comprised of
three arbitrators. Each of the claimant and respondent shall nominate one
arbitrator (provided that Buyer and Parent shall together only be permitted to
nominate one arbitrator). If either party fails to nominate an arbitrator in
accordance with the Commercial Arbitration Rules of the JCAA, such arbitrator
shall be appointed by the JCAA. The two arbitrators so nominated shall nominate
the third arbitrator. If for any reason an arbitrator resigns, is removed or
otherwise is no longer serving on the arbitral tribunal, his or her replacement
must be nominated in accordance with the Commercial Arbitration Rules of the
JCAA by the party originally nominating him or her. Any failure by a party to
appoint such replacement shall cause the replacement arbitrator to be appointed
by the JCAA.
(c) Where any remedy at law or damages is inadequate for any particular
dispute, and without prejudice to the power of arbitrators to award any specific
performance or injunctive or similar equitable relief, any legal action for
specific performance or injunctive or similar equitable relief against either
party may be brought in any court of competent jurisdiction by either party.
(d) Neither the existence of any dispute, controversy or claim nor the fact
that any arbitration is pending thereunder shall relieve any party of its
respective obligations under this Agreement.
(e) Judgment upon awards or orders for enforcement may be entered by all
courts to which an award is presented.
(f) The unsuccessful party in an arbitration shall pay and discharge all
costs and expenses (including reasonable attorneys' fees) which are incurred by
the other party in enforcing this Agreement.
(g) Any arbitration under this Section 8.14 shall be conducted in English.
8.15 PARENT GUARANTY
(a) Parent hereby irrevocably and unconditionally agrees to guaranty to
Seller, jointly and severally with Buyer, the performance by Buyer of its
obligations under the terms of this Agreement, including but not limited to the
obligation to pay the Purchase Price and to repay the Intercompany Loan
hereunder. In the event that all or any portion of the obligations is paid or
performed by Buyer, the obligations of Parent hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment is rescinded or recovered directly or
indirectly from Seller as a preference, fraudulent transfer or otherwise, and
any such payment or performance that is rescinded or recovered shall also
constitute obligations.
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(b) Seller shall not be required to give any notice to, or make any demand
on, the Buyer or to proceed against the Buyer's assets prior to the performance
by the Parent of its obligations under this Section 8.15. The Parent agrees that
the Parent's obligations under this Section 8.15 will not be discharged except
by complete performance of all obligations set forth in this Agreement.
(c) Parent hereby agrees, in furtherance of the foregoing and not in
limitation of any other right which the Seller may have against the Parent by
virtue hereof, that upon the failure of Buyer to pay or perform any of the
obligations when and as the same shall become due hereunder, Parent will, upon
demand, pay, perform or cause to be paid or performed all obligations then due
as aforesaid.
(d) Parent agrees that it will not exercise any rights of indemnification
or subrogation which it may have under or by virtue of any contract or law
against the Buyer, as a result of or in relation to the performance of the
obligations of the Parent hereunder, unless and until the guarantied amounts
have been paid in full and all obligations have been performed in full.
(e) Parent agrees to pay, or cause to be paid, on demand, and to indemnify
Seller from and against liability for, any and all costs and expenses (including
reasonable fees and disbursements of counsel) incurred or expended by Seller in
connection with the enforcement of or preservation of any rights under this
Section 8.15.
(f) The rights, powers and remedies given to Seller by this Section 8.15
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Seller by virtue of any statute or rule of law. Any
forbearance or failure to exercise, and any delay by Seller in exercising, any
right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.
ARTICLE IX
DEFINITIONS
9.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly provided,
(a) the terms defined in this Article 9 have the meanings assigned to them
in this Article 9 and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings
assigned under GAAP;
(c) all references in this Agreement to designated "Articles," "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of the body of this Agreement;
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(d) pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms;
(e) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; and
(f) the use herein of the word "include" or "including", when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
As used in this Agreement and the Exhibits, Schedules or certificates
delivered pursuant to this Agreement, the following definitions shall apply.
"ACTION" means any action, suit or other legal proceeding, whether civil or
criminal, in law or in equity, before any court, arbitrator or governmental
entity.
"AFFECTED EMPLOYEES" means all the employees of NEC Corporation and the
Predecessor Companies who are employed in connection with the Transferred
Business.
"AFFILIATE" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person.
"AGREEMENT" means this Stock Purchase Agreement as amended or supplemented
together with all exhibits and schedules attached or incorporated by reference.
"ANCILLARY AGREEMENTS" means collectively, the Intellectual Property
Agreement, the Shared Services Agreement, the Purchase and Supply Agreement and
the NEC Separation Agreement.
"BUNKATSU DAY" means the day on which the Transferred Assets are
transferred to Company and the Stock is issued to the Predecessor Companies
pursuant to the NEC Separation Agreement.
"BUSINESS" means the business of the Predecessor Companies until the
consummation of the transactions contemplated by the NEC Separation Agreement,
and, thereafter, the business of Company.
"CLOSING" means the consummation of the purchase and sale of the Stock, and
the repayment of the Intercompany Loan and all interest accrued thereon, under
this Agreement.
"CLOSING DATE" means the date of the Closing.
"COMPANY" has the meaning set forth in the preamble to this Agreement.
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"CONTRACT" means any agreement, arrangement, bond, commitment, franchise,
indemnity, indenture, instrument or lease.
"CORPORATE SEPARATION PROCEDURE OF THE JAPANESE COMMERCIAL CODE" means the
provisions of the Commercial Code of Japan (Section 6-3, Articles 374-16 through
374-31) governing the Corporate Separation Procedure (kaisha bunkatsu).
"ENCUMBRANCE" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, option, pledge, rights of others, or other
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding or law, except for any restrictions
on transfer generally arising under any applicable securities law.
"EPF" shall mean the NEC employee pension fund (NEC Kousei Nenkin Kikin)
applicable to the Affected Employees, including the first additional pension
(Dai-Ichi Kasan Nenkin), the second additional pension (Dai-Ni Kasan Nenkin) and
the supplemental pension (Fuka Nenkin).
"EQUITY SECURITIES" means any capital stock or other equity interest or any
securities convertible into or exchangeable for capital stock or any other
rights, warrants or options to acquire any of the foregoing securities.
"GAAP" means generally accepted accounting principles in Japan, as in
effect from time to time.
"INTELLECTUAL PROPERTY AGREEMENT" means the intellectual property agreement
in form and substance substantially as set forth in Exhibit B.
"INTERCOMPANY LOAN" means that certain loan from NEC Corporation to Company
the terms and conditions of which are described in Schedule 9.1(C).
"KAISHA BUNKATSU" means corporate separation (kaisha bunkatsu) to be
carried out in accordance with the NEC Separation Agreement.
"KNOWLEDGE" with respect to Seller means the actual knowledge of the
following with respect to the relevant matter: Xxxxxxxx Xxxxxxx, President, NEC
Miyagi; Xxxxx Xxxx, Associate Senior Vice President, NEC Yamanashi; Xxxxx
Xxxxxxx, Associate Senior Vice President, NEC Miyagi; Xxxxx Xxxxx, Associate
Senior Vice President, NEC Miyagi; Kazuyuki Suzuki, Vice President, General
Administration, NEC Miyagi; Xxxxxxxx Xxxxxxxxx, Associate Senior Vice President,
NEC Yamanashi; Mitsuhiko Osanai, Manager, Planning Control Department, NEC
Miyagi; Xxxxxxxx Xxxxxxxx, General Manager, Planning Division, NEC Networks ,
NEC Corporation; Kazuiki Watariya, Senior Manager, Business Strategy, Planning
Division, NEC Networks, NEC Corporation; Xxxxxxx Xxxxx, Manager, Legal, Planning
Division, NEC Corporation; Kota Takemura, Legal Staff, Legal, Planning Division,
NEC Networks , NEC Corporation; Kenichi Inoue, Senior Manager, Controller and
Finance Division, NEC Networks, NEC Corporation; Xxxxxxxx Xxxxxxxxxx, Department
Manager, 2nd Department, Controller and Finance Division, NEC Networks, NEC
Corporation; Xxxxxxxx Xxxxxxxx, Senior Manager, 2nd Department, Controller and
Finance Division, NEC Networks, NEC Corporation; Xxxxxxxx Xxxxx, Chief Manager,
Optical Network Planning Division, Optical Network Operations Unit,
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NEC Networks, NEC Corporation; Xxxxxxxx Xxxxxx, Expert Engineer, Optical
Network Planning Division, Optical Network Operations Unit, NEC Networks, NEC
Corporation; Kenichi Sugamuta, Manager, Optical Network Planning Division,
Optical Networks Operations Unit, NEC Networks, NEC Corporation.
"LOSS" has the meaning set forth in Section 7.1.
"Miyagi Property" means the real property located at 0 Xxx-Xxxxxx Xxxxxxxx,
Xxxxx-xxx, Xxxxxxxx-xxx, Xxxxxx 981-3681 more particularly described in Schedule
9.1A.
"NEC SEPARATION AGREEMENT" means the separation agreement to be adopted by
the Predecessor Companies and the Company in form and substance substantially as
set forth in Exhibit A.
"PENSION PLAN" means any contract, plan, program, fund, policy or
arrangement for pension benefits/retirement benefits for employees or former
employees of a company and the beneficiaries and dependents of any such
employee, regardless of whether it is mandated under local law, private, funded,
unfunded, financed by the purchase of insurance, contributory or
non-contributory.
"PERMITTED ENCUMBRANCES" has the meaning ascribed thereto in Section 2.9.
"PERSON" means an association, a corporation, an individual, a partnership,
a trust or any other entity or organization, including a governmental entity.
"PREDECESSOR COMPANIES" means NEC Miyagi and NEC Yamanashi and "Predecessor
Company" refers to either of the Predecessor Companies.
"PURCHASE AND SUPPLY AGREEMENT" means the Purchase and Supply Agreement to
be entered into between Buyer and Seller in form and substance substantially as
set forth in Exhibit C.
"PURCHASE PRICE" has the meaning set forth in Section 1.2, as adjusted
pursuant to Section 1.3.
"R&D BUSINESS" means the research and development business of NEC Miyagi
that will not be transferred to the Company in connection with the transactions
contemplated by the NEC Separation Agreement.
"REAL PROPERTY" means the Miyagi Property and the Yamanashi Property.
"SHARED SERVICES AGREEMENT" means the services agreement to be entered into
between Buyer and Seller in form and substance substantially as set forth in
Exhibit D.
"STOCK" means the shares of capital stock of Company issued to Seller on or
after the Bunkatsu Day.
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"TAX" means any national, local or foreign income, sales, use, excise,
franchise, ad valorem, real and personal property, transfer, gross receipt,
stamp, premium, profits, windfall profits, capital stock, production, business
and occupation, or similar taxes imposed by any taxing authority, any interest
and penalties (civil or criminal), additions to tax, payments in lieu of taxes
or additional amounts related thereto or to the nonpayment thereof.
"TRANSFERRED ASSETS" means all assets of the Predecessor Companies which
are transferred to the Company as part of the NEC Separation Agreement.
"TRANSFERRED BUSINESS" means the Business excluding: (i) the R&D Business
and (ii) any assets or liabilities of the Business not contemplated as being
transferred to Company by the NEC Separation Agreement.
"TRANSFERRED EMPLOYEES" means the Affected Employees who have consented to
the transfer of employment pursuant to Section 4.4 and who will be transferred
to Company as of the Closing Date.
"UNFUNDED PENSION LIABILITIES" has the meaning set forth in Schedule 4.4(b)
to this Agreement.
"YAMANASHI PROPERTY" means the real property located at 843, Kobaranishi,
Yamanashi, Yamanashi-xxx 405-0006 more particularly described in Schedule 9.1B
(but excluding the real property listed in Table 2.14A of Schedule 2.14, and
including the real property listed in Table 2.14B of Schedule 2.14).
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officers as of the day and year first above
written.
BUYER: 1325091 ONTARIO INC.
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: Authorized Signatory
PARENT: CELESTICA INC.
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Senior Vice President,
Mergers and Acquisitions
SELLER:
NEC CORPORATION
By: /s/ Botaro Hirosaki
-------------------------------------
Name: Botaro Hirosaki
Title: Associate Senior Vice
President and
Executive General Manager,
Optical Network Unit
NEC YAMANASHI, LTD.
By: /s/ Xxxxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: President
NEC MIYAGI, LTD.
By: /s/ Xxxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: President
EXHIBITS
Exhibit A - NEC Separation Agreement
Exhibit B - Intellectual Property Agreement
Exhibit C - Purchase and Supply Agreement
Exhibit D - Shared Services Agreement
Exhibit E - Legal Opinion
