EXHIBIT 10.01
CONFIDENTIAL TREATMENT REQUESTED
NORTEL NETWORKS LIMITED
as Seller
and
FLEXTRONICS TELECOM SYSTEMS, LTD.
as Purchaser
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
June 29th, 2004
- --------------------------------------------------------------------------------
STIKEMAN ELLIOTT LLP
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions ................................................ 1
Section 1.2 Including .................................................. 31
Section 1.3 Material ................................................... 31
Section 1.4 Articles and Sections ...................................... 31
ARTICLE 2
PURCHASE AND SALE OF ASSETS: THE CLOSING
Section 2.1 Purchase and Sale .......................................... 31
Section 2.2 Assumed Liabilities ........................................ 36
Section 2.3 Purchase Price and Payment Procedures ...................... 39
Section 2.4 Adjustment of Purchase Price................................ 42
Section 2.5 The Closings ............................................... 45
Section 2.6 Personal Computers ......................................... 46
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 3.1 Organization and Corporate Power ........................... 48
Section 3.2 Authorization; Binding Effect; No Breach ................... 48
Section 3.3 Tax ........................................................ 49
Section 3.4 Litigation ................................................. 49
Section 3.5 Financial Capability ....................................... 49
Section 3.6 Purchaser's Employee Plans ................................. 50
Section 3.7 Labour Matters ............................................. 50
Section 3.8 Compliance with Laws ....................................... 50
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 4.1 Organization and Corporate Power ........................... 51
Section 4.2 Authorization; Binding Effect; No Breach ................... 51
Section 4.3 Financial Information ...................................... 52
Section 4.4 Title to Personal Property ................................. 52
Section 4.5 Absence of Certain Developments ............................ 52
Section 4.6 Compliance With Laws, Permits and Licenses ................. 53
Section 4.7 Tax Matters ................................................ 53
Section 4.8 Contracts and IS Software .................................. 54
Section 4.9 Intellectual Property Rights ............................... 56
Section 4.10 Litigation ................................................. 56
(i)
Execution Copy
Section 4.11 Employee Plans ............................................ 56
Section 4.12 Employee Matters .......................................... 57
Section 4.13 Residence ................................................. 59
Section 4.14 Insurance ................................................. 60
Section 4.15 Inventory ................................................. 60
Section 4.16 Environmental Matters ..................................... 60
Section 4.17 Equipment ................................................. 62
Section 4.18 Chateaudun Real Estate .................................... 62
Section 4.19 Sufficiency of Assets ..................................... 64
Section 4.20 No Other Purchase Agreements .............................. 64
Section 4.21 Government Assistance ..................................... 64
Section 4.22 Leased Equipment .......................................... 64
Section 4.23 Representations and Warranties ............................ 64
ARTICLE 5
COVENANTS AND OTHER AGREEMENTS
Section 5.1 General ................................................... 65
Section 5.2 Conduct of Operations ..................................... 68
Section 5.3 Access and Information .................................... 70
Section 5.4 Litigation Support ........................................ 71
Section 5.5 Record Retention; Post Closing Access ..................... 71
Section 5.6 Transaction Expenses; Filings and Certificates ............ 73
Section 5.7 Confidentiality ........................................... 75
Section 5.8 Forward Looking Information ............................... 75
Section 5.9 Necessary Consents ........................................ 75
Section 5.10 Maintain Insurance ........................................ 77
Section 5.11 Operations at the Chateaudun Facility ..................... 77
Section 5.12 Cooperation ............................................... 77
Section 5.13 Purchaser's Acquisition of Software ....................... 77
Section 5.14 Transferable Equipment .................................... 78
Section 5.15 Inventory Put Option ...................................... 79
Section 5.16 Equipment Put Option ...................................... 83
Section 5.17 Consignment Obligations ................................... 85
Section 5.18 Transition Expense Payment ................................ 86
Section 5.19 Operations at Chateaudun Facility ......................... 86
Section 5.20 GDNT Asset Sale Discussions ............................... 86
Section 5.21 Monkstown Incentive Grant ................................. 86
Section 5.22 VSHA Price Setting ........................................ 87
Section 5.23 Equipment at Third Party Locations ........................ 87
Section 5.24 CUCW Collective Labour Agreement .......................... 87
Section 5.25 Covenant Not to Sue ....................................... 88
Section 5.26 Post Closing Tax Liens .................................... 88
(ii)
Execution Copy
Section 5.27 Employer Payroll Contribution Reimbursement .................. 88
Section 5.28 Transfer of Assets to French Newco ........................... 89
Section 5.29 Reimbursement for French Accruals ............................ 91
Section 5.30 Restatement Adjustments ...................................... 91
Section 5.31 Mind ready Employees ......................................... 91
Section 5.32 Security Documentation ....................................... 93
Section 5.33 Facilities Licenses .......................................... 93
Section 5.34 Annual Incentive Bonus ....................................... 94
ARTICLE 6
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
Section 6.1 General ...................................................... 95
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival of Representations and Warranties ................... 96
Section 7.2 Indemnification Obligations of the Seller .................... 98
Section 7.3 Indemnification Obligations of the Purchaser ................. 99
Section 7.4 Limitations on Indemnification ............................... 101
Section 7.5 Defence of Third Party Actions ............................... 103
Section 7.6 Sole Remedy .................................................. 105
Section 7.7 Indemnification after Insurance and Other Recoveries ......... 105
Section 7.8 Termination of Indemnification ............................... 106
Section 7.9 Limitations on Losses ........................................ 106
Section 7.10 Characterization of Indemnity Payments ....................... 107
Section 7.11 Assignment of Claims ......................................... 107
ARTICLE 8
CONDITIONS TO THE CLOSING
Section 8.1 Conditions of the Purchaser's Obligation for Each Closing .... 107
Section 8.2 Conditions of the Seller's Obligation for Each Closing ....... 112
ARTICLE 9
MISCELLANEOUS
Section 9.1 Effectiveness of Agreement ................................... 116
Section 9.2 Termination .................................................. 116
Section 9.3 Rights on Termination ........................................ 117
Section 9.4 Set Off ...................................................... 118
Section 9.5 Remedies ..................................................... 118
Section 9.6 Consent to Amendments; Waivers ............................... 118
Section 9.7 Successors and Assigns ....................................... 119
(iii)
Execution Copy
Section 9.8 Governing Law; Submission to Jurisdiction ................. 119
Section 9.9 Waiver of Jury Trial; Limitation on Damages ............... 119
Section 9.10 Notices ................................................... 120
Section 9.11 Bulk Sales Waiver ......................................... 122
Section 9.12 Schedules and Exhibits .................................... 122
Section 9.13 Counterparts .............................................. 122
Section 9.14 Construction .............................................. 122
Section 9.15 Severability .............................................. 122
Section 9.16 No Third-Party Beneficiaries .............................. 122
Section 9.17 Currency .................................................. 123
Section 9.18 Headings .................................................. 123
Section 9.19 Entire Agreement .......................................... 123
Section 9.20 Seller References ......................................... 123
Section 9.21 Brokerage ................................................. 124
Section 9.22 Time of Essence ........................................... 124
Section 9.23 Judgment Currency ......................................... 124
Section 9.24 Further Assurances ........................................ 125
Section 9.25 English Language .......................................... 125
Section 9.26 Contra Proferentum ........................................ 125
Section 9.27 Expenses for Dispute Resolution ........................... 125
Section 9.28 Guarantee of Performance .................................. 126
ADDENDA
SCHEDULE 1.1 DESIGNATED SELLERS AND DESIGNATED PURCHASERS AND
FACILITY PURCHASE PRICES
SCHEDULE 1.1(33) COLLECTIVE LABOUR AGREEMENTS
SCHEDULE 1.1(37) CONTRACTS
SCHEDULE 1.1(44) DESIGN EMPLOYEES
SCHEDULE 1.1(57) END OF LIFE INVENTORY
SCHEDULE 1.1(63) EQUIPMENT THAT THIRD PARTY LOCATIONS
SCHEDULE 1.1(113) INVENTORY
SCHEDULE 1.1(118) IS SOFTWARE
SCHEDULE 1.1(122) KEY EMPLOYEES
SCHEDULE 1.1(123)(i) SELLER'S "KNOWLEDGE" LIST
SCHEDULE 1.1(123)(ii) PURCHASER'S "KNOWLEDGE" LIST
SCHEDULE 1.1(124) LAW
SCHEDULE 1.1(125) LEASED EQUIPMENT
SCHEDULE 1.1(133) LOGISTICS EMPLOYEES
SCHEDULE 1.1(173) PERMITTED ENCUMBRANCES
SCHEDULE 1.1(199) REPAIR EMPLOYEES
SCHEDULE 1.1(200) REPAIR INVENTORY
(iv)
Execution Copy
SCHEDULE 2.1(1)(d) OWNED EQUIPMENT
SCHEDULE 2.1(1)(l) OPERATING PERMITS
SCHEDULE 2.1(1)(n) SECURITY DEPOSITS
SCHEDULE 2.1(1)(q) PREPAID EXPENSES
SCHEDULE 2.1(2)(p) OTHER EXCLUDED ASSETS
SCHEDULE 2.3(2) CASH FLOW PAYMENTS
SCHEDULE 2.6 LIST OF PCs AND ANCILLARY EQUIPMENT TO BE
TRANSFERRED
SCHEDULE 3.2(2) PURCHASER'S CONFLICTS EXCEPTIONS
SCHEDULE 3.6 PURCHASER'S EMPLOYEE PLANS AND ACTIONS
SCHEDULE 4.1(3) NORTEL SUBSIDIARIES CONDUCTING OPERATIONS
SCHEDULE 4.2(2) SELLER'S CONFLICTS EXCEPTIONS
SCHEDULE 4.3 FINANCIAL INFORMATION
SCHEDULE 4.5 ABSENCE OF CERTAIN DEVELOPMENTS
SCHEDULE 4.6 COMPLIANCE WITH LAWS, PERMITS AND LICENSES
EXCEPTIONS
SCHEDULE 4.8 CONTRACTS EXCEPTIONS
SCHEDULE 4.8(9) OTHER THIRD PARTY PAYMENT EXCEPTIONS
SCHEDULE 4.8(10) COMPANY-WIDE CONTRACTS RIGHTS OR LICENSES
SCHEDULE 4.9(1) OTHER INTELLECTUAL PROPERTY
AGREEMENTS/ OBLIGATIONS
SCHEDULE 4.9(2) INTELLECTUAL PROPERTY RIGHTS CLAIMS
EXCEPTIONS
SCHEDULE 4.9(3) INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT
EXCEPTIONS
SCHEDULE 4.10 LITIGATION
SCHEDULE 4.11(1) SELLER'S EMPLOYEE PLANS
SCHEDULE 4.11(2) COMPENSATION AND BENEFIT CLAIMS
SCHEDULE 4.12(1) EMPLOYEES
SCHEDULE 4.12(2) WORK STOPPAGES
SCHEDULE 4.12(3) COMPLIANCE WITH EMPLOYMENT LAW
EXCEPTION
SCHEDULE 4.12(4) LEAVE EMPLOYEES
SCHEDULE 4.12(5) LONG-TERM DISABILITY LEAVE EMPLOYEES
SCHEDULE 4.12(6) LABOUR RELATIONS EXCEPTIONS
SCHEDULE 4.12(7) VISA EMPLOYEES
SCHEDULE 4.12(8) WORKERS' COMPENSATION LAW EXCEPTIONS
SCHEDULE 4.12(9) EMPLOYEE ACCRUED AND UNUSED VACATION
SCHEDULE 4.12(10) DESIGN EMPLOYEES, REPAIR EMPLOYEES AND
LOGISTICS EMPLOYEES
SCHEDULE 4.12(11) COLLECTIVE LABOUR AGREEMENT
(v)
Execution Copy
SCHEDULE 4.12(13) U.S. EMPLOYEE JOB-RELATED FELONY CONVICTIONS
SCHEDULE 4.15 INVENTORY EXCEPTIONS
SCHEDULE 4.15(1) INVENTORY FORECAST
SCHEDULE 4.16 ENVIRONMENTAL MATTERS
SCHEDULE 4.17 EQUIPMENT EXCEPTIONS
SCHEDULE 4.18 REAL ESTATE EXCEPTIONS
SCHEDULE 4.19 SUFFICIENCY OF EMPLOYEES EXCEPTION
SCHEDULE 4.20 OTHER PURCHASE AGREEMENTS
SCHEDULE 4.21 GOVERNMENT ASSISTANCE PROGRAMS
SCHEDULE 5.1(2) FILINGS AND APPROVALS
SCHEDULE 5.2 OPERATION OF BUSINESS EXCEPTION
EXHIBIT A AMENDED AND RESTATED MASTER CONTRACT
MANUFACTURING SERVICES AGREEMENT
EXHIBIT B SHARED SERVICES AGREEMENT
EXHIBIT C REAL PROPERTY LEASE
EXHIBIT D EMPLOYMENT PROVISIONS
EXHIBIT D-1 EMPLOYMENT PROVISIONS FOR UNITED KINGDOM
EMPLOYEES ("UK EMPLOYEES")
EXHIBIT D-1A UK SEVERANCE
EXHIBIT D-1B ACTUARIES LETTER
EXHIBIT D-2 EMPLOYMENT PROVISIONS FOR FRANCE
EMPLOYEES
EXHIBIT D-3 EMPLOYMENT PROVISIONS FOR ALBERTA AND
ONTARIO EMPLOYEES
EXHIBIT D-3A TERMS AND CONDITIONS OF EMPLOYMENT OF
ALBERTA AND ONTARIO EMPLOYEES
EXHIBIT D-3B FORM OF EMPLOYMENT OFFER, ALBERTA AND
ONTARIO And FORM OF EMPLOYMENT OFFER
(ALBERTA AND ONTARIO), LEAVE EMPLOYEES
EXHIBIT D-4 PENSION AND RETIREMENT BENEFITS AGREEMENT
("PRBA")
EXHIBIT D-4A SELLER'S PENSION AND RETIREMENT BENEFITS
PLANS
EXHIBIT D-4B BENEFIT CHANGES AND INTRODUCTIONS UNDER
SELLER'S PENSION AND RETIREMENT BENEFITS
PLANS
EXHIBIT D-4C PURCHASER'S PENSION AND RETIREMENT
BENEFITS PLANS
EXHIBIT D-4D POST-RETIREMENT BENEFIT COST FACTORS
EXHIBIT D-5 QUEBEC EMPLOYMENT PROVISIONS
(vi)
Execution Copy
EXHIBIT D-5A TERMS AND CONDITIONS OF EMPLOYMENT OF
QUEBEC EMPLOYMENT (NON-UNION )
EXHIBIT D-5B FORMS OF QUEBEC EMPLOYMENT NOTICES
EXHIBIT D-5C QUEBEC RECALL EMPLOYEES
EXHIBIT D-5D PURCHASER STOCK OPTION GRANTS
EXHIBIT D-8 INTENTIONALLY DELETED
EXHIBIT D-8A INTENTIONALLY DELETED
EXHIBIT D-9 EMPLOYMENT PROVISIONS FOR UNITED STATES
EMPLOYEES
EXHIBIT D-9A TERMS AND CONDITIONS OF EMPLOYMENT OF
UNITED STATES EMPLOYEES
EXHIBIT D-9B FORM OF U.S. EMPLOYMENT OFFER
EXHIBIT E LOCAL SALE AGREEMENTS
EXHIBIT F NORTEL PROPRIETARY SOFTWARE LICENSE
AGREEMENT
EXHIBIT G REPAIR SERVICES AGREEMENT
EXHIBIT H INTENTIONALLY DELETED
EXHIBIT I INTENTIONALLY DELETED
EXHIBIT J INTENTIONALLY DELETED
EXHIBIT K LICENCES OF SPACE
EXHIBIT L INTENTIONALLY DELETED
EXHIBIT M LOGISTICS SERVICES AGREEMENT
EXHIBIT N INTENTIONALLY DELETED
EXHIBIT O FORM OF PROMISSORY NOTE
(vii)
Execution Copy
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is dated as of June
29, 2004, by and among Flextronics Telecom Systems, Ltd., a Mauritius
corporation ("PURCHASER"), Flextronics International Ltd., a Singapore
corporation acting through its Hong Kong office (the "GUARANTOR") and Nortel
Networks Limited, a Canadian corporation ("SELLER").
WHEREAS each of the companies listed in Schedule 1.1 as a Designated
Seller is a direct or indirect Affiliate (as defined below ) of the Seller
(the "DESIGNATED SELLERS");
WHEREAS each of the companies listed in Schedule 1.1 as a Designated
Purchaser is a direct or indirect Affiliate (as defined below ) of the
Purchaser (the "DESIGNATED PURCHASERS");
WHEREAS the Purchaser is, directly or indirectly, a wholly-owned
Affiliate of the Guarantor;
WHEREAS with a view to selling the Operations (as defined below ) to
the Purchaser and, in connection with the Amended and Restated Master
Contract Manufacturing Services Agreement (as defined below ), the Seller has
agreed to sell, or cause the Designated Sellers to sell, and the Purchaser has
agreed to purchase, or cause the Designated Purchasers to purchase, as the case
may be, the Assets (as defined below ) upon the terms and conditions
hereinafter set forth; and
WHEREAS the Designated Sellers have agreed to the various terms of this
Agreement, the Amended and Restated Master Contract Manufacturing Services
Agreement, and the other Transaction Documents (as defined below ) in order
to focus on their core capabilities required to deliver converged networks
while meeting their time-to-market, quality and cost-reduction objectives.
NOW, THEREFORE, in consideration of the respective covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the Parties (as defined below) agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS
For the purposes of this Agreement, the following terms have the
meanings set forth below :
Execution Copy
- 2 -
(1) "ACTION" means any litigation, action, suit, grievance, claim,
written complaint or demand, assessment, charge, arbitration, audit,
investigation, or other legal, administrative or judicial proceeding.
(2) "ADJUSTMENT REQUEST" shall have the meaning set forth in Section
2.4(3).
(3) "AFFILIATE" means, as to any Person, any other Person that directly
or indirectly Controls, or is under common Control with, or is
Controlled by, such Person.
(4) "AGGREGATE ASSET AMOUNT" means the aggregate amount shown as the "
AGGREGATE ASSET AMOUNT" on the Closing Statement of Assets and
Liabilities.
(5) "AGREEMENT" means this asset purchase agreement and all schedules and
exhibits attached hereto.
(6) "ALBERTA AND ONTARIO EMPLOYMENT OFFER" has the meaning set forth in
Exhibit D-3.
(7) "ALBERTA AND ONTARIO TRANSFERRING EMPLOYEE" has the meaning set forth
in Exhibit D-3.
(8) "ALBERTA AND ONTARIO VISA EMPLOYEE" has the meaning set forth in
Exhibit D-3.
(9) "ALBERTA EMPLOYEE" has the meaning set forth in Exhibit D-3.
(10) "AMENDED AND RESTATED MASTER CONTRACT MANUFACTURING SERVICES AGREEMENT"
means the revised Master Contract Manufacturing Services Agreement
between the Seller and the Purchaser to be executed on the first
Closing Date related to the Purchaser manufacturing the Products for,
and providing the Services to, the Seller, in the form attached hereto
as Exhibit A.
(11) "ANTITRUST APPROVALS" has the meaning set forth in Section 5.1(2).
(12) "APPLICABLE NOTICE DATE" has the meaning set forth in Section
7.1.
(13) "ASSETS" has the meaning set forth in Section 2.1(1).
(14) "ASSUMED CONTRACTS" means those Contracts which are identified on
Schedule 1.1(37) as Contracts that the Seller, or applicable
Designated Seller, as the case may be, shall assign to the Purchaser,
or applicable Designated Purchaser, as the case may be, at the
applicable Closing.
(15) "ASSUMED LIABILITIES" has the meaning set forth in Section 2.2.
Execution Copy
- 3 -
(16) "ATES" means the Association of Telecom Engineers and Scientists.
(17) "BONEPILE INVENTORY" refers to inventory (including applicable labour
and overhead and other capitalized costs, if any) that is found (a) to
be defective or otherwise does not conform to the applicable
specifications (commonly known in the industry as "bonepile" ), and
(b) with assembly dates less than ninety (90) days prior to the
Applicable Closing Date, all of which is listed and located at the
locations referred to on Schedule 1.1(113).
(18) "BONEPILE INVENTORY PUT OPTION" has the meaning set forth in Section
5.14(1).
(19) "BONEPILE INVENTORY PUT PERIOD" means the ninety (90) day period after
the applicable Closing Date.
(20) "BRAZIL ASSET PURCHASE AGREEMENT" means an asset purchase agreement,
dated as of the same date as the Agreement, entered into between Nortel
Telecom Do Brasil Industria E Comercio Ltda. and Northern Telecom Do
Brasil Comercio E Servicios Ltda., as vendor, and Flextronics
International Tecnologia Ltda., as purchaser.
(21) "BUSINESS DAY" means any day (other than Saturday or Sunday) in
which major banks in the City of Toronto, Province of Ontario, Canada,
and the City of San Jose, State of California, USA, are open for
business in the ordinary course.
(22) "CALGARY WESTWINDS FACILITY" means the facility located at 5111 47th
Street N .E., Calgary Alberta, Canada T3J 3R2.
(23) "CANADA DESIGN EMPLOYEES" means a Design Employee of the Seller or the
Designated Sellers based in Canada and listed on Schedule 1.1(44) as
such schedule may be updated at or immediately prior to the
applicable Employment Transfer Date.
(24) "CANADA EMPLOYEE" means an employee of the Seller or the Designated
Sellers based in Canada and listed on Schedule 4.12(1), as such
schedule may be updated on or immediately prior to the applicable
Employment Transfer Date.
(25) "CANADIAN COMPETITION COMMISSIONER" means the Commissioner of
Competition appointed under the Competition Act (Canada).
(26) "CASH FLOW PAYMENTS" has the meaning set forth in Section 2.3(2).
Execution Copy
- 4 -
(27) "CHATEAUDUN FACILITY" means the facilities located at 5 rue des
Treize Langues, BP 89 and 8 rue de la Fosse aux Canes, Chateaudun,
France 28200.
(28) "CLOSING" has the meaning set forth in Section 2.5.
(29) "CLOSING DATE" means, with respect to any Facility/ Design Closing,
the date upon which such Facility/ Design Closing occurs.
(30) "CLOSING SCHEDULES" means:
Schedule 1.1(37) Contracts
Schedule 1.1(122) Key Employees
Schedule 1.1(123)(i) Seller's "Knowledge" List
Schedule 1.1(123)(ii) Purchaser's "Knowledge" List
Schedule 2.1(1)(l) Operating Permits
Schedule 2.6 List of PCS and Ancillary Equipment To Be
Transferred
(31) "CLOSING STATEMENT OF ASSETS AND LIABILITIES" has the meaning set forth
in Section 2.4(2).
(32) "COEU" means the Canadian Office Employees' Union.
(33) "COLLECTIVE LABOUR AGREEMENTS" means the bargaining agreements listed
in Schedule 1.1(33).
(34) "COMPANY-WIDE CONTRACTS" means any agreement between the Seller or any
of its Affiliates, on the one hand, and any other Person (other than
the Seller or an Affiliate of the Seller), on the other hand, with
respect to goods or services that are used, sold or licensed in
connection with both (a) any part of the Operations, and (b) the
businesses of the Seller or its Affiliates that are not part of the
Operations and which are not used primarily in or do not relate
primarily to the Operations; provided, however, that " Company-Wide
Contracts" shall not include (i) contracts material to the procurement
of goods used in the conduct of the Operations, (ii) contracts related
to leased equipment used in the Operations, (iii) licence agreements
for the Transferred Business Applications, or (iv) Excluded Business
Applications all of which are listed on Schedule 1.1(37), but shall
include all license agreements (including royalty-based licenses) for
software incorporated into the Products (provided the costs of such
software, to the extent that the Purchaser or Designated Purchasers
incur such costs, are reflected in the Product pricing in the Amended
and Restated Master Contract Manufacturing Services Agreement).
(35) "COMPETITION ACT (CANADA)" means the Canadian Competition Act, R.S.C.
1985, c. C-34, as amended.
Execution Copy
- 5 -
(36) "CONFIDENTIALITY AGREEMENT" means the confidentiality agreement between
the Purchaser and the Seller dated May 19, 2004, with effect as of
December 1, 2003.
(37) "CONTRACTS" means, other than employment contracts and the license
agreements for IS Software, all contracts, agreements, personal
property leases, indentures or other legally binding arrangements
hereto between the Seller or the Designated Sellers, on the one hand
and any other Person other than the Seller or an Affiliate of the
Seller on the other hand, that are used primarily in or relate
primarily to the conduct of the Operations or, except for the
Company-Wide Contracts, which are material to the conduct of the
Operations, all of which are listed on Schedule 1.1(37) (except that
Schedule 1.1(37) need not specifically identify those non-Assumed
Contracts that involve payments of less than $100,000 during the
current term of such Contract. Contracts include, without limitation,
the Assumed Contracts).
(38) "CONTROL", including, with its correlative meanings, "CONTROLLED
BY" and "UNDER COMMON CONTROL WITH", has the meaning ascribed thereto
in the Canada Business Corporations Act.
(39) "CORPORATE DESKTOP SOFTWARE" means software which (i) is licensed to
the Seller or Designated Seller under a corporate licence, (ii) at the
Effective Time, is installed on any of the PCs or other computing
equipment, other than test equipment, forming part of the Equipment,
and which is identified as such on Schedule 1.1(118).
(40) "CPP/QPP/EI TAX" shall mean the amounts required by Law to be paid by
employers with respect to the Canada Pension Plan, the Quebec Pension
Plan and the Employment Insurance Act (Canada).
(41) "CUCW" means the Canadian Union of Communication Workers, Unit 1.
(42) "CURRENCY OF THE AGREEMENT" has the meaning set forth in Section 9.23.
(43) "DAMAGES" means any loss, liability, claim, damage (excluding
incidental and consequential damage and lost profits or revenues) or
expense (including legal expenses), whether or not involving a Third
Party Action.
(44) "DESIGN EMPLOYEE" means an Employee who is identified as such and whose
name is listed in Schedule 1.1(44), as such schedule may be updated at
or immediately prior to the applicable Employment Transfer Date.
(45) "DESIGN OPERATIONS" means certain development and sustaining design
operations related to world-class, carrier grade optical products used
in telecommunications networks. These Design Operations relate to
certain
Execution Copy
- 6 -
edge, core switching and transport line optical products and are
specifically (a) the optical hardware and software product design and
verification activities for OM3300/ 3400/ 3500, OC-48 and DX/ LH
carried on by the Canada Design Employees at the Ottawa Lab 2/ Lab 10
Facility, and (b) the hardware design activities, embedded software
design activities and verification activities for OM4000/ TN-1X, DX,
and new product development activities for OPTera Optical
Multi-Service Edge (" OME" ), all carried on by the UK Design Employees
at the Monkstown Facility. Capabilities of the Canada Design Employees
and the UK Design Employees include, to varying degrees, product
architecture, product characterization, ASIC and FPGA design, hardware
design, management of physical design, software design and product
design verification.
(46) "DESIGN TOOLS" means the software applications which are either owned
by Seller or a Designated Seller or are licensed to the Seller or a
Designated Seller and which are identified as such in Schedule
1.1(118).
(47) "DESIGNATED PURCHASERS" has the meaning set forth in the preamble to
this Agreement.
(48) "DESIGNATED SELLERS" has the meaning set forth in the preamble to this
Agreement.
(49) "EC MERGER REGULATION" means the EC Merger Regulation of the
Commission of the European Communities.
(50) "EFFECTIVE DATE" means the applicable Closing Date with respect to any
Facility/ Design Closing.
(51) "EFFECTIVE TIME" means, with respect to any Effective Date, 12:01 a.m.
(applicable local time) on such Effective Date.
(52) "EMPLOYEE" means an employee of the Seller or the Designated Sellers
listed on Schedule 4.12(1), as such schedule may be updated at or
immediately before the applicable Closing.
(53) "EMPLOYEE INFORMATION" means the employee data listed or described on
any Employee Schedule relating to the Transferring Employees, as such
schedule may be updated pursuant to Section 5.1(3) hereof.
(54) "EMPLOYEE SCHEDULES" means Schedule 1.1(44) (Design Employees);
Schedule 1.1(133) (Logistics Employees); Schedule 1.1(199) (Repair
Employees); Schedule 1.1(122) (Key Employees); Schedule 4.12(1)
(Employees); Schedule 4.12(5) (Long-Term Disability Leave Employees);
Schedule 4.12(7) (Visa Employees); Schedule 4.12(10) (Design
Employees,
Execution Copy
- 7 -
Repair Employees and Logistics Employees), and Schedule 4.12(4)
(Leave Employees).
(55) "EMPLOYMENT OFFER" means that document, in applicable form, which
Purchaser or the applicable Designated Purchaser is required under the
terms of this Agreement to deliver to Employees whose employment or
employment contract does not otherwise transfer to Purchaser or the
applicable Designated Purchaser under applicable Law.
(56) "EMPLOYMENT TRANSFER DATE" means the date on which the employment of
a Transferring Employee (i) commences with the Purchaser or the
relevant Designated Purchaser pursuant to this Agreement, or (ii)
transfers to the Purchaser or the relevant Designated Purchaser
pursuant to this Agreement, the CUCW Collective Labour Agreement and /
or applicable law.
(57) "END OF LIFE INVENTORY" means any inventory (including applicable
labour and overhead and other capitalized costs, if any, and excluding
materials consumed in the manufacturing process) owned by the Seller
or the Designated Sellers to the extent used, (i) in manufacturing,
engineering, assembling, testing or configuring of Products, or (ii)
for repair services, in each case which is scheduled to be, or has
been, discontinued by a supplier of the Seller or the Purchaser, as
set forth in Schedule 1.1(57), in each case which is located at the
locations referenced in Schedule 1.1(57).
(58) "END OF LIFE/INVENTORY CAP" has the meaning set forth in Section
2.1(1)(b).
(59) "Environmental Laws" mean all domestic and foreign federal, state,
provincial, local or municipal statutes, laws, EU directives, by-laws,
common laws, ordinances, codes, rules, regulations, treaties,
conventions, licenses, consents, orders, writs, injunctions,
directives, judgments, decrees, policies and guidelines having force of
law, and other requirements of all governmental entities relating to
the environment and the health and safety of the workplace, including
those relating to the existence, storage, generation, use, handling,
manufacture, processing, labelling, sale, display, transportation,
treatment, emission, discharge, release or threatened release,
remediation, amelioration or monitoring of Hazardous Substances, but in
each case solely to the extent having the force of law.
(60) "ENVIRONMENTAL LIABILITIES OF THE PURCHASER" means any and all
liabilities arising in connection with or relating to the Operations or
the Facility/ Design Assets conveyed to Purchaser or a Designated
Purchaser at any Closing, whether accrued, contingent, absolute,
determined, determinable or otherwise, that (i) arise under or
relate to any Environmental Law (including changes in Environmental
Laws or exceedance levels prescribed thereunder)
Execution Copy
- 8 -
or to any operating permit in effect after the Effective Time for such
Closing in relation to acts occurring or conditions arising after the
Effective Time for such Closing; (ii) arise under or relate to any
changes in Environmental Laws or exceedance levels prescribed
thereunder in effect after the Effective Time for such Closing in
relation to (x) actions occurring or conditions arising prior to the
Effective Time for such Closing, but only to the extent that the
actions or conditions giving rise to such liability were in compliance
with French Environmental Laws at the time they occurred or arose, or
(y) actions occurring or conditions arising after the Effective Time
for such Closing and attributable to the acts of the Seller or any of
its Affiliates, but only to the extent that such acts were in
compliance with French Environmental Laws at the time they occurred;
(iii) relate to actions occurring or conditions arising after the
Effective Time for such Closing, attributable to the acts of the
Purchaser or any of its Affiliates; or (iv) arise as a result of (w)
the failure of the Purchaser or any of its Affiliates to comply with
the Environmental Laws in relation to acts occurring or conditions
arising after the such Effective Time; (x) the presence of any
Hazardous Substance that is introduced by, or caused by human error of,
the employees, agents or representatives of the Purchaser or any of its
Affiliates after such Effective Time; or (y) the presence of any
Hazardous Substance caused by a decision by the Purchaser or any of its
Affiliates to use, manufacture, generate or release a Hazardous
Substance that was not previously used, manufactured, generated or
released by the Operations when it was operated by the Seller or any of
its Affiliates before such Effective Time; or (z) a change in the use
of the Chateaudun Facility from its current use; but excluding, in the
case of (i) and (iv) above, liabilities mentioned under (iii) of the
Environmental Liabilities of the Seller.
(61) "ENVIRONMENTAL LIABILITIES OF THE SELLER" means any and all liabilities
arising in connection with or relating to the Operations or the
Facility/ Design Assets conveyed by Seller or a Designated Seller at
any Closing, whether accrued, contingent, absolute, determined,
determinable or otherwise, that (i) arise under or relate to any
Environmental Law or to any Operating Permit in effect before the
Effective Time for such Closing in relation to acts occurring or
conditions arising prior to the Effective Time for such Closing; (ii)
relate to actions occurring or conditions existing prior to the
Effective Time for such Closing, whether or not attributable to the
acts of the Seller or any of its Affiliates; (iii) relate to actions
occurring or conditions arising after the Effective Time for such
Closing, attributable to the acts of the Seller or any of its
Affiliates; or (iv) arise as a result of (x) the presence of any
Hazardous Substance that is introduced by, or caused by human error of,
the employees, agents or representatives of the Seller or any of its
Affiliates before such Effective Time; or (y) the presence of any
Hazardous Substance caused by a decision by the Seller or any of its
Affiliates to use, manufacture, generate or
Execution Copy
- 9 -
release a Hazardous Substance before such Effective Time; but
excluding (v) any liability directly arising from the matters disclosed
in Schedule 4.16, other than items the Seller has agreed to remedy as
set forth therein, and (vi) in the cases of (ii), (iii) and (iv) above,
liabilities mentioned under (ii) of the Environmental Liabilities of
the Purchaser.
(62) "EQUIPMENT" means the Owned Equipment, the Leased Equipment and the
Equipment at Third Party Locations.
(63) "EQUIPMENT AT THIRD PARTY LOCATIONS" means the machinery, equipment,
furniture, tools and test sets, and associated spare parts and
supplies, if any, owned by the Seller or the Designated Sellers or
French Newco and used primarily in Operations which is located at a
premise other than a premise owned or leased by the Seller or the
Designated Sellers, all of which is listed, and is located at the
locations referenced on Schedule 1.1(63).
(64) "EQUIPMENT PUT OPTION" has the meaning set forth in Section 5.16(1).
(65) "EQUIPMENT PUT PURCHASE PRICE" has the meaning set forth in Section
5.16(4).
(66) "EQUIPMENT USAGE PERIOD" shall mean the period which starts at the end
of the ninth (9th) month after the applicable Closing Date and
continues through to the end of the twelfth (12th) month after the
applicable Closing Date.
(67) "EQUIPMENT WARRANTIES" has the meaning set forth in Section 2.1(1)(o).
(68) "EUROPEAN CONTRACT OF EMPLOYMENT OFFER" means the UK and France offer
of a contract of employment as set forth in Section D-1.1 of Exhibit
D-1 and Section D-2.1 of Exhibit D-2, respectively.
(69) "EXCESS CPP/QPP/EI AMOUNT" shall mean an amount equal to (i) the sum of
(a) the Total Seller CPP/ QPP/ EI Payments and (b) the Total Purchaser
CPP/ QPP/ EI Payments less (ii) the Maximum CPP/ QPP/ EI Amount.
(70) "EXCLUDED ASSETS" has the meaning set forth in Section 2.1(2).
(71) "EXCLUDED BONEPILE INVENTORY" refers to inventory that is (a) defective
or otherwise does not conform to the applicable specifications
(commonly known in the industry as " bonepile" ), and (b) with assembly
dates greater than ninety (90) days prior to the applicable Closing
Date.
(72) "EXCLUDED BUSINESS APPLICATIONS" means the software applications or
systems owned by the Seller or a Designated Seller or licensed to the
Seller or Designated Seller and used in the Operations which are not
transferring or
Execution Copy
- 10 -
not to be licensed to the Purchaser or a Designated Purchaser, which
are identified as such on Schedule 1.1(118).
(73) "EXCLUDED LIABILITIES" has the meaning set forth in Section 2.2(2).
(74) "EXECUTION SCHEDULES" means:
Schedule 1.1 Designated Sellers and Designated Purchasers and
Facility/ Design Purchase Prices
Schedule 1.1(33) Collective Labour Agreements
Schedule 1.1(37) Contracts
Schedule 1.1(44) Design Employees
Schedule 1.1(118) IS Software
Schedule 1.1(122) Key Employees
Schedule 1.1(123)(i) Seller's " Knowledge" List
Schedule 1.1(173) Permitted Encumbrances
Schedule 2.1(1)(l) Operating Permits
Schedule 2.3(2) Cash Flow Payments
Schedule 3.6 Purchaser's Employee Plans
Schedule 4.1(3) Nortel Subsidiaries Conducting Operations
Schedule 4.6 Compliance with Laws, Permits and Licenses
Exceptions
Schedule 4.8 Contracts Exceptions
Schedule 4.8(9) Other Third Party Payment Exceptions
Schedule 4.8(10) Company-Wide Contracts Rights or Licenses
Schedule 4.9(1) Other Intellectual Property Agreements/ Obligations
Schedule 4.9(2) Intellectual Property Rights Claims Exceptions
Schedule 4.9(3) Intellectual Property Rights Infringement Exceptions
Schedule 4.10 Litigation
Schedule 4.11(1) Seller's Employee Plans
Schedule 4.11(2) Compensation and Benefit Claims
Schedule 4.12(1) Employees
Schedule 4.12(2) Work Stoppages
Schedule 4.12(3) Compliance with Employment Law Exception
Schedule 4.12(4) Leave Employees
Schedule 4.12(6) Labour Relations Exceptions
Schedule 4.12(8) Workers' Compensation Law Exceptions
Schedule 4.12(11) Collective Labour Agreement
Schedule 4.16 Environmental Matters
Schedule 4.18 Real Estate Exceptions
Schedule 4.20 Other Purchase Agreements
Schedule 4.21 Government Assistance Programs
Schedule 5.1(2) Filings and Approvals
Schedule 5.2 Operation of Business Exception
Execution Copy
- 11 -
(75) "FACILITIES" means, collectively, the Calgary Westwinds Facility, the
Chateaudun Facility, the Monkstown Facility, the Montreal OPTO 1
Facility, Montreal Ban 1 Facility, Montreal Ban 3 Facility and the
Ottawa Lab 2/Lab 10 Facility.
(76) "FACILITY/DESIGN ASSETS" has the meaning set forth in Section 2.1(1).
(77) "FACILITY/DESIGN ASSUMED LIABILITIES" has the meaning set forth in
Section 2.2(1).
(78) "FACILITY/DESIGN CLOSING" has the meaning set forth in Section 2.5 and
for greater certainty includes separate Closings for the purchase and
sale of the applicable Assets and assumption of the applicable Assumed
Liabilities related to (i) each Facility, (ii) the Design Operations
and (iii) other repair and logistics Operations that are not located in
a Facility.
(79) "FACILITY/DESIGN CLOSING NET ASSETS VALUE" means the aggregate value,
determined in accordance with the terms of this Agreement and, to the
extent consistent therewith, GAAP (save and except in relation to the
Chateaudun Facility and End of Life Inventory), of the net book value
of the Facility/Design Assets transferred by Seller and the applicable
Designated Seller at a Closing, minus the Facility/Design Assumed
Liabilities assumed from Seller and the applicable Designated Seller at
same applicable Closing. Subject to the foregoing, for purposes of
calculating the Facility/Design Closing Net Assets Value, (a) the
value of the shares of French Newco shall be equal to the net book
value of the assets of French Newco (except that the value of the
Chateaudun Facility shall be deemed equal to six million dollars
($6,000,000) for such purpose) minus the value of the liabilities of
French Newco, (b) the value of each item of Inventory, End of Life
Inventory or Repair Inventory, as the case may be, shall be the price
at which such Inventory, End of Life Inventory or Repair Inventory, as
the case may be, is to be sold to Seller as part of the Product price
(in the case of the Inventory and End of Life Inventory pursuant to the
Amended and Restated Master Contract Manufacturing Services Agreement
or, in the case of Repair Inventory, pursuant to the Repair Services
Agreement), as determined in accordance with the books and records of
the Seller or Designated Seller (except that the value of End of Life
Inventory shall exclude any related provision for such purpose), and
(c) the value of the Equipment will be calculated using a straight line
depreciation methodology.
(80) "FACILITY/DESIGN ESTIMATED NET ASSETS VALUE" has the meaning set forth
in Section 2.3(1).
Execution Copy
- 12 -
(81) "FACILITY/DESIGN NET ASSET STATEMENT" has the meaning set forth in
Section 2.3(1).
(82) "FACILITY/DESIGN OPERATIONS" means the Operations conducted in and
from the Facilities or in relation to the Design Operations, as
applicable.
(83) "FACILITY/DESIGN PURCHASE PRICE" has the meaning set forth in Section
2.3(1).
(84) "FIRST PARTY" has the meaning set forth in Section 7.4(5).
(85) "FLEXTRONICS CANADA" means Flextronics (Canada) Inc.
(86) "FLEXTRONICS FRANCE" means Flextronics France S.A.
(87) "FLEXTRONICS MAURITIUS" means Flextronics Telecom Systems, Ltd.
(88) "FLEXTRONICS U.K." means Flextronics International (U.K.) Limited.
(89) "FLEXTRONICS U.S." means Flextronics International U.S.A. Inc.
(90) "FORWARD LOOKING INFORMATION" has the meaning set forth in Section 5.8.
(91) "FRANCE COLLECTIVE LABOUR AGREEMENT" has the meaning set forth in
Exhibit D-2.2.
(92) "FRANCE EMPLOYEE" means an employee of the Seller or the Designated
Sellers based in France as of the date hereof, and an Employee of
France Newco as of the applicable Closing Date, and listed on Schedule
4.12(1), as such schedule may be updated on or immediately prior to
the applicable Employment Transfer Date.
(93) "FRANCE EMPLOYMENT COMMITMENT" has the meaning set forth in Exhibit
D-2.
(94) "FRANCE EMPLOYMENT OFFER" has the meaning set forth in Exhibit D-2.
(95) "FRANCE TRANSFERRING EMPLOYEES" has the meaning set forth in Exhibit
D-2.
(96) "FRENCH CONTRIBUTED ASSETS" means the Assets relating to the Operations
at the Chateaudun Facility, including the real estate titles to the
Chateaudun Facility but excluding the goodwill described in the
applicable Local Sale Agreement.
(97) "FRENCH NEWCO" means a newly formed entity organized as a societe par
actions simplifee under French Law to which the Seller shall cause the
Execution Copy
- 13 -
transfer of the French Contributed Assets and any associated Assumed
Liabilities pursuant to Section 5.28.
(98) "GAAP" means the United States generally accepted accounting principles.
(99) "GDNT ASSETS" has the meaning set forth in Section 5.20.
(100) "GOVERNMENT ASSISTANCE PROGRAMS" has the meaning set forth in Section
4.21.
(101) "GOVERNMENT ENTITY" or "GOVERNMENT ENTITIES" means any foreign, domestic,
federal, territorial, state or local governmental authority,
quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing, which is
entitled to issue or to improve the implementation of the Laws or
Environmental Laws.
(102) "GRIEVANCE" has the meaning set forth in Section 5.31.
(103) "GST" means the Goods and Services Tax imposed by the GST Legislation.
(104) "GST LEGISLATION" means the Excise Tax Act (Canada).
(105) "GUARANTOR" has the meaning set forth in the preamble to this Agreement.
(106) "HAZARDOUS SUBSTANCE" means any substance, waste or other material that
is identified, classified or described in or otherwise determined to be,
hazardous, radioactive or toxic, or a pollutant or a contaminant, under or
pursuant to any local, national and / or international Environmental Law
applicable in France, the storage, manufacture, disposal, treatment,
generation, use, transportation or remediation of which, or release of
which into or concentration of which in the environment, is prohibited,
controlled, regulated or licensed by any Governmental Entity having
jurisdiction over the French territory or under any local, national or
international Environmental Law applicable in France.
(107) "INDEMNIFIED PARTY" has the meaning set forth in Section 7.5.
(108) "INDEMNIFYING PARTY" has the meaning set forth in Section 7.5.
(109) "INDEPENDENT ACCOUNTANT" has the meaning set forth in Section 2.4(3).
Execution Copy
- 14 -
(110) "INITIAL OBSOLETE EQUIPMENT" means all equipment that (a) is not yet fully
depreciated at the end of the Equipment Usage Period, (b) was not used in
the Operations, or otherwise used by the Purchaser or Designated Purchaser
or Affiliates, during the Equipment Usage Period, and (c) is not
forecasted at the end of the Equipment Usage Period by the Purchaser or
Designated Purchasers or Affiliates to be used at any time during the
Subsequent Equipment Usage Period to meet Product supply requirements, or
otherwise to be used by the Purchaser or Designated Purchasers or
Affiliates.
(111) "INITIAL OBSOLETE EQUIPMENT PUT OPTION" has the meaning set forth in
Section 5.16(1).
(112) "INTELLECTUAL PROPERTY" means all proprietary and intellectual property
rights, in any jurisdiction, whether owned or held for use under license
by Seller or its Affiliates, including such rights in and to (i)
trademarks, service marks, brand names, distinguishing guises, trade
dress, trade names, words, symbols, color schemes, business names,
internet domain names and other indications of origin; (ii) patents and
pending and filed patent applications (including all provisional,
divisional, continuation in part and reissue patents), utility models,
inventors' certificates and invention disclosures; (iii) trade secrets and
other confidential or non-public business or technical information,
including ideas, formulas, compositions, program devices, compilations,
patterns, discoveries and improvements, know-how, show-how, manufacturing
and production methods, processes and techniques, and research and
development information; drawings, designs, specifications, plans,
proposals and technical and system data; analytical models, investment and
lending strategies and records, financial and other products; financial,
marketing and business data, pricing and cost information; business and
marketing plans and customer and supplier lists and information; in each
case whether patentable, copyrightable or not; (iv) computer programs and
databases, including all object code, source code, algorithms,
subroutines, specifications, data and documentation and all translations,
compilations, arrangements, adaptations, and derivative works thereof, in
each case whether patentable, copyrightable or not, and all documentation
thereof; (v) Network Identifiers; (vi) writings and other works of
authorship, including marketing materials, brochures, training materials,
including all copyrights and moral rights related to each of the
foregoing; (vii) mask works or integrated circuit topographies; (viii)
industrial designs; and (ix) rights to limit the access, use or disclosure
of confidential information by any Person; in each case including all
registrations of, and applications to register, any of the foregoing with
any Government Entity and any renewals or extensions thereof; the goodwill
associated with each of the foregoing; and any claims or causes of action
or defences arising out of or related to any of the foregoing.
Execution Copy
- 15 -
(113) "INVENTORY" means, as of any date, all inventories of raw materials,
manufactured and purchased parts, work-in-process, packaging, stores,
supplies and Unassigned Finished Goods Inventory (including applicable
labour and overhead and other capitalized costs, if any), purchased or
acquired exclusively for use in connection with the conduct of the
Operations as of such date, and Bonepile Inventory, in each case which
are listed, and are located at, the locations referenced on Schedule
1.1(113), but expressly excludes End of Life Inventory and Repair
Inventory.
(114) "INVENTORY PUT OPTION" has the meaning set forth in Section 5.15(1)(a).
(115) "INVENTORY PUT PERIOD" means the twelve (12) month period after the
applicable Closing Date.
(116) "INVENTORY PUT PURCHASE PRICE" has the meaning set forth in Section
5.15(3).
(117) "INVESTMENT CANADA ACT" means the Investment Canada Act (Canada).
(118) "IS SOFTWARE" means the software applications or systems owned by Seller
or licensed to the Seller or a Designated Seller as listed on Schedule
1.1(118) which includes all of the Corporate Desktop Software, the Design
Tools, the Excluded Business Applications and Transferred Business
Applications and the Licensed Business Applications.
(119) "ITA" means the Income Tax Act (Canada).
(120) "JUDGMENT CONVERSION DATE" has the meaning set forth in Section 9.23.
(121) "JUDGMENT CURRENCY" has the meaning set forth in Section 9.23.
(122) "KEY EMPLOYEES" means all Employees whose names are listed on Schedule
1.1(122).
(123) "KNOWLEDGE" or "AWARE OF" or "NOTICE OF" or a similar phrase shall mean,
with reference to Seller or the Designated Sellers, the actual knowledge
of those Persons listed on Schedule 1.1(123)(i), and with reference to
Purchaser or the Designated Purchasers, the actual knowledge of those
persons listed on Schedule 1.1(123)(ii).
(124) "LAW" means, with respect to any Person, any domestic or foreign, federal,
state, provincial, local or municipal statute, law, by-law having the
force of law, common law including, without limitation, the law of
contract, ordinance, rule, regulation, order, writ, injunction, directive,
judgment, decree, policy or guideline having the force of laws, or
other requirement of any Government Entity applicable to such Person or
any of its Affiliates or
Execution Copy
- 16 -
any of their respective properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's,
director's, employee's, consultant's or agent's activities on behalf of
such Person or any of its Affiliates); provided, however, that "LAW" shall
not include any "ENVIRONMENTAL LAWS".
(125) "LEASED EQUIPMENT" means the machinery, equipment, furniture, tools and
test sets, associated spare parts and supplies, if any, and all other
tangible personal property leased by the Designated Seller or the Sellers
and used primarily in the Operations, which is listed, and is located at
the locations referenced on Schedule 1.1(125), but excludes equipment
used in Shared Labs and Leased PC Equipment.
(126) "LEASED PC EQUIPMENT" has the meaning ascribed thereto in Section 2.6(1).
(127) "LEAVE EMPLOYEE" has the meaning set forth in Section 4.12(4).
(128) "LICENSES OF SPACE" means the agreements to be entered into by the Parties
for the licenses space by the Purchaser at those facilities that are not
the subject of Real Property Leases and which the Seller and Purchaser
agree will be licenses as provided in Section 5.33 for a term of up to
twelve (12) months in the case of the Ottawa Lab 2/ Lab 10 Facility and
up to three (3) years in the case of the Monkstown Facility and for a
term of six (6) months (or such other term as the Purchaser and Seller
may agree) in the case of any other facilities, each, in the form attached
hereto as Exhibit K.
(129) "LICENSED BUSINESS APPLICATIONS" means the software applications or
systems owned by the Seller or Designated Sellers and used primarily in
the Operations, which are to be licensed to the Purchaser or Designated
Purchaser under the Nortel Proprietary Software License Agreement, all of
which are listed on Schedule 1.1(118).
(130) "LIEN" means any lien, mortgage, hypothec, pledge, security interest,
encumbrance, easement, encroachment, right-of-way, restrictive covenant,
real property license, charge, prior claim, lease or conditional sale
arrangement.
(131) "LOANED EMPLOYEE AGREEMENT" means the agreement, if any, that the parties
may enter into on mutually acceptable terms providing for the temporary
provision of services of certain Employees between the Seller or any of
the Designated Sellers and the Purchaser or any of the Designated
Purchasers.
(132) "LOCAL SALE AGREEMENTS" means the agreements providing for the sale and
purchase of the Facility/ Design Assets and the assumption of the
Facility/ Design Assumed Liabilities of each Designated Seller, or the
sale of
Execution Copy
- 17 -
all of the shares of French Newco, as the case may be, which will be
consistent with the terms of this Agreement in substantially the form as
set forth in Exhibit E (with such variations as are necessary to reflect
local law, but which variations shall not impose any additional
material obligations on any Party, or materially reduce the rights of any
Party in relation to the terms and conditions of this Agreement, without
such Party's consent).
(133) "LOGISTICS EMPLOYEE" means an Employee who is identified as such and whose
name is listed on Schedule 1.1(133), as such schedule may be updated at
or immediately prior to the applicable Employment Transfer Date.
(134) "LOGISTICS SERVICES AGREEMENT" has the meaning set forth in Exhibit M.
(135) "LONG-TERM DISABILITY LEAVE EMPLOYEES" has the meaning set forth in
Section 4.12(5).
(136) "LOSSES" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments,
awards, fines, sanctions, penalties, charges and amounts paid in
settlement, including (i) interest on cash disbursements in respect of
any of the foregoing at the prevailing commercial interest rate in effect
from time to time, compounded quarterly, from the date each such cash
disbursement is made until the Party incurring the same shall have been
indemnified in respect thereof; and (ii) the reasonable out-of-pocket
costs, fees and expenses of attorneys, experts, accountants, appraisers,
consultants, witnesses, investigators and any other agents of such Party.
(137) "MANUFACTURER" shall have the meaning defined in the Amended and Restated
Master Contract Manufacturing Services Agreement.
(138) "MATERIAL ADVERSE EFFECT" means a material adverse change in, or effect
on, the net Assets or the Operations taken as a whole; provided, however,
that a Material Adverse Effect shall not include an effect resulting from
(i) any change in Law, Environmental Law, GAAP or interpretations thereof
that apply to the Operations; (ii) any change in general economic,
business or financial market conditions or any change in the
telecommunications or data networking industries that does not affect the
Operations disproportionately to the other participants in such
industries; or (iii) discussions or consultations with workers' councils,
Employees representatives and collective bargaining agents or the
Employees, regarding the transaction contemplated in this Agreement.
(139) "MAXIMUM CPP/QPP/EI AMOUNT" shall mean the maximum amount of CPP/ QPP/ EI
Tax that would be required to be paid by the Seller or a
Execution Copy
- 18 -
Designated Seller with respect to the Transferring Employees if the
Transferring Employees were to be employed by the Seller or a Designated
Seller for the entire calendar year in which the applicable Closing
occurs.
(140) "MINDREADY" has the meaning set forth in Section 5.31.
(141) "MONKSTOWN AGREEMENT" has the meaning set forth in Section 7.3(3).
(142) "MONKSTOWN DEVELOPMENT AGENCY" has the meaning set forth in Section 5.21.
(143) "MONKSTOWN FACILITY" means the facility located at Doagh Road, New-
townabbey, Northern Ireland BT36 6XA.
(144) "MONKSTOWN GRANT" has the meaning set forth in Section 5.21.
(145) "MONKSTOWN PERMITTED ASSIGNEE" has the meaning set forth in Section
7.3(3).
(146) "MONKSTOWN TERMINATION DATE" has the meaning set forth in Section 7.3(3).
(147) "MONTREAL BAN 1 FACILITY" means the facility located at 2351 Boulevard
Alfred Nobel, Montreal, Quebec, Canada H4S 2A9.
(148) "MONTREAL BAN 3 FACILITY" means the facility located at 2311 Boulevard
Alfred Nobel, Montreal, Quebec, Canada H4S 2A9.
(149) "MONTREAL OPTO 1 FACILITY" means the facility located at 7055 Alexander
Fleming, Montreal, Quebec, Canada H4S 2A9.
(150) "NECESSARY CONSENTS" has the meaning set forth in Section 5.9.
(151) "NETWORK IDENTIFIERS" means all internet protocol addresses and
networks, including DNS domain names, e-mail addresses, world wide
web (www) and http addresses, network names, network addresses
(such as IPv4 and Ipv6) and services (such as mail or website) whether
or not used or currently in service, and including all registrations
relating thereto in or with all registration bodies or organizations.
(152) "NDBC" means Northern Telecom do Brasil Comercio E Servicios Ltda.
(153) "NNCI" means Nortel Networks (CALA) Inc.
(154) "NNI" means Nortel Networks Inc.
(155) "NNL" means Nortel Networks Limited.
Execution Copy
- 19 -
(156) "NNSA" means Nortel Networks, S.A.
(157) "NNTC" means Nortel Networks Technology Corporation.
(158) "NNUK" means Nortel Networks U.K. Limited.
(159) "NON-ASSIGNABLE ASSETS" has the meaning set out in Section 2.1(3).
(160) "NORTEL PROPRIETARY SOFTWARE LICENCE AGREEMENT" means the licence
agreement between the Seller and the Purchaser to be executed on the
first Closing Date, related to the Seller's proprietary software to be
licensed to the Purchaser or Designated Purchaser asset forth in Schedule
1.1(118), in the form attached hereto as Exhibit F.
(161) "NTBI" means Northern Telecom do Brasil Industria e Comercio Ltda.
(162) "OBSOLETE EQUIPMENT" means Equipment at the applicable Closing Date that
is used exclusively for discontinued Product (as the term "discontinued"
is determined in accordance with the Amended and Restated Master Contract
Manufacturing Services Agreement).
(163) "ONTARIO EMPLOYEE" has the meaning set forth in Exhibit D-3.
(164) "OPEN PURCHASE ORDERS" means, with respect to any Closing, all purchase
orders or other commitments issued by Seller or any of its Affiliates
before such Closing Date for the supply of tangible assets (including
inventory) and services (including maintenance and other incidental
services but excluding design services) to or for use in the part of the
Operations that is then being transferred and assigned by the Seller or
the Designated Seller and assumed by the Purchaser or the relevant
Designated Purchaser to the extent that such tangible assets have not
already been supplied and accepted or services performed, respectively,
to such part of the Operations on or prior to the Effective Time for such
Closing.
(165) "OPERATING PERMITS" means, with respect to the Facility/ Design Assets
being conveyed at any Closing, each permit, certificate, approval,
consent, authorization, registration and license issued by any Government
Entity pursuant to any Law (or in the case of environmental matters,
Environmental Laws), in connection with the use or operation of such
Facility/ Design Assets or the conduct of the Operations at the relevant
Facility, each of which is listed on Schedule 2.1(1)(l) hereto.
(166) "OPERATIONS" means (i) the production activities including product
assembly, integration and test as well as the product repair activities
carried on at the Calgary Westwinds Facility, the Chateaudun Facility,
the Monkstown Facility
Execution Copy
- 20 -
and the Montreal OPTO 1 Facility (ii) the following support activities
associated with production and repair at the Calgary Westwinds,
Chateaudun, Monkstown, and Montreal OPTO 1 facility: supply and demand
planning and procurement, production planning and control, factory order
management and order fulfillment, supply chain execution and inventory
management, quality planning and assurance, test engineering including
test development, test process support, product verification and failure
analysis, manufacturing engineering including production process
development and support, engineering change management, new product
project management, cost reduction management and build management
including phase-in phase-out management, (iii) the GSM base station light
reconfiguration and merchandise kitting currently carried on at the
Raleigh Facility, (iv) the management of the Class A RMA material return
activities by the Logistics Employees and the management of certain Third
Party logistics services with respect to the Products (v) the management
of Third Party repair services for all products, (vi) the Design
Operations, but excluding the operations conducted with the GDNT Assets.
Notwithstanding the foregoing, the tangible assets owned or leased by
Seller or any Designated Seller and used in, the contracts and licenses
relating to and the employees engaged in, the provision of the following
corporate overhead services for or on behalf of Nortel Networks
Corporation, Seller, any Designated Seller or any of Seller's Affiliates,
are not a part of the "Operations" unless such tangible assets, contract
or licenses or employees are specifically identified as being transferred
or assigned on a Schedule to this Agreement: treasury, legal, tax, human
resources, risk management, corporate marketing, corporate finance,
accounts payables and receivables, employee expense vouchering, travel,
purchasing (except for procurement carried out in the Facilities),
information systems support, finance, corporate communications, investor
relations, intellectual property support, group marketing plans, group
purchasing plans, corporate employee benefit and pension plans, facilities
management, real estate brokerage, architecture and program management,
health and wellness, environment and safety, workplace; food; security and
fire alarm monitoring; reprographics and mail distribution, janitorial,
mechanical preventive maintenance; waste management, landscaping, pest
control and parking lot and lighting maintenance services.
(167) "OPERATIONS INFORMATION" means, subject to applicable limitations
necessary for compliance with applicable Facility based country privacy
Laws, governing employee information, originals or copies of all books,
records, files and documentation, used or held for use primarily with
respect to the Operations or the Assets, including information, policies
and procedures, Equipment manuals and materials procurement documentation
utilized in connection with the Operations, but excluding (i) any
Intellectual Property
Execution Copy
- 21 -
rights of the Seller or the Designated Sellers related to the Operations
or otherwise, (ii) any and all technical information, including relating
to Products, designs, specifications, test software, testing tools,
testing processes or system architecture together with any and all
Intellectual Property rights therein; (iii) employee data, except for
the Employee Information; and (iv) Contracts, the Company-Wide Contracts
and the IS Software.
(168) "OTTAWA LAB 2/LAB 10 FACILITY" means the facility located at 3500 Carling
Avenue, Ottawa, Ontario, Canada K2H 8E9.
(169) "OWNED EQUIPMENT" means the machinery, equipment, furniture, hardware
tools and test sets, associated spare parts and supplies and all other
tangible personal property owned by the Seller, any of the Designated
Sellers or French Newco and used primarily in the Operations, all of which
are listed, and are located at, the locations referenced on Schedule
2.1(1)(d), including assets forming the subject of Open Purchase Orders
for equipment that has been delivered to the Seller or the Designated
Sellers French Newco as of the relevant Closing Date, together with all of
Seller's and Designated Seller's rights as a licensee with respect to any
operating software forming part of such equipment at the time of its
purchase by the Seller or Designated Seller French Newco, but excluding
Equipment at Third Party Locations and equipment located at the Shared
Labs.
(170) "PARTY" or "PARTIES" means individually or collectively, as the case may
be, the Seller, the Designated Sellers, the Purchaser and the Designated
Purchasers.
(171) "PATENT CROSS LICENCES" means the reciprocal patent and patent rights
cross licence agreements between the Seller or any of its Affiliates and
third Persons.
(172) "PCS" means, with respect to any Closing, those personal computers and
UNIX workstations, including lap-top and desk-top computers, used
primarily by Employees of the relevant Designated Seller or the Seller in
the relevant part of the Operations.
(173) "PERMITTED ENCUMBRANCES" means (i) real property Liens, if any, attaching
to the Chateaudun Facility not material in nature and that, individually
or in the aggregate, do not materially interfere with or affect the
conduct of the Operations or the use or value of the Assets; (ii) Liens
for Taxes or governmental assessments, charges or claims the payment of
which is not yet due, or for Taxes the validity of which are being
contested in good faith by appropriate proceedings or arising or
potentially arising under statutory provisions that have not at the time
been filed and of which written notice has
Execution Copy
- 22 -
not been served pursuant to Law; (iii) statutory Liens of landlords
and Liens of carriers, warehousemen, mechanics, materialmen and other
similar Persons and other Liens imposed by Law incurred in the ordinary
course of business for sums not yet delinquent or overdue or which are
being contested in good faith; (iv) Liens relating to deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (v) Liens
relating to the executory obligations of Seller or any Designated Seller
under any leases intended as security; and (vi) any other Liens set forth
in Schedule 1.1(173); provided, however, that, with respect to each of
clauses (i) through (vi), to the extent that any such Lien relates to, or
secures the payment of, a liability that is required to be accrued under
GAAP, such Lien shall only be a Permitted Encumbrance to the extent that
such liability is included in the Facility/ Design Closing Net Assets
Statement (or, in the case of any such liability existing or the Closing
Date, the Closing Statement of Assets and Liabilities) in conformity with
GAAP, or such liability constitutes an Excluded Liability for which Seller
remains responsible.
(174) "PERSON" means an individual, a partnership, a corporation, an
association, a limited or unlimited liability company, a joint stock
company, a trust, a joint venture, an unincorporated organization or a
Government Entity.
(175) "POST-EXECUTION SCHEDULES" means Schedule 1.1(125) (Leased Equipment),
Schedule 1.1(63) (Equipment at Third Party Locations) and Schedule 2.6
(List of PCS and Ancillary Equipment to be Transferred).
(176) "POTENTIAL CONTRIBUTOR" has the meaning set forth in Section 7.11.
(177) "PRBA" has the meaning set forth in Exhibit D-4.
(178) "PRE-CLOSING SCHEDULES" means
Schedule 1.1(57) End of Life Inventory
Schedule 1.1(63) Equipment at Third Party Locations
Schedule 1.1(113) Inventory
Schedule 1.1(125) Leased Equipment
Schedule 1.1(200) Repair Inventory
Schedule 2.1(1)(d) Owned Equipment
Schedule 2.1(1)(n) Security Deposits
Schedule 2.1(1)(q) Prepaid Expenses
Schedule 4.12(9) Employee Accrued and Unused Vacation
Execution Copy
- 23 -
Schedule 4.15(1) Inventory Forecast
(179) "PREPAID EXPENSES" has the meaning set forth in Section 2.1(1)(q).
(180) "PRIMARY PARTY" means each of the Seller and the Purchaser.
(181) "PRODUCTS" means the products listed in the exhibits VSHA which related to
the applicable Facility/ Design Closing.
(182) "PROMISSORY NOTES" means the promissory notes evidencing the obligation
of each respective Designated Purchaser to pay any amount of the Purchase
Price, which is due and payable by it after the relevant Facility/
Design Closing Date, in the form attached hereto as Exhibit O.
(183) "PURCHASE PRICE" has the meaning set forth in Section 2.3(1).
(184) "PURCHASER" has the meaning set forth in the preamble to this Agreement.
(185) "PURCHASER CAP" has the meaning set forth in Section 7.4(3).
(186) "PURCHASER INDEMNITEES" has the meaning set forth in Section 7.2.
(187) "PURCHASER ONE-TIME DEDUCTIBLE" has the meaning set forth in Section
7.4(3).
(188) "PURCHASER THRESHOLD" has the meaning set forth in Section 7.4(3).
(189) "PURCHASER'S EMPLOYEE PLANS" means any pension plan, supplemental pension
plan, profit sharing plan, savings plan, retirement savings plan, bonus
plan, incentive compensation plan, deferred compensation plan, stock
purchase plan, stock option plan, employee benefit plan, vacation plan,
leave of absence plan, employee assistance plan, automobile leasing/
subsidy/ allowance plan, relocation plan, family support plan, retirement
plan, medical, hospitalization or life insurance plan, disability plan,
sick leave plan, redundancy or severance plan, retention agreement, death
benefit plan, compensation arrangement, including any base salary
arrangement, overtime policy, on-call policy or call-in policy, or any
other plan, program, arrangement, policy or practice that is or will be
maintained or otherwise contributed to, or is or will be required to be
contributed to, by or on behalf of the Purchaser or Purchaser's
Affiliates, and in respect of which Transferring Employees will be
eligible to participate on or immediately after the applicable Employment
Transfer Date.
Execution Copy
- 24 -
(190) "QUEBEC EMPLOYEE" means an employee of the Seller or Designated Sellers
based in Quebec and listed on Schedule 4.12(1), as such schedule may
be updated at or immediately prior to the applicable Employment Transfer
Date.
(191) "QUEBEC EMPLOYMENT NOTICE" has the meaning set forth in Exhibit D-5.
(192) "QUEBEC TRANSFERRING EMPLOYEE" has the meaning set forth in Exhibit D-5.
(193) "REAL ESTATE" means the buildings and land located at the Chateaudun
Facility that is owned by Nortel or an Affiliate thereof.
(194) "REAL PROPERTY LEASE" means the lease agreements to be entered into by the
Parties for the lease of space by the Purchaser at the Montreal OPTO 1
Facility, Montreal BAN 3 Facility, the Calgary Westwinds Facility and
the Monkstown Facility, and by the Seller or Designated Seller as lessee
of the Chateaudun Facility, in the form attached hereto as Exhibit C
(with such variations as are necessary to reflect local law, but which
variations shall not impose any additional material obligations on any
Party, or materially reduce the rights of any Party in relation to the
terms and conditions of this Agreement, without such Party's consent).
(195) "REFERENCE DATE" means the applicable date of reference for each Facility/
Design Net Asset Statement which shall be the last day of the most recent
month which is at least thirty (30) days before each applicable Facility/
Design Closing.
(196) "REFUNDABLE TRANSFER TAX" means any Transfer Tax (or portion thereof)
incurred in connection with the transactions contemplated in this
Agreement which is refundable to (or can be taken as a credit against
other taxes owed by) the Purchaser or Designated Purchaser, as applicable.
For the avoidance of doubt, value-added and goods and services taxes shall
be treated as Refundable Transfer Taxes and U.S. and Canadian sales taxes,
stamp duty or registration taxes shall not be treated as Refundable
Transfer Taxes.
(197) "REGULATION" has the meaning set forth in Section 8.2(4)(b).
(198) "REMEDIATION WORK" has the meaning set forth in Section 5.11.
(199) "REPAIR EMPLOYEE" means an Employee who is identified as such and whose
name is listed on Schedule 1.1(199), as such schedule may be updated at
or immediately prior to the applicable Employment Transfer Date.
(200) "REPAIR INVENTORY" means repair inventory (including applicable labour
and overhead and other capitalized costs, if any) listed on, and located
at the locations referenced in Schedule 1.1(200).
Execution Copy
- 25 -
(201) "REPAIR SERVICES AGREEMENT" means the agreement in the form attached
hereto as Exhibit G.
(202) "RESIDUAL KNOWLEDGE" means the concepts or ideas related to, but not
embodied in tangible form, the Operations, and unintentionally retained
in the unaided memory of a Transferring Employee who has or has had
access to such concepts or ideas; provided, however, that neither
Purchaser nor Designated Purchasers, nor their Affiliate, shall encourage,
or shall have encouraged, the Transferring Employees to commit such
concepts or ideas to memory for later use.
(203) "REWORKED BONEPILE INVENTORY" refers to Bonepile Inventory that the
Purchaser or Designated Purchasers has re-worked (including returning to
supplier for credit) or re-treated to become useable Inventory.
(204) "SECOND PARTY" has the meaning set forth in Section 7.4(5).
(205) "SECURED ASSETS" has the meaning set forth in Section 5.32.
(206) "SECURITY DOCUMENTATION" refers to a general security agreement and
ancillary instruments and registrations (including requisite
acknowledgments and subordinations from existing secured creditors)
provided by the Purchaser and Designated Purchasers in favour of the
Seller and Designated Sellers sufficient to obtain a first priority
(subject to permitted encumbrances) fully perfected security interest in
the shares of French Newco, Equipment, and Inventory (for as long as any
of the Purchase Price has not been paid by Purchaser and Designated
Purchasers) securing the indebtedness evidenced by the Promissory Notes,
minus one hundred million dollars ($100,000,000).
(207) "SELLER" has the meaning set forth in the preamble to this Agreement.
(208) "SELLER CAP" has the meaning set forth in Section 7.4(1).
(209) "SELLER INDEMNITEES" has the meaning set forth in Section 7.3.
(210) "SELLER ONE-TIME DEDUCTIBLE" has the meaning set forth in Section 7.4(1).
(211) "SELLER THRESHOLD" has the meaning set forth in Section 7.4(1).
(212) "SELLER'S EMPLOYEE PLANS" means any pension plan, supplemental pension
plan, profit sharing plan, savings plan, retirement savings plan, bonus
plan, incentive compensation plan, deferred compensation plan, stock
purchase plan, stock option plan, employee benefit plan, vacation plan,
leave of absence plan, employee assistance plan, automobile
leasing/subsidy/allowance plan, relocation plan, family support plan,
retirement plan,
Execution Copy
- 26 -
medical, hospitalization or life insurance plan, disability plan, sick
leave plan, redundancy or severance plan, retention agreement, death
benefit plan, compensation arrangement, including any base salary
arrangement, overtime policy, on-call policy or call-in policy, or any
other plan, program, arrangement, policy or practice that is maintained or
otherwise contributed to, or required to be contributed to, by or on
behalf of the Seller or any of the Designated Sellers with respect to
Employees in effect as at of the Employment Transfer Date.
(213) "SELLER'S STOCK PLANS" means Nortel Networks 1986 and 2000 stock option
plans, the Nortel Networks Stock Purchase Plans and the Plan d'Epargne
D'Enterprise (i.e., the Nortel Networks French company savings plan).
(214) "SHARED LABS" means laboratories owned by the Seller or Designated
Sellers and used by the Design Employees and other Seller or Designated
Sellers design employees (including the Ottawa hardware sustaining
lab, the Ottawa software sustaining lab and Monkstown hardware and
software sustaining labs).
(215) "SHARED SERVICES AGREEMENT" means the Shared Services Agreement between
the Seller and the Purchaser to be executed on the first Closing Date, in
the form attached hereto as Exhibit B.
(216) "SINGLE USE DESKTOP SOFTWARE" means the software which is licensed to
the Seller or its Affiliates under a transferable, shrink-wrap or
click-wrap license agreement for use on a single computer and is, as of
the Effective Time, installed on any of the PCs.
(217) "SKILLED TRADE EMPLOYEE" means an Employee who is employed in a position
that is recognized as a skilled trade occupation under the CUCW
Collective Labour Agreement.
(218) "SUBSEQUENT EQUIPMENT PUT PERIOD" has the meaning set forth in Section
5.16(1).
(219) "SUBSEQUENT EQUIPMENT USAGE PERIOD" shall mean the period which starts at
the end of the twelfth (12th) month after the applicable Closing Date and
continues through to the end of the fifteenth (15th) month after the
applicable Closing Date.
(220) "SUBSEQUENT OBSOLETE EQUIPMENT" means all Equipment that (a) is not yet
fully depreciated at the end of the Equipment Usage Period, (b) was
forecasted by the Purchaser or Designated Purchasers or Affiliates at the
end of the Equipment Usage Period to be used to meet Product supply
requirements, or otherwise to be in use by the Purchaser or Designated
Execution Copy
- 27 -
Purchasers or Affiliates, and (c) was not used in the Operations, or
otherwise in use by the Purchaser or Designated Purchasers or Affiliates
during the Subsequent Equipment Usage Period.
(221) "SUBSEQUENT OBSOLETE EQUIPMENT PUT OPTION" has the meaning set forth in
Section 5.16(1).
(222) "SUSTAINING DESIGN SERVICES" shall have the meaning set forth in the
Amended and Restated Contract Manufacturing Services Agreement.
(223) "SUBSTITUTABLE EQUIPMENT" means, with respect to any Equipment which
ceases to be in use by Purchaser or one of its Affiliates thereof during
the applicable put period, any equipment which the Purchaser or one of its
Affiliates thereof purchases or leases after such Equipment has ceased
being in use by Purchaser or one of its Affiliates thereof, if (i) such
Equipment is of the same kind, or suitable for the same purpose, as such
other equipment, and is configured (or is readily configurable without
significant cost or delay) for the same purpose as such other equipment,
and (ii) either is located at the same Facility as such Equipment or at
another facility of Purchaser or one of its Affiliates thereof to which
such Equipment could have been transported at reasonable cost and without
significant disruption to operations.
(224) "TAX" means any domestic or foreign federal, state, local, provincial, or
municipal taxes or other impositions by any Government Entity, including
the following taxes and impositions: net income, gross income, individual
income, capital, value added, goods and services, gross receipts, sales,
use, advalorem, business rates, transfer, franchise, profits, business,
real property, gains, service, service use, withholding, payroll,
employment, social security, excise, severance, occupation, premium,
property, customs, duties or other type of fiscal levy and all other
taxes, fees, assessments, deductions, withholdings or charges of any kind
whatsoever, together with any interest and penalties, additions to tax or
additional amounts imposed or assessed with respect thereto.
(225) "TAX BENEFIT" means, with respect to any Loss incurred by an Indemnified
Party, the present value of all Tax deductions, other reductions in
taxable income and Tax credits to the Indemnified Party as a result of
incurring or paying the Loss indemnified, net of any reduction in Tax
credit or Tax deduction, or increase in taxable income incurred by the
Indemnified Party as a result of receiving the indemnification payment
hereunder with respect to such Loss.
(226) "TAX RETURN" means any return, declaration (including estimated Tax),
report, statement, claim for refund or credit, or information return or
Execution Copy
- 28 -
statement relating to Taxes, including information returns or reports with
respect to backup withholding and payments to Third Parties, and any
schedule or attachment relating to any of the foregoing or any amendment
thereof.
(227) "THIRD PARTY" means any non-Affiliate of the Parties.
(228) "THIRD PARTY ACTION" has the meaning set forth in Section 7.5(1).
(229) "THIRD PARTY LICENSES" means licenses and other agreements, other than the
Patent Cross Licences and the Corporate Desktop Software, and licenses
for the Transferred Business Applications, pursuant to which any Third
Party has granted the Seller or any Affiliates of the Seller any rights in
Intellectual Property used in the Operations.
(230) "TOTAL PURCHASER CPP/QPP/EI PAYMENTS" shall mean the total amount of CPP/
QPP/ EI Tax paid by the Purchaser or a Designated Purchaser with respect
to the Transferring Employees in the calendar year in which the Closing
applicable to such Transferring Employees occurs.
(231) "TOTAL SELLER CPP/QPP/EI PAYMENTS" shall mean, with respect to the
Employees who following the applicable Closing become Transferring
Employees, the total amount of CPP/ QPP/ EI Tax paid by the Seller or a
Designated Seller in the calendar year in which the Closing applicable
to such Transferring Employees occurs.
(232) "TRANSACTION DOCUMENTS" means this Agreement, each Local Sale Agreement,
each Real Property Lease, the Amended and Restated Master Contract
Manufacturing Services Agreement, the Confidentiality Agreement, the
Shared Services Agreement, the Licenses of Space, the Nortel Propriety
Software License Agreement, the Repair Services Agreement, the Logistics
Services Agreement, the Brazil Asset Purchase Agreement and all other
ancillary agreements to be entered into or documentation delivered by
any Party pursuant to this Agreement or any Local Sale Agreement.
(233) "TRANSFER DATE" has the meaning set forth in Section 2.6(3).
(234) "TRANSFER FEES" means all registration, transfer, conveyance, recording,
license and other similar fees, expenses or charges.
(235) "TRANSFER REGULATIONS" means the legislation implementing or having the
effect of implementing the provisions of the European Union Directive
2001/ 23/ EEC (March 12, 2001), as amended, and any other applicable
provision affecting the transfer of employees under applicable Law
(including but not limited to the Transfer of Undertakings (Protection of
Execution Copy
-29-
Employment) Regulation 1981 as enacted by Northern Ireland legislation
and as amended, article 122.12 of the French Labour Code.
(236) "TRANSFER TAXES" means all goods and services, sales, land transfer, gross
receipt, documentary, value-added, stamp duties, and all other similar
taxes, duties, registration charges or other like charges related to the
transactions contemplated in this Agreement together with any interest
and penalties, additions to tax or additional amounts imposed or assessed
with respect thereto.
(237) "TRANSFER VALUE" has the meaning set forth in Section 2.6(3).
(238) "TRANSFERABLE EQUIPMENT" has the meaning set forth in Section 5.14(2).
(239) "TRANSFERABLE EQUIPMENT TRANSFER DATE" has the meaning set forth in
Section 5.14(2).
(240) "TRANSFERABLE EQUIPMENT TRANSFER VALUE" has the meaning set forth in
Section 5.14(2).
(241) "TRANSFERRED BUSINESS APPLICATIONS" means the software applications
licensed to the Seller or a Designated Seller and used primarily in the
Operations, all of which are identified on Schedule 1.1(118).
(242) "TRANSFERRING EMPLOYEE" means, with respect to any Closing, any Employee
who (i) accepts an Employment Offer by the Purchaser or the relevant
Designated Purchaser and commences employment with the Purchaser or one of
the Designated Purchasers on the Employment Transfer Date; or (ii) whose
employment is otherwise transferred on the Employment Transfer Date to the
Purchaser or one of the Designated Purchasers pursuant to this Agreement
the CUCW Collective Labour Agreement and/or applicable Law; (iii) or is
an employee of French Newco at the time of the applicable Closing Date.
(243) "TRANSITION PAYMENT" has the meaning set forth in Section 5.18.
(244) "TRUED UP EMPLOYEE SCHEDULES" has the meaning set forth in Section 5.1
(3)(b).
(245) "UK DESIGN EMPLOYEES" means a Design Employee of the Seller or Designated
Sellers based in the U.K. and listed on Schedule 1.1(44), as such schedule
may be updated at or immediately prior to the applicable Employment
Transfer Date.
- 30 -
(246) "UK EMPLOYEE" means an employee of the Seller or the Designated Sellers
based in the UK and listed on Schedule 4.12(1), as such schedule may
be updated at or immediately prior to the applicable Employment Transfer
Date.
(247) "UK EMPLOYMENT COMMITMENT" has the meaning set forth in Exhibit D-1.
(248) "UK EMPLOYMENT OFFER" has the meaning set forth in Exhibit D-1.
(249) "UK TRANSFERRING EMPLOYEES" has the meaning set forth in Exhibit D-1.
(250) "UNASSIGNED FINISHED GOODS INVENTORY" means all Inventory purchased by the
Purchaser and the Designated Purchasers under this Agreement that is
finished goods not assigned to a specific customer order as of the
applicable Closing, referenced as such on Schedule 1.1(113).
(251) "UNASSIGNED FINISHED GOODS PUT OPTION" has the meaning set forth in
Section 5.15(1).
(252) "UNASSIGNED FINISHED GOODS PUT PERIOD" means the ninety (90) day period
after the applicable Closing Date.
(253) "UNREPAIRABLE BONEPILE INVENTORY" means Bonepile Inventory which is not
subsequently converted to Reworked Bonepile Inventory during the Bonepile
Inventory Put Period.
(254) "UNUSED INVENTORY" means (i) Inventory purchased by the Purchaser or
Designated Purchasers under this Agreement; and (ii) other materials on
order through Open Purchase Orders, referenced as such on Schedule
1.1(113), and that are not cancellable at any time during the Inventory
Put Period, and, in each case, which are not sold during the Inventory Put
Period and are physically held and usable by the Purchaser or Designated
Purchaser at the end of the Inventory Put Period.
(255) "UNUSED INVENTORY PUT OPTION" has the meaning set forth in Section
5.15(1).
(256) "UNUSED UNASSIGNED FINISHED GOODS INVENTORY" means Unassigned Finished
Goods Inventory that is not sold during the Unassigned Finished Goods Put
Period and is physically held and [USABLE] by the Purchaser or Designated
Purchaser at the end of the Unassigned Finished Goods Put Period.
(257) "U.S. EMPLOYEE" means an employee of the Seller or the Designated Sellers
based in the U.S. and listed on Schedule 4.12(1), as updated on or
immediately prior to the applicable Employment Transfer Date.
Execution Copy
- 31 -
(258) "U.S. EMPLOYMENT OFFER" has the meaning set forth in Exhibit D-9A.
(259) "U.S. Leave Employee" has the meaning set forth in Exhibit D-9A.
(260) "U.S. Transferring Employee" has the meaning set forth in Exhibit D-9A.
(261) "U.S. Visa Employee" has the meaning set forth in Exhibit D-9A.
(262) "Visa Employees" has the meaning set forth in Section 4.12(6).
(263) "VSHA" means individually or collectively the virtual systems house
agreements attached as exhibits to the Amended and Restated Master
Contract Manufacturing Services Agreement.
SECTION 1.2 INCLUDING
The words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation".
SECTION 1.3 MATERIAL
The word "material" shall be interpreted having regard inter alia to the
quantum of the Purchase Price.
SECTION 1.4 ARTICLES AND SECTIONS
The words "Article" or "Section" followed by a number mean and refer to
the specified Article or Section of this Agreement, unless otherwise noted.
ARTICLE 2
PURCHASE AND SALE OF ASSETS: THE CLOSING
SECTION 2.1 PURCHASE AND SALE
(1) Assets. On the terms and subject to the conditions set forth in this
Agreement and each Local Sale Agreement, at each applicable Facility/
Design Closing the Purchaser shall cause the relevant Designated Purchaser
set forth in Schedule 1.1 to purchase from the relevant Designated Seller
(the name of which is set forth opposite the Designated Purchaser in
Schedule 1.1), and the Seller shall cause the relevant Designated Seller
to sell, convey, assign, transfer and deliver to the relevant Designated
Purchaser, all of the Seller's and such Designated Seller's rights, title
and interest in and to the following assets (such assets referred to
herein individually as the "FACILITY/DESIGN ASSETS" for each applicable
Facility/Design Closing, and collectively herein as the "ASSETS"):
(a) the Inventory as of the Effective Time, excluding (i) any Inventory
not forecasted to be used in the twelve (12) months immediately
following
Execution Copy
- 32 -
the applicable Closing Date based on the Seller's forecasts of
orders to be fulfilled (which forecast is set forth in Schedule
4.15(1)), and (ii) Excluded Bonepile Inventory;
(b) the End of Life Inventory as of the Effective Time; provided,
however, that:
(i) any End of Life Inventory exceeding 3% of the total projected
annual global revenue for the Purchaser and its Affiliates
from the Products as set forth in Schedule 4.15(1) (which
shall include for the purpose of calculating the 3% cap all
End of Life Inventory sold pursuant to the provisions of the
Brazil Asset Purchase Agreement) shall not be an Asset and
shall be dealt with on a consignment basis as set forth in the
Amended and Restated Master Contract Manufacturing Services
Agreement ("END OF LIFE INVENTORY CAP"); and
(ii) should any of Facility/Design Closings not occur as a result
of a termination of the Agreement in accordance with Section
9.2, the Parties shall negotiate in good faith to read just
the End of Life Inventory Cap to reflect the impact of the
Facility/ Design Closings that did not occur;
(c) the Repair Inventory as of the Effective Time, excluding any Repair
Inventory not forecasted to be used in the twelve (12) months
immediately following the applicable Closing Date based on Seller's
forecasts of repair orders to be fulfilled (which forecast is set
forth in Schedule 4.15(1));
(d) the Owned Equipment;
(e) the Equipment at Third Party Locations;
(f) the Assumed Contracts (but excluding any amounts owing prior to or
with respect to periods prior to, or goods purchased or services
performed prior to, the applicable Closing pursuant to an Assumed
Contract, save and except with respect to Open Purchase Orders;
(g) the Transferred Business Applications;
(h) Single Use Desktop Software;
(i) the Open Purchase Orders as of the Effective Time;
Execution Copy
-33-
(j) the Operations Information currently used in or relating to the
country to which such Closing relates, subject to the Seller's or
Designated Sellers' right to retain a copy of such material to
comply with applicable Law or with a third party agreement;
(k) the Employee Information;
(l) to the extent assignable, the Operating Permits;
(m) certain owned PCs and ancillary equipment in accordance with the
terms of Section 2.6(3);
(n) the security deposits or advances deposited or paid by or on behalf
of the Seller or the applicable Designated Seller as lessee or
sublessee or pursuant to any Assumed Contract all of which will be
listed or otherwise described on Schedule 2.1(1)(n);
(o) to the extent assignable, all warranty rights and associated claims
of the Seller or the applicable Designated Seller with respect to
all manufacturers' warranties covering the Owned Equipment (the
"EQUIPMENT WARRANTIES");
(p) all of the share capital, and any outstanding indebtedness owed
to Seller or any Designated Seller, of French Newco;
(q) The prepaid expenses of the Seller or the applicable Designated
Seller relating to the Operations or the Assets (the "PREPAID
EXPENSES"), all of which will be listed on Schedule 2.1(1)(q); and
(r) goodwill (which shall not be deemed to include any Intellectual
Property).
(2) Excluded Assets. Notwithstanding anything in this Section 2.1 or
elsewhere in this Agreement to the contrary or anything to the contrary in
any other Transaction Document, the Assets shall not include the following
(collectively, the "EXCLUDED ASSETS"):
(a) any cash and cash equivalents, accounts and notes receivable and
securities (including capital stock of Affiliates) of the Seller or
any of its Affiliates (including all intercompany and intracompany
receivables, all bank account balances and all petty cash);
(b) any amounts payable to or claims or causes of action of the Seller
or any of its Affiliates in respect of Taxes, including duty
drawbacks, Tax credits and Taxes refundable to the Seller or any of
its Affiliates in
Execution Copy
-34-
respect of transactions prior to the Effective Time or in respect of
the period or portion thereof ending on or prior to the Effective
Time;
(c) any refunds due from, or payments due on, claims with the
insurers of Seller or any of its Affiliates in respect of losses
arising prior to the Effective Time;
(d) all books, documents, records and files prepared in connection with
or relating to the transactions contemplated by this Agreement,
including bids received from other parties and analyses relating
to the Operations;
(e) other than the Assumed Contracts and the license agreements for
Transferred Business Applications, any rights of the Seller or any
of its Affiliates under any contract, arrangement or agreement
(including this Agreement, any other Transaction Document or any of
the Company-Wide Contracts);
(f) any and all Intellectual Property owned by or licensed to the
Seller or any of its Affiliates (and any tangible embodiments of
any such property), including any rights in the Third Party
Licenses, any Patent Cross License, Design Tools, any computer
software and the Network Identifiers, other than Sellers' or
Designated Sellers' rights or interests in Intellectual Property
licensed to the Seller or its Affiliates in a Transferred Business
Applications;
(g) any and all employee data, other than the Employee Information;
(h) such portion of the Operations Information that the Seller or
Seller's Affiliates are, in the reasonable opinion of Seller's
counsel, required by Law or by agreement with a Third Party to
retain and competitively sensitive information regarding Contracts
which are not Assumed Contracts, or license agreements for
Transferred Business Applications, provided that the Purchaser shall
be provided copies of such material unless contrary to Law or
agreement with a Third Party;
(i) any asset of the Seller or any of the Seller's Affiliates that would
constitute an Asset (if owned by the Seller or a Designated Seller
on the relevant Closing Date) that is conveyed or otherwise disposed
of during the period from the date hereof until the relevant Closing
Date (y) in the ordinary course of business and not in violation of
the terms of this Agreement or (z) as otherwise expressly permitted
by the terms of this Agreement;
(j) the Seller's Employee Plans;
Execution Copy
-35-
(k) title to the Leased Equipment;
(l) the Corporate Desktop Software;
(m) the Excluded Business Applications and the Licensed Business
Applications;
(n) the Shared Labs and the equipment located therein;
(o) Obsolete Equipment;
(p) the other assets and rights listed or described in Schedule
2.1(2)(p); and
(q) any and all other assets or rights of the Seller or the Seller's
Affiliates not specifically included in Section 2.1(1).
(3) Non-Assignable Assets. Notwithstanding anything contained herein to the
contrary, Section 2.1 of this Agreement shall not require the assignment
or sublicense of any of the Assumed Contracts, or license agreement for
the Transferred Business Applications licensed to Seller or Designated
Sellers by Third Parties, if any assignment or attempted assignment of the
same without the consent of any Person, other than of the Seller or any of
its Affiliates, would constitute a breach thereof, or if such Assumed
Contract or license agreements for the Transferred Business Applications
may not, by virtue of Law, be assigned or sublicensed and (the requirement
for such consent is disclosed with respect to such Assumed Contract or
Transferred Business Applications in Schedule 1.1(37) (the "NON-ASSIGNABLE
ASSETS"). The Seller shall, prior to and after the applicable Closing
Date, and shall cause the Designated Sellers to, use their commercially
reasonable efforts, and the Purchaser shall cooperate in all reasonable
respects with the Seller, to obtain all consents and waivers and to
resolve all impracticalities of assignments or transfers necessary to
convey (or sublicense, in the case of Assumed Contracts, or license
agreements for the Transferred Business Applications consisting of
licenses that are not assignable without the consent of the licensor) any
of the Assets to the Purchaser; provided, however, that except as
otherwise provided in Section 5.9, such efforts by the Seller or any
Designated Seller shall not include any requirement of the Seller or any
of its Affiliates to pay money, commence any litigation, or offer or grant
any accommodation, financial or otherwise, to any Third Party, except that
the Seller and the applicable Designated Seller, on the one hand, and the
Purchaser and applicable Designated Purchaser, on the other hand, shall
each pay half of any amounts that are required under the terms of such
Assumed Contracts or Transferred Business Applications to be paid in
connection with such assignment or sublicense, or provided to have been
paid prior to the
Execution Copy
-36-
applicable Closing Date (including any payments for maintenance and
support for periods, or portions, therefore, ending before the
applicable Closing Date). If any such Non-Assignable Assets are not able
to be assigned or transferred (whether because a consent in respect of
any Non-Assignable Assets could not be obtained or otherwise), (x) the
Seller shall (and shall cause the Designated Sellers to) use their
commercially reasonable efforts (it being understood that such efforts
shall not include any requirement of the Seller or any of its Affiliates
to pay money, commence litigation, or offer or grant any accommodation,
financial or otherwise, other than provided above, to provide or cause
to be provided to the Purchaser, to the extent permitted by applicable
Law, the benefits of any such Non-Assignable Assets and cooperate with
Purchaser or the applicable Designated Purchaser in any reasonable
arrangement designed to provide Purchaser or the applicable Designated
Purchaser the material benefits intended to be assigned under the
relevant Asset, including enforcement at the cost and for the account of
Purchaser or a Designated Purchaser of any and all rights of Seller or the
applicable Designated Seller against the other party thereto arising out
of the breach or cancellation thereof by such other party or otherwise;
(y) the Seller shall (to the extent the Purchaser has undertaken the
responsibilities thereunder) promptly pay or cause to be paid to the
Purchaser all monies received by the Seller or any of its Affiliates with
respect to any such Non-Assignable Asset; and (z) the Purchaser shall, to
the extent the Seller or Seller's Affiliates are able to provide the
benefits of such Non-Assignable Assets and comply with (y) above, perform
and discharge on behalf of each of the Seller or any Designated Seller all
of the Seller's or such Designated Seller's debts, liabilities,
obligations or commitments, if any, thereunder, and subject to and in
accordance with the provisions thereof.
SECTION 2.2 ASSUMED LIABILITIES
(1) On the terms and subject to the conditions set forth in this Agreement and
the Local Sale Agreements, at each applicable Facility/ Design Closing the
Purchaser shall cause the relevant Designated Purchaser to assume and
become responsible for, and to perform, discharge and pay when due, and
indemnify the Seller and its Affiliates against and hold each of them
harmless from, the following obligations and liabilities, whether known or
unknown, absolute, contingent, determined, determinable or otherwise, if
the grounds or facts for such obligations and liabilities came into
existence or arose after the applicable Facility/ Design Closing (or, in
the case of Section 2.2(1)(a), whether accrued, presently in existence or
arising hereafter) and were relating to or arising out of the applicable
Facility/ Design Assets (such obligations and liabilities are referred to
individually herein as the "FACILITY/DESIGN ASSUMED LIABILITIES" for each
applicable Facility/ Design
Execution Copy
-37-
Closing and all Facility/ Design Assumed Liabilities are collectively
referred to herein as the "ASSUMED LIABILITIES"):
(a) except as otherwise specified in Section 2.2(2)(d ) or elsewhere
in this Agreement or the Local Sale Agreements, all obligations and
liabilities related to or arising from or in connection with: (A)
the employment (or termination of employment) by the Purchaser or
the Designated Purchaser of the Transferring Employees (or any of
them) that arise or accrue on and after such Transferring Employees'
Employment Transfer Date; (B) the Purchaser's or the relevant
Designated Purchaser's Employment Offer, Quebec Employment Notice,
and European Contract of Employment Offer, as applicable, to any
Employee; or (C) the failure of the Purchaser or any of the
Designated Purchasers to satisfy their respective obligations as
provided in Article 6, including Exhibit D-1 et. seq.;
(b) all obligations or liabilities of Seller or any of its Affiliates
with respect to accrued and unused vacation days, as set out in
Schedule 4.12(9), of Transferring Employees as at the applicable
Employment Transfer Date;
(c) all executory obligations and liabilities of the Seller or any of
its Affiliates arising from or in connection with the Open Purchase
Orders;
(d) personal property taxes, other ad valorem taxes, with respect to the
Facility/ Design Assets and any other liabilities or obligations
relating to Taxes for any period or portion thereof ending after the
Effective Time. For the avoidance of doubt, such Taxes for the year
that includes the applicable Closing Date shall be allocated pro
rata based on the number of days that occur before and after such
Closing, with such Taxes being borne by the Seller based on the
ratio of the number of days in the relevant period prior to the
relevant Closing Date to the total number of days in the actual
taxable period with respect to which such Taxes are assessed,
irrespective of when such Taxes are due, become a lien or are
assessed, and such Taxes being borne by the Purchaser based on the
ratio of the number of days in the relevant period after the
relevant Closing Date to the total number of days in the actual
taxable period with respect to which such Taxes are assessed,
irrespective of when such Taxes are due, become a lien or are
assessed.
(2) Notwithstanding anything in this Section 2.2 or elsewhere in this
Agreement or any other Transaction Document to the contrary, the Assumed
Liabilities
Execution Copy
-38-
shall not include, and neither the Purchaser nor any of its Affiliates will
assume at any of the Closings, any of the following liabilities or obligations
(collectively, "EXCLUDED LIABILITIES"):
(a) liabilities or obligations for indebtedness for borrowed money or
guarantees, or other financial assistance obligations incurred by
the Seller or any of its Affiliates or relating to the Assets;
(b) warranty and other liabilities or obligations with respect to
products sold by Seller or any Designated Seller prior to the
Effective Time for the relevant Closing;
(c) liabilities or obligations of the Seller or the Designated Sellers
relating to the execution, delivery and consummation of this
Agreement or the other Transaction Documents and the transactions
contemplated hereby and thereby;
(d) liabilities or obligations of the Seller or any of its Affiliates
relating to Taxes for any period or portion thereof ending on or
before the Effective Time for the relevant Closing (except Taxes
specifically allocated to or assumed by the Purchaser or the
Designated Purchasers under this Agreement or the Local Sale
Agreements);
(e) except as specified otherwise in this Agreement or as may otherwise
be required by Law, the liabilities or obligations of the Seller or
any of its Affiliates that relate to or arise from or in connection
with the employment or termination of employment by the Seller or
the Designated Sellers of Transferring Employees on or prior to such
Transferring Employees' Employment Transfer Date, or the employment
or termination of employment of any of Seller's or such Designated
Seller's employees who are not Transferring Employees;
(f) liabilities or obligations arising out of a failure of the Seller or
the Designated Sellers to fulfill their respective obligations as
provided for in Article 6;
(g) the Environmental Liabilities of the Seller;
(h) any amounts owing prior to, or with respect to periods prior to, or
goods purchased or services performed prior to, the applicable
Closing pursuant to an Assumed Contract, save and except with
respect to Open Purchase Orders;
(i) any and all other liabilities or obligations of the Seller or any of
its Affiliates, whether known or unknown, accrued, absolute,
contingent,
Execution Copy
-39-
determined, determinable or otherwise, that are not expressly assumed
by the Purchaser or the Purchaser's Affiliates pursuant to Section 2.2(1);
and
(j) any liabilities or obligations of the Seller or Designated Sellers
relating primarily to, or arising under, the Excluded Assets.
Nothing in this Section 2.2(2) shall be construed to negate any liability or
obligation explicitly assumed by the Purchaser or a Designated Purchaser, or
expressly indemnified by either Party, elsewhere in this Agreement.
SECTION 2.3 PURCHASE PRICE AND PAYMENT PROCEDURES
(1) In full consideration for the transfer of the Facility/ Design Assets for
each Facility or for the Design Operations, as the case may be, on the
terms and subject to the conditions of this Agreement and the Local Sale
Agreement at each Facility/ Design Closing, the Purchaser shall cause the
relevant Designated Purchaser to assume, the Facility/ Design Assumed
Liabilities, attributable to such Closing and pay, or cause to be paid on
behalf of the Designated Purchaser, to the Seller or the relevant
Designated Seller, at such Closing, an amount equal to the estimated
Facility/ Design Estimated Net Assets Value as of the Reference Date
referred to in the Facility/ Design Net Asset Statement (the "FACILITY/
DESIGN ESTIMATED NET ASSETS VALUE") together with the additional purchase
price set forth in Schedule 1.1 with respect to such Designated Purchaser.
No more than ten (10) nor less than seven (7) Business Days prior to each
Closing Date, Seller shall deliver to Purchaser a statement (the
"FACILITY/DESIGN NET ASSET STATEMENT"), executed on behalf of Seller,
setting forth in reasonable detail the calculation of the Facility/ Design
Estimated Net Assets Value in respect of the Assets that are the subject
of such Closing, which shall be accompanied by the applicable schedules of
the relevant Facility/ Design Assets and Facility/ Design Assumed
Liabilities. The Facility/ Design Estimated Net Assets Value together with
the additional purchase price of two hundred million dollars
($200,000,000) as set forth in Schedule 1.1 with respect to such
Designated Purchaser for such Closing, shall be referred to herein as the
"FACILITY/ DESIGN PURCHASE PRICE". The sum of Facility/ Design Purchase
Prices for all Facilities and the Design Operations, less the sum of
Facility/ Design Purchase Prices in respect of Facility/ Design Closings
which have not occurred by the date specified in Section 9.2(4), shall be
referred to herein as the "PURCHASE PRICE".
(2) The Parties have agreed as of the date hereof to certain advanced cash
payments between the Parties related to the amounts payable pursuant to
the terms of this Agreement (the "CASH FLOW PAYMENTS") as set forth in
Schedule 2.3(2). The Parties acknowledge that the Cash Flow Payments
strictly relate
Execution Copy
-40-
to optimization of each Parties cash management objectives in relation to
the transactions contemplated by the Agreement and do not represent
agreement between the Parties as to the amount of any additional
purchase price payable in relation to any of the Facility/Design
Closings. As such, the Parties agree that the Cash Flow Payments may
represent an advance or instalment of the two hundred million dollars
($200,000,000) referenced in Section 2.3(1).
(3) Subject to the provisions of Section 2.3(2), at each Facility/Design
Closing, the relevant Designated Purchaser shall pay by wire transfer, to
the Seller or applicable Designated Seller as the case may be, an amount
equal to twenty-five percent (25%) of (i) the applicable Facility/Design
Estimated Net Assets Value, plus (ii) the applicable Cash Flow Payment
Amount referenced for such Facility/Design Closing in Schedule 2.3(2)
(collectively the "INITIAL PAYMENT"). Thereafter, subject to appropriate
adjustments to the Facility/Design Purchase Price for each Facility/Design
Closing pursuant to the provisions of Section 2.4, Section 7.2 and Section
7.3, the Purchaser shall pay, or cause to be paid, to Seller (which
Seller will accept on behalf of itself and/or the relevant Designated
Seller) the amount of (i) the applicable Facility/Design Estimated Net
Assets Value, plus (ii) the applicable Cash Flow Payment Amount referenced
for such Facility/Design Closing in Schedule 2.3(2), less the Initial
Payment (the "REMAINING CLOSING AMOUNT") in three (3) equal instalments
according to the following payment schedule:
PAYMENT AMOUNT PAYMENT DUE DATE
-------------- ------------------
1/3 of Remaining Closing Amount Applicable Closing Date + 91 days
1/3 of Remaining Closing Amount Applicable Closing Date + 181 days
1/3 of Remaining Closing Amount Applicable Closing Date + 271 days
Notwithstanding the above, for any applicable Facility/Design Closing
that occurs on or after May 1, 2005, the amount of the Initial Payment
shall be one-third (1/3) of the (i) the applicable Facility/Design
Estimated Net Assets Value, plus (ii) the applicable Cash Flow Payment
Amount referenced for such Facility/Design Closing in Schedule 2.3(2),
and the Remaining Closing Amount shall be paid in two (2) equal
instalments according to the following payment schedule:
Execution Copy
-41-
PAYMENT AMOUNT PAYMENT DUE DATE
-------------- ------------------
1/2 of Remaining Closing Amount Applicable Closing Date + 91 days
1/2 of Remaining Closing Amount Applicable Closing Date + 181 days
The obligation to pay each Remaining Closing Amount in respect of each
Facility/Design Closing shall be evidenced by a Promissory Note.
All payments made pursuant to this Section 2.3 shall be made in the
currency referenced in the applicable VSHA, or otherwise in United
States dollars.
Notwithstanding the above, the amount of each outstanding quarterly
payment for each Facility/Design Closing will be adjusted up or down, as
the case may be, to reflect any adjustments to the Facility/Design
Purchase Price, if any, required pursuant to the provisions of Section
2.4, Section 7.2 and Section 7.3 of this Agreement.
(4) Allocation of Purchase Price.
(a) The Seller and the Purchaser have allocated on a preliminary basis,
each Facility/Design Purchase Price, for each Facility and the
Design Operations as set forth in Schedule 1.1.
(b) Such allocations shall be finalized, in accordance with the
preliminary allocations methodology, as promptly as practicable
following the last Closing Date, but in any event not later than
ten (10) Business Days following the final determination of the
Purchase Price pursuant to Section 2.4.
(c) The Seller and the Purchaser hereby agree to execute and file or
cause to be executed and filed all relevant Tax Returns and prepare
or cause to be prepared all financial statements, returns and other
instruments on the basis of the allocations referred to in Section
2.3(1). None of the Seller, the Designated Sellers, the Purchasers
or the Designated Purchasers shall take any position on any Tax
Return, before any Government Entity charged with the collection of
any Tax, or in any judicial proceeding that is inconsistent with
the allocation of the Purchase Price established pursuant to Section
2.3(1).
(d) Except as otherwise provided in this Agreement, neither the
Purchaser nor any of the Designated Purchasers, nor the Seller nor
any of the Designated Sellers, if applicable, shall be responsible
for any Tax liability or any other expense of, in the case of the
Purchaser or any Designated Purchasers, the Seller or any Designated
Seller and, in the case of the Seller or any Designated Seller, the
Purchaser or any
Execution Copy
-42-
Designated Purchaser, resulting from the reporting and allocations
made by such Party as contemplated by Section 2.3(1).
SECTION 2.4 ADJUSTMENT OF PURCHASE PRICE.
(1) Physical Count and Inspection. Within seven (7) calendar days before each
Facility/ Design Closing, the Seller or Designated Seller, as the case may
be, shall take a physical count and inspection of the Facility/ Design
Assets, as of the Effective Date in accordance with a mutually agreed
upon procedure for conducting such physical count and inspection, to
confirm the amount of each item of Facility/ Design Assets and their
conformity to any criteria set forth in this Agreement. Representatives of
the Purchaser or the Designated Purchaser, as the case may be, will be
entitled to participate in all aspects of such physical count and
inspection. The Closing Statement of Assets and Liabilities shall, in
respect of the Aggregate Asset Amount, reflect the results of each of the
physical counts of the Assets in respect of each Facility and the Design
Operations, as the case may be, as contemplated in this Section 2.4(1).
(2) Closing Statement of Assets and Liabilities. Within sixty (60) days
following the Closing Date for each Facility/ Design Closing, the Seller
shall prepare and submit to the Purchaser in accordance with the form set
out in Schedule 1.1 a final statement of the Facility/ Design Estimated
Net Asset Value, including Assets acquired, and Assumed Liabilities
assumed, at such Closing as at the applicable Closing Date (the "CLOSING
STATEMENT OF ASSETS AND LIABILITIES"), which shall contain specific lists
of Assets and Assumed Liabilities and shall be prepared (i) from the books
and records maintained by the Seller or the Designated Sellers, as the
case may be, in connection with the Operations (to the extent consistent
with clauses (ii) and (iii) below ); (ii) reflecting the results of the
physical inspections contemplated by Section 2.4(1) and any variances
therein from the information set forth in the Facility/ Design Net Asset
Statement, and (iii) in accordance with the definitions, guidelines and
assumptions set forth in Section 1.1(79), this Section 2.4(2) and
elsewhere in this Agreement. The Closing Statement of Assets and
Liabilities shall fairly present the aggregate Facility/ Design Closing
Net Assets Value in accordance with the terms of this Agreement. Provided
the Closing Statement of Assets conforms to the requirements set forth in
Section 1.1(79), the preparation and examination of the Closing Statement
of Assets and Liabilities is not intended to permit the introduction of
different judgments, accounting methods, policies, practices, procedures,
classifications or estimation methodology for purposes of determining the
asset and liability balances from those used in the Facility/ Design Net
Asset Statement. Each Party shall provide the other Party and its
representatives with access (on reasonable prior notice) to all relevant
books and records and relevant personnel during the preparation of each
Closing Statement of
Execution Copy
- 43 -
Assets and Liabilities and the resolution of any disputes that may arise
under this Section 2.4.
(3) Review of the Closing Statement of Assets and Liabilities. The Purchaser
and its representatives shall have sixty (60) days following receipt of
the Closing Statement of Assets and Liabilities in which to review and
examine the Closing Statement of Assets and Liabilities and all accounting
procedures, books, records and work papers used in the preparation of the
Closing Statement of Assets and Liabilities and to verify the accuracy,
presentation and other matters related to the preparation of the Closing
Statement of Assets and Liabilities and the conformity of the Facility/
Design Estimated Net Assets Value to the terms of Section 1.1(79). If the
Purchaser determines that the Closing Statement of Assets and Liabilities
(a) does not fairly present any items on such Closing Statement of Assets
and Liabilities or reflects a value for any assets or liabilities that
does not conform to the terms of Section 1.1(79) or includes any Excluded
Assets or Excluded Liabilities, or excludes any Assets or Assumed
Liabilities, the Purchaser shall have the right to propose any adjustment
thereto within such sixty (60) day period. Any such proposed adjustment
(an "ADJUSTMENT REQUEST") shall be submitted by the Purchaser to the
Seller within such sixty (60) day period and shall specify (i) the
amount(s) of the Adjustment Request; (ii) the item(s) to which such
Adjustment Request relates; and (iii) the facts and circum stances
supporting such Adjustment Request. Subject to any intentional
misrepresentation and/or fraud, unless the Purchaser notifies the
Seller within such sixty (60) day period that it objects to the Closing
Statement of Assets and Liabilities, such Closing Statement of Assets and
Liabilities shall be binding upon the Seller and the Purchaser. After the
end of such sixty (60) day period, the Purchaser may not introduce
additional disagreements with respect to any item in the Closing Statement
of Assets and Liabilities or increase the amount of any disagreement, and
any item not so identified shall be deemed to be agreed to by the
Purchaser and will be final and binding upon the Parties. Similarly, a
disagreement by the Purchaser does not provide any right to the Seller to
introduce any changes to the Closing Statement of Assets and Liabilities
not directly related to the disputed item. To the extent that a
disagreement relates to an error in the Closing Statement of Assets and
Liabilities and a similar error also exists in the Facility/Design Net
Asset Statement, then, to the extent that such disagreement is determined
to be an error, the error in the Closing Statement of Assets and
Liabilities and the error in the Facility/Design Net Asset Statement
shall both be corrected in determining the adjustment under Section
2.4(4). The Seller and the Purchaser shall use their commercially
reasonable efforts for forty-five (45) Business Days following the
Seller's receipt of any Adjustment Request to agree upon any proposed
adjustments to the Closing Statement of Assets and Liabilities
Execution Copy
- 44 -
at issue. If the Purchaser and the Seller, each acting reasonably and in
good faith, are unable to resolve all disagreements properly identified by
the Purchaser pursuant to this Section 2.4(3) within such period, then the
disputed matters shall be submitted to a mutually agreed upon expert from
one of the nationally recognized firms of certified public accountants in
the United States of America that is not the independent auditor of either
Party (the "INDEPENDENT ACCOUNTANT") for resolution. The Independent
Accountant will only consider those items and amounts set forth in the
Closing Statement of Assets and Liabilities as to which the Purchaser and
the Seller have disagreed within the time periods and on the terms
specified above, and must resolve the matter in accordance with the terms
and provisions of this Agreement. The Independent Accountant shall deliver
to the Purchaser and the Seller, as promptly as practicable and in any
event within one hundred and twenty (120) days after its appointment, a
written report setting forth the resolution of any such disagreement
determined in accordance with the terms of this Agreement. The Independent
Accountant shall select as a resolution the position of either the
Purchaser or the Seller for each item of disagreement (based solely on
presentations and supporting material provided by the Parties and not
pursuant to any independent review) and may not impose an alternative
resolution. The Independent Accountant's determination shall be final and
binding on the parties. The fees, costs and expenses of the Independent
Accountant relating to this Section 2.4(3) shall be paid as set forth in
Section 9.27.
(4) Adjustment and Payment Procedures. If the Facility/Design Closing Net
Assets Value set forth on the Closing Statement of Assets and Liabilities,
as finally determined pursuant to Section 2.4(3), exceeds the
Facility/Design Estimated Net Assets Value, the Purchase Price shall be
increased dollar for dollar by the amount of such excess and the Purchaser
shall pay (as noted below in this Section 2.4(4)) to the Seller on behalf
of itself and any applicable Designated Sellers the amount of such excess.
If the value of the Facility/Design Closing Net Assets Value set forth on
the Closing Statement of Assets and Liabilities, as finally determined
pursuant to Section 2.4(3), is less than the Estimated Net Assets Value,
the Purchase Price shall be decreased dollar for dollar by the amount of
such deficit and the Seller shall pay (as noted below in this Section
2.4(4)) to the Purchaser the amount of such deficit. Once determination of
the Facility/Design Closing Net Assets Value is deemed final in accordance
with Section 2.4(3), any amounts payable pursuant to this Section 2.4(4)
shall be made by adjusting the outstanding quarterly payment amounts of
the Purchase Price, if any, owing to the Seller pursuant to the provision
of Section 2.3. If no amounts remain owing pursuant to the provisions of
Section 2.3, such amount shall be paid forthwith by the applicable Party
to the other by wire transfer.
Execution Copy
- 45 -
Section 2.5 The Closings
(1) Except to the extent otherwise provided in the applicable Local Sale
Agreement, each closing of the purchase and sale of the Facility/Design
Assets and the assumption of the Facility/Design Assumed Liabilities (each
a "Facility/Design Closing" or a "Closing" and collectively with all
Facility/Design Closings, the "Closings") shall take place at the offices
of Stikeman Elliott LLP in Toronto, Ontario (or such other place as may be
agreed by the Seller and the Purchaser) commencing at noon local time on
the applicable Closing Date, with effect as of the Effective Time for such
Closing (subject to satisfaction or waiver in writing by the Purchaser
and the Seller of their respective conditions of such Facility/Design
Closing set forth in Section 8.1 and Section 8.2 and the relevant Local
Asset Sales Agreement) or as soon thereafter as practicable after the
satisfaction or waiver in writing by the Purchaser and the Seller of their
respective conditions relating to such Facility/Design Closing set forth
in Section 8.1 and Section 8.2 and the relevant Local Asset Sales
Agreement, or on such other date as shall be mutually agreed upon by the
Purchaser and the Seller. As of the date of this Agreement, the Parties
anticipate that the Closing for the Design Operations and the Montreal BAN
1 Facility, Montreal BAN 3 Facility, and Montreal OPTO 1 Facility will
occur on or about November 1, 2004, the Closing for the Calgary Westwinds
Facility will occur on or about February 1, 2005, and the Closing for the
Chateaudun Facility, the Monkstown Facility (other than Design
Operations) and for repair Operations and logistics Operations that are
not located at a Facility, will occur on or about May 1, 2005. The Parties
presently intend that the Design Operations will all be transferred at the
same Closing.
(2) At each Facility/Design Closing:
(a) the Purchaser shall deliver, or cause to be delivered, to the
Seller as agent for the Designated Seller, the Facility/Design
Purchase Price as determined in accordance with Section 2.3(1);
(b) each Primary Party shall deliver to the other Primary Party
customary reasonable evidence of the due fulfillment or waiver
of each of the conditions to performance of its obligations set
forth in Section 8.1 and Section 8.2, as the case may be, with
respect to such Facility/Design Closing;
(c) the Seller shall, and shall cause the relevant Designated Sellers
to, and the Purchaser shall, and shall cause the relevant Designated
Purchasers to, enter into and perform their respective obligations
to be
Execution Copy
- 46 -
performed at such Facility/Design Closing under the relevant Local
Sale Agreement to which such Facility/Design Closing relates;
(d) subject to and on the terms and conditions set forth in this
Agreement, the relevant Local Sale Agreement, and in accordance with
applicable Laws, the Purchaser shall deliver, or cause to be
delivered, to the Seller and the relevant Designated Seller
instruments of assumption in form and substance reasonably
satisfactory to the Seller and its counsel evidencing and effecting
the assumption by the Purchaser or its Affiliates of the
Facility/Design Assumed Liabilities to be assumed by the Purchaser
and the relevant Designated Purchaser at such Facility/Design
Closing and such other documents as are specifically required by
this Agreement, any other Transaction Document or applicable Law (it
being understood, however, that such instruments shall not require
the Purchaser, its Affiliates or any other Person to make any
additional representations, warranties or covenants, express or
implied, not contained in this Agreement or the relevant Local Sale
Agreement); and
(e) subject to and on the terms and conditions set forth in this
Agreement, the relevant Local Sale Agreement and in accordance with
applicable Laws, the Seller shall deliver or cause to be delivered
to the Purchaser or the relevant Designated Purchaser such
appropriately executed instruments of sale, assignment, transfer and
conveyance in form and substance reasonably satisfactory to the
Purchaser and its counsel evidencing and effecting the sale and
transfer to the Purchaser or the relevant Designated Purchaser of
the Facility/Design Assets to which such Facility/Design Closing
relates (it being understood, however, that such instruments shall
not require the Seller or any other Person to make any additional
representations, warranties or covenants, express or implied, not
contained in this Agreement or the relevant Local Sale Agreement).
SECTION 2.6 PERSONAL COMPUTERS
(1) Seller or the Designated Seller lease certain of the PCs and ancillary
equipment used by the Employees in the Operations (collectively, the
"LEASED PC EQUIPMENT"). The Parties agree that these PCs and ancillary
equipment are not intended to form part of the Facility/Design Assets.
The temporary use by the Purchaser and the Designated Purchaser, as the
case may be, following the applicable Closing Date of Leased PC Equipment
shall be governed by the Shared Services Agreement.
Execution Copy
-47-
(2) The Parties acknowledge the Purchaser and its Affiliates may, but shall
not be obligated to, contract with the lessors of such Leased PC Equipment
for the purchase or continued use of such equipment following the expiry
of the Shared Services Agreement.
(3) Schedule 2.6 lists and separately identifies each piece of Leased PC
Equipment used in the Operations. No later than (30) days prior to the
termination of the applicable "SSA Period" (as that term is defined in the
Shared Services Agreement), the Purchaser shall be entitled to request
that (i) Seller approach the lessor(s) and negotiate on behalf of
Purchaser or a Designated Purchaser, either a buyout of such equipment (in
which case such equipment shall be deemed to Owned Equipment and
transferred pursuant to the terms of this Agreement as part of the
transfer of the Facility/Design Assets for the applicable Facility or the
Design Operations, as the case may be); or (ii) the assignment in whole or
in part, and assumption by the Purchaser of the applicable lease
agreements, in which case Seller or the applicable Designated Seller shall
use commercially reasonable efforts to achieve either (i) or (ii) above,
as requested by Purchaser, and in the case of clause (i) shall make any
buy-out payments required under the terms of the applicable lease to be
provided to any applicable lessor. In respect of the Leased PC Equipment
listed on Schedule 2.6 for which title or the lease in respect thereof is
to be transferred, when and if the Seller is able to transfer, or to cause
to be transferred, title to such equipment or the lease in respect thereof
to the Purchaser or the relevant Designated Purchasers, the Seller will
notify the Purchaser of the proposed transfer date (the "TRANSFER DATE" )
and the value (the "TRANSFER VALUE" ) in the case of a buyout of Leased PC
Equipment so being transferred (which amount will be provided by the
lessor of such equipment). Upon receipt of such notification, the
Purchaser or relevant Designated Purchasers shall promptly advise the
Seller whether it wishes to buy out the Leased PC Equipment and, if it
wishes to make such a buy out, upon receipt of a bill of sale from the
Seller evidencing transfer of title of such Leased PC Equipment, the
Purchaser agrees to pay to the Seller as agent for the relevant Designated
Seller on the relevant Transfer Date, (in immediately available funds in
the currency of the applicable equipment contract), the Transfer Value of
the Leased PC Equipment being transferred (and any applicable Transfer
Taxes arising out of either the purchase of Leased PC Equipment by the
Seller or any of its Affiliates or out of the transfer of such Leased PC
Equipment to the Purchaser or the relevant Designated Purchaser hereunder)
Execution Copy
- 48 -
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller that as of the
date of the Agreement (or, if made as of a specified date, as of such date):
SECTION 3.1 ORGANIZATION AND CORPORATE POWER
(1) The Purchaser is a corporation organized and validly existing under the
laws of Mauritius. Each Designated Purchaser is a corporation organized
and validly existing under the laws of the jurisdiction identified next to
such entity on Schedule 1.1. Each of the Purchaser and the Designated
Purchasers has the requisite corporate power and authority to enter into,
deliver and perform its obligations pursuant to each of the Transaction
Documents to which it is or will become a Party.
(2) The Purchaser is, and each of the Designated Purchasers is or on the
relevant Closing Date will be, qualified to do business as contemplated
by this Agreement and the Transaction Documents and to own or lease and
operate its properties and assets, including the Assets or the relevant
Facility/Design Assets, as applicable, except to the extent that the
failure to be so qualified would not have a material adverse effect on the
Purchaser's business.
SECTION 3.2 AUTHORIZATION; BINDING EFFECT; NO BREACH
(1) The execution, delivery and performance of each Transaction Document to
which the Purchaser or any of the Designated Purchasers is, or on the
Closing Date will be, a Party have been duly authorized by the Purchaser
and the relevant Designated Purchaser, as applicable. Each Transaction
Document to which the Purchaser or a Designated Purchaser is a Party
constitutes, or upon execution thereof will constitute, a valid and
binding obligation of the Purchaser or the Designated Purchaser, as
applicable, enforceable against such Person in accordance with its
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization and other similar Laws affecting
generally the enforcement of the rights of contracting Parties, by
provision of Laws regarding the currency of judgments, and subject to a
court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies.
(2) Except as set forth in Schedule 3.2(2), the execution, delivery and
performance by each of the Purchaser and the Designated Purchasers of the
Transaction Documents to which the Purchaser or such Designated Purchaser
is, or on the Closing Date will be, a Party do not and will not conflict
with or result in a breach of the terms, conditions or provisions of,
constitute a default under, result in a violation of, or require any
authorization, consent,
Execution Copy
- 49 -
approval, exemption or other action by or declaration or notice to any
third Person pursuant to (i) the articles, charter or by-laws of the
Purchaser or the relevant Designated Purchaser, (ii) any material
agreement, instrument, or other document to which the Purchaser or the
relevant Designated Purchaser is a party or to which any of its assets is
subject or (iii) any Laws to which the Purchaser, the Designated
Purchaser, or any of their assets is subject, except, in the case of (ii)
and (iii) above, for such defaults, violations, actions and notifications
that would not individually or in the aggregate materially hinder or
impair the performance by the Purchaser or the Designated Purchasers of
any of their obligations under any Transaction Document.
SECTION 3.3 TAX
Each of the Purchaser and the relevant Designated Purchasers is registered
as follows:
(a) Flextronics (Canada) Inc. is registered for purposes of the GST
legislation under registration number 859098303-RT0001, the Retail
Sales Tax Act (Ontario) under registration number 4949-4287, the Act
respecting the Quebec Sales Tax and regulations thereunder under
registration 1207205032-TQ0001, and under any other similar
legislation (including value added legislation) in any other
jurisdiction of Canada where the Assets which it is purchasing are
located .
(b) Flextronics U.K. is registered for VAT in the United Kingdom under
registration number 692231046.
(c) Flextronics France is registered for VAT in France under
registration number 435 168 091 00013.
(d) Flextronics U.S. is registered for Tennessee sales tax in the United
States.
SECTION 3.4 LITIGATION
There is no Action involving or affecting the Purchaser or any Designated
Purchaser that seeks to enjoin, prevent, alter or delay any of the transactions
contemplated by the Transaction Documents before any Government Entity or
arbitration tribunal and, to the Purchaser's Knowledge, no such Action has been
threatened in writing.
SECTION 3.5 FINANCIAL CAPABILITY
Each of the Purchaser and the Designated Purchasers has and will have on
each Closing Date and at all times thereafter, sufficient funds available or
financing in place to consummate the transactions contemplated by this Agreement
and the other Transaction Documents and to fulfill all of such Persons'
respective obligations
Execution Copy
- 50 -
hereunder and thereunder as such obligations become due, including the purchase
of the Assets or the Facility/ Design Assets and the assumption of the Assumed
Liabilities or the Facility/ Design Assumed Liabilities, as applicable.
SECTION 3.6 PURCHASER'S EMPLOYEE PLANS
Schedule 3.6 contains a complete and accurate list of all Purchaser's
Employee Plans. The Purchaser has provided the Seller with a true and complete
copy of the plan document or summary plan description of such plan or, if such
plan document or summary plan description does not exist, an accurate written
summary of such Purchaser's Employee Plans. No promises or commitments have been
made by the Purchaser or the Purchaser's Affiliates to amend materially or
terminate any of Purchaser Employee Plans, to decrease materially the
compensation or benefits thereunder or to establish new Purchaser's Employee
Plans, except as required by Law, or as disclosed in the applicable plan
document, summary plan description, written summary or other written document
provided by the Purchaser to the Seller. Purchaser's Employee Plans are
administered in all material respects in accordance with their terms and the
Purchaser and the Designated Purchaser meet their obligations in all materials
respects with respect to Purchaser's Employer Plans. The Purchaser and the
Designated Purchaser maintain and perform under Purchaser's Employee Plans in
material compliance with all applicable Laws. Except as set forth in Schedule
3.6, there are no Actions pending (except claims for benefits payable in the
normal operations of Purchaser's Employee Plans) against or involving the
Purchaser's Employment Plans or asserting any rights or claims to benefits under
Purchaser's Employee Plans, or Purchaser, to the Purchaser's Knowledge, Actions
involving Purchaser's Employee Plans that have or could be expected to have,
either individually or in the aggregate, a material effect. None of the
Purchaser's Employee Plans contain any provision for any of the benefits
thereunder to vest, other than vesting of exercisability under Purchaser's stock
option plan and vesting under pension plans established in accordance with
Exhibits D-1, D-3 and D-5.
SECTION 3.7 LABOUR MATTERS
Other than the general collective labour agreement (metullargie)
applicable to the Purchaser's and Designated Purchasers' employees in France,
neither Purchaser nor any Designated Purchaser is a party to or bound by any
collective bargaining agreement that shall apply to the terms and conditions of
employment of Transferring Employees at the Employment Transfer Date.
SECTION 3.8 COMPLIANCE WITH LAWS
Each of the Purchaser and the Designated Purchasers is in compliance with
all applicable Laws, except where failure to so comply, individually or in the
aggregate, does not have a material adverse effect on the business, operations
or financial condition of the Purchaser.
Execution Copy
- 51 -
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser that as of the
date of this Agreement (or, if made as of a specified date, as of such date):
SECTION 4.1 ORGANIZATION AND CORPORATE POWER
(1) The Seller is organized and validly existing under the Laws of Canada.
Each Designated Seller is a corporation organized and validly existing
under the laws of the jurisdiction identified next to such entity on
Schedule 1.1. The Seller has, and each of the Designated Sellers shall
have at the applicable Facility/ Design Closing, the requisite corporate
power and authority to enter into, deliver and perform its obligations
pursuant to each of the Transaction Documents to which it is or will
become a Party.
(2) Each of the Seller and the Designated Sellers is qualified to do business
and to own and operate its assets, including the Assets or the
Facility/ Design Assets, as applicable in each jurisdiction in which its
ownership of property or conduct of business relating to the Operations
requires it to so qualify, except to the extent that the failure to be so
qualified would not have a Material Adverse Effect.
(3) The Seller is a direct subsidiary of Nortel Networks Corporation. None of
the Operations are conducted by any direct or indirect Subsidiary of
Nortel Networks Corporation other than the Seller and the Designated
Sellers, except as disclosed in Schedule 4.1(3).
SECTION 4.2 AUTHORIZATION; BINDING EFFECT; NO BREACH
(1) The execution, delivery and performance of each Transaction Document to
which the Seller or any of the Designated Sellers is, or on the Closing
Date will become, a Party have been duly authorized by the Seller, or
shall at the applicable Closing be duly authorized by the relevant
Designated Sellers, as applicable. Each Transaction Document to which the
Seller or a Designated Seller is a Party constitutes, or upon execution
thereof will constitute, a valid and binding obligation of the Seller or
the Designated Seller, as applicable, enforceable against it in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization and similar Law s affecting
generally the enforcement of the rights of contracting parties, by
provisions of the Laws regarding the currency of judgments and subject to
a court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies.
Execution Copy
- 52 -
(2) Except as set forth in Schedule 4.2(2), the execution, delivery and
performance by each of the Seller and the Designated Sellers of the
Transaction Documents to which the Seller or such Designated Seller is,
or on the Closing Date will be, a Party do not and will not conflict
with or result in a breach of the terms, conditions or provisions of,
constitute a default under, result in a violation of, result in the
creation or imposition of any Lien upon any of the Assets, or require any
authorization, consent, approval, exemption or other action by or
declaration or notice to any third Person pursuant to (i) the articles,
charter or by-laws of the Seller or the relevant Designated Seller, (ii)
Assumed Contracts or any other material agreement, instrument or other
document to which the Seller or the relevant Designated Seller is a party
or to which any of its assets is subject or (iii) any Laws to which
the Seller, the Designated Sellers or any of the Assets are subject,
except, in the case of (ii) and (iii) above, for such defaults,
violations, actions and notifications that would not individually or in
the aggregate materially hinder or impair the performance by the Seller
or the Designated Sellers of any of their obligations under any
Transaction Document.
SECTION 4.3 FINANCIAL INFORMATION
Except as set forth in Schedule 4.3, each Facility/Design Net Asset
Statement was derived from books and records, maintained by Seller in
connection with the Operations, and was prepared in accordance with the
principles set forth in Section 1.1(79) and , to the extent consistent therein,
with GAAP, and fairly and accurately represents the Facility/Design Estimated
Net Assets Value of the Assets and Assumed Liabilities, in accordance with
the provisions of this Agreement, subject to any adjustments made pursuant to
Section 2.4.
SECTION 4.4 TITLE TO PERSONAL PROPERTY
Except for the Permitted Encumbrances, other than those Permitted
Encumbrances listed on Schedule 1.1(173), the tangible Assets will be, at the
applicable Closing Date relating to such Assets, owned beneficially by the
Seller or one of the Designated Sellers, free and clear of all Liens and the
Seller or such Designated Seller shall have good and marketable title thereto.
SECTION 4.5 ABSENCE OF CERTAIN DEVELOPMENTS
Since the date hereof for each Facility/Design Closing, except as set
forth in Schedule 4.5, the Operations have been conducted only in the ordinary
course, and :
(a) there has not been any change in the Operations, financial
condition, results of operations, or Assets that, individually or in
the aggregate, has had , or could reasonably be expected to have, a
Material Adverse Effect;
Execution Copy
- 53 -
(b) neither the Operations nor the Assets has suffered any damage,
destruction or other casualty that has had individually or in the
aggregate, a Material Adverse Effect; and
(c) neither the Seller nor any of the Designated Sellers has incurred or
agreed to incur, with respect to the Operations or the Assets, any
liability or obligation except those incurred or agreed to be
incurred in the ordinary course of their business and such
liabilities and obligations have not had and could not reasonably be
expected to have, either individually or in the aggregate, a
Material Adverse Effect.
SECTION 4.6 COMPLIANCE WITH LAWS, PERMITS AND LICENSES
Except as set forth in Schedule 4.6 and Schedule 4.16:
(a) Each of the Seller and the Designated Sellers has complied in all
material respects with all Laws applicable to the Operations or
the Assets.
(b) The Operating Permits are all the material permits, licenses,
certificates and authorizations of, and registrations with, any
Government Entity necessary for the Seller and the Designated
Sellers to conduct the Operations as presently conducted, and the
Operating Permits are in good standing and each of the Seller and
the relevant Designated Sellers is in compliance in all material
respects thereunder.
SECTION 4.7 TAX MATTERS
The Seller is registered for purposes of the GST legislation under
registration number (119 409 258-RT0001), the Retail Sales Tax Act (Ontario)
under registration number 7947-0009, the Act respecting the Quebec Sales Tax
under registration number 1001830151-TQ, and under similar legislation in any
other jurisdiction where the Assets are located .
NNTC is registered for purposes of the GST legislation under registration
number 118802974-RT0001, the Retail Sales Tax Act (Ontario) under registration
number 0274-3442, the Act respecting the Quebec Sales Tax under registration
number 1000242965-TQ.
NNUK Limited is registered for VAT in the United Kingdom under
registration number GB 229 5608 45.
NNSA is registered for VAT in France under registration number
FR62389516741.
Execution Copy
- 54 -
SECTION 4.8 CONTRACTS AND IS SOFTWARE
(1) Except as set forth in Schedule 4.8, each Contract (as amended to the date
hereof) is a valid and binding obligation of the Seller or a Designated
Seller, as the case may be, and is in full force and effect, except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws affecting generally the enforcement of
the rights of contracting parties, and subject to a court's discretionary
authority with respect to the granting of a decree ordering specific
performance or other equitable remedies and further subject to the
Currency Act (Canada) precluding a court in Canada from awarding a
judgment for an amount expressed in a currency other than Canadian
dollars; and (b) no event, condition or occurrence has occurred that with
or without notice, lapse of time or both would constitute a material
breach or default or permit termination, material modification or
acceleration of any Contract (other than any breach by any party other
than Seller or any Designated Seller of which Seller has no Knowledge);
(2) Except as set forth in Schedule 4.8, each license agreement for IS
Software (as amended to the date hereof) is a valid and binding obligation
of the Seller or a Designated Seller, as the case may be, and is in full
force and effect, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws affecting
generally the enforcement of the rights of contracting parties, and
subject to a court's discretionary authority with respect to the granting
of a decree ordering specific performance or other equitable remedies and
further subject to the Currency Act (Canada) precluding a court in Canada
from awarding a judgment for an amount expressed in a currency other than
Canadian dollars; and (b) no event, condition or occurrence has occurred
that with or without notice, lapse of time or both would constitute a
material breach or default or permit termination, material modification or
acceleration of any license agreement for IS Software (other than any
breach by any party other than Seller or any Designated Seller of which
Seller has no Knowledge);
(3) Schedule 1.1(37) is a true and complete list, other than employment
contracts and IS Software, of all contracts, agreements, personal property
leases, indentures or other legally binding arrangements hereto between
the Seller or the Designated Sellers on the one hand, and any other Person
other that the Seller or an Affiliate of the Seller on the other hand,
that are used primarily in or related primarily to the conduct of the
Operations or which are material to the conduct of the Operations (save
and except for (i) the Company-Wide Contracts, and (ii) those contracts
that involve payments of less than $100,000 during the current term of
such contract);
Execution Copy
- 55 -
(4) Schedule 1.1(37) identifies any Assumed Contracts for which the
assignment to Purchaser or a Designated Purchaser would require the
consent of any third Person under such Contract, or for which any such
assignment would be ineffective, would result in the termination of such
Contract, or would materially change any of the rights of any party
thereunder;
(5) Schedule 1.1(118) is a true and complete list of the software
applications or systems owned by the Seller or licensed to the Seller or
a Designated Seller and used in the Operations, including all of the
Corporate Desktop Software, the Design Tools and the Excluded Business
Applications and Transferred Business Applications;
(6) Schedule 1.1(118) identifies any license agreements with Third Parties
for the Transferred Business Applications for which the assignment to
Purchaser or a Designated Purchaser requires the consent of any third
person under such licence, or for which any such assignment would be
ineffective, would result in the termination of such license, or would
materially change any of the rights of any party thereunder;
(7) neither the Seller nor any of the Designated Sellers has been notified of
any cancellation or intention to cancel or not to renew or extend any
Assumed Contract or any license agreement for any Transferred Business
Application;
(8) except to the extent indicated on Schedule 1.1(37) or on Schedule
1.1(118) the Purchaser has been provided with complete and correct
copies (including all amendments) of all Assumed Contracts set forth on
Schedule 1.1(37), a summary, accurate in all material respects, of
certain tactical terms of all non-Assumed Contracts (subject to applicable
confidentiality and disclosure limitations) and all license agreements
with third parties for the Transferred Business Applications which are to
be assigned to the Purchaser or Designated Purchaser as set forth in
Schedule 1.1(118);
(9) other than with respect to fees and asset forth in Schedule 4.8(9), if
any, relating to the assignment of the Assumed Contracts and the Transfer
Taxes, at Closing there are no fees or other payments payable by Seller in
excess of five thousand dollars ($5,000) to any third Person under any
of the Contracts as a result of the disposition of any of the Assets or
the Operations, and none will become payable as a result of the
consummation of the transactions contemplated hereby; provided , however,
that the foregoing does not apply to fees or payments relating to
the buy-out of Leased Equipment as may be requested by Purchaser or a
Designated Purchaser; and except as disclosed on Schedule 4.8(10), there
are no rights or licenses granted to Seller or a Designated Seller under
any of the Company-Wide Contracts, which are
Execution Copy
- 56 -
material to the purchasing of Inventory or the maintenance of Equipment or
obtaining of temporary employees used in the Operations.
SECTION 4.9 INTELLECTUAL PROPERTY RIGHTS
(1) Except as disclosed on Schedule 4.9(1), the Seller has no Knowledge of
any other agreement or obligation, written or oral, relating to
Intellectual Property of the Seller or any Designated Seller, whether
owned or licensed , that is material to the use and enjoyment of the Owned
Equipment as of Closing.
(2) Except as disclosed on Schedule 4.9(2), the Seller has no Knowledge of
any claims made in writing to the Seller or any of its Affiliates during
the past two (2) years that the Seller's or any of its Affiliates'
use of the Owned Equipment or the software applications being licensed to
the Purchaser or Designated Purchasers pursuant to the Nortel Proprietary
Software License Agreement infringes any Intellectual Property right of
any Third Party.
(3) Except as disclosed on Schedule 4.9(3), the Seller has no Knowledge that
the use of the Owned Equipment in the operation of the Operations as of
the relevant Closing Date infringes upon or violates the intellectual
property rights of any Third Party.
SECTION 4.10 LITIGATION
Except as disclosed in Schedule 4.10, there is no Action pending before
any Government Entity or arbitration tribunal involving or affecting the
Operations or Assets, or that seeks to enjoin, prevent, alter or delay any of
the transactions contemplated by the Transaction Documents, and, to the Seller's
Knowledge, no such Action has been threatened in writing.
SECTION 4.11 EMPLOYEE PLANS
(1) Schedule 4.11(1) contains a complete and accurate list of all Seller's
Employee Plans. The Seller has provided the Purchaser with a true and
complete copy of the current plan document and summary plan description of
each of Seller's Employee Plans or, if such plan document or summary plan
description does not exist, an accurate written summary of Seller's
Employee Plans. No promises or commitments have been made by the Seller or
any Affiliates of the Seller to materially amend or terminate any of
Seller's Employee Plans, to increase materially, or decrease materially,
the compensation or benefits thereunder or to establish new Seller's
Employee Plans, except as required by applicable Law (as disclosed in
Schedule 4.11(1)) or as disclosed in the applicable plan document, summary
plan description, written summary or other written document provided by
the Seller to the Purchaser. Seller's Employee Plans have been
administered in all material respects in accordance with their terms and
the Seller and the Seller's
Execution Copy
- 57 -
Affiliates have met their obligations in all material respects with
respect to Seller's Employee Plans. The Seller and the Seller's Affiliates
maintain and perform under Seller's Employee Plans in material compliance
with all applicable Laws.
(2) Except as disclosed in Schedule 4.11(2), there are no Actions pending
(except claims for benefits payable in the normal operation of Seller's
Employee Plans) against or involving Seller's Employee Plans or asserting
any rights or claims to benefits under Seller's Employee Plans, or, to the
Seller's Knowledge, Actions involving Seller's Employee Plans that have or
could reasonably be expected to have, either individually or in the
aggregate, a material effect.
SECTION 4.12 EMPLOYEE MATTERS
(1) Schedule 4.12(1) is an accurate and complete list as of the date hereof
and, when updated in accordance with Section 5.1(3), will be an accurate
and complete list of Employees, setting forth with respect to each
Employee: (i) name, (ii) home address (except with respect to UK and
France Employees), (iii) work location, (iv) continuous service date, (v)
local service date, where applicable, (vi) job title, (vii) JCI (Job
Complexity Indicator), (viii) annual base salary (in local currency), (ix)
last pay review date, (x) target incentive compensation (SUCCESS), (xi)
any other compensation or allowances, including, but not limited to, pay
premium, expat provisions, reimbursement, relocation, etc., (xii) Capital
Accumulation and Retirement Plan (CARP) participation, (xiii) language
preference (Quebec and France, and (xiv) regular full-time (" RFT" ),
regular part time (" RPT" ) or co-op, as applicable, and (xv) Skilled
Trade Employee indicator, and (xvi) Collective Labour Agreement
identifier. With respect to the data set forth in Schedule 4.12(1),
including any updates thereto pursuant to Section 5.1(3), the Purchaser
undertakes that such personal data shall be held in confidence and that
until the applicable Closing with respect to the country in which such
Employee is employed ;
(a) the Purchaser and its Affiliates shall restrict the disclosure of
such personal data to such of its employees, agents and advisors
as is necessary for the purposes of complying with its obligations
pursuant to the Transaction Documents prior to Closing, including
Section 5.3 of this Agreement;
(b) such personal data shall not be disclosed to any other Person
(including, for the avoidance of doubt, any other employee of
the Purchaser or any Purchaser Affiliate) without the consent of
the Seller, such consent not unreasonably to be withheld ; and
Execution Copy
-58-
(c) such personal data shall not be used save for the purposes of
complying with the Purchaser's obligations pursuant to the
Transaction Documents, and shall be returned to the Seller or
destroyed if this Agreement is terminated.
Save for the Key Employees, it is agreed that as a result of data privacy
requirements in Europe, the name of each of the UK Employees and France
Employees shall not be disclosed until the appropriate time in the
information and consultation process.
(2) Except as set forth in Schedule 4.12(2), there has not been for a period
of twelve (12) consecutive months prior to the date hereof, nor is there
existent or, to the Knowledge of the Seller, threatened, any strike,
slowdown, picketing or work stoppage by Employees.
(3) Except as set forth in Schedule 4.12(3), the Seller and each of the
Designated Sellers is, to the Seller's Knowledge, in material compliance
with all Laws applicable to the employment of the Employees. Except as set
forth in Schedule 4.12(3), there are no Actions related to the employment
of the Employees pending against the Seller or the Designated Seller and,
to the Seller's Knowledge, no such Actions have been threatened in
writing.
(4) All Employees on leave approved by the Seller or Designated Sellers,
including, but not limited to, parental or pregnancy leave, or leave
related to receipt of short-term disability benefits or workers'
compensation benefits, are identified in Schedule 4.12(4) (collectively, "
LEAVE EMPLOYEES" ), along with the type of leave and their expected date
of return to work, if known, and the information set forth on such
Schedule is in relation to the names of the Leave Employees, or, to the
Seller's Knowledge in all other respects, accurate.
(5) All Operations employees in Canada and the U.S. who are on long-term
disability leave approved by Seller or Designated Sellers, and associated
information, are identified in Schedule 4.12(5) (collectively "LONG-TERM
DISABILITY LEAVE EMPLOYEES" ), and is in relation to the names of the
Long-Term Disability Leave Employees, or, to the Seller's Knowledge in all
other respects, accurate.
(6) Except as set forth in Schedule 1.1(33), there are no collective
bargaining agreements covering any Employees and save and except as set
forth in Schedule 4.12(6), no petition or proceedings are pending before
any Government Entity seeking either recognition of a bargaining
representative with respect to such Employee or to include any Employee
within the bargaining unit, and, to Seller's Knowledge, no organizational
effort is
Execution Copy
-59-
currently being made or threatened by or on behalf of any labour union
to organize any Employees.
(7) All Employees currently on a work authorization or visa approved by a
Government Entity in accordance with applicable Laws concerning
immigration are identified in Schedule 4.12(7) (collectively " VISA
EMPLOYEES" ), along with the type of work authorization and expiration
date.
(8) Except as set forth in Schedule 4.12(8), (i) there are no outstanding
assessments, penalties, fines, levies, charges, surcharges or other
amounts due or owing pursuant to any applicable workers' compensation
Laws in respect of the Operations or Employees; and (ii) the Seller has no
Knowledge of any audit of the Operations currently being performed
pursuant to any applicable workers' compensation Law.
(9) Schedule 4.12(9), which is a Pre-Closing Schedule, is an estimate and when
updated by Seller as of the applicable Closing Date, in accordance with
Section 2.4(2) herein, will be an accurate and complete list of each
Employee's accrued and unused vacation and vacation accrual rate.
(10) Schedule 4.12(10) is an accurate and complete list of Design Employees,
Repair Employees and Logistics Employees, as such schedule may be updated
at or immediately prior to the applicable Employment Transfer Date.
(11) Schedule 4.12(11) is an accurate and complete copy of the Collective
Labour Agreement between the Seller and CUCW as in effect on the date
hereof.
(12) The data elements listed in Schedule 4.12(1)(viii), (x) and (xi) are all
of the material elements of compensation relating to Employees. All other
data elements of compensation relating to the Employees have been provided
to the Purchaser by the Seller.
(13) Seller represents that human resources recruitment practices in the United
States include background checks. Except as set forth in
Schedule 4.12(13), to Seller's Knowledge no U.S. Employee has a job-
related felony conviction.
SECTION 4.13 RESIDENCE
Each of the Seller and NNTC is a resident of Canada for the purposes of
the ITA. None of the Assets to be purchased by the Purchaser under this
Agreement, which are sold by any other Designated Seller is taxable Canadian
property as that term is defined for purposes of the ITA.
Execution Copy
-60-
SECTION 4.14 INSURANCE
The Seller and the Designated Sellers maintain adequate insurance with
respect to the Assets and the Operations. The Seller and the Designated Sellers
are not to Seller's Knowledge in default of any material obligation pursuant to
any of the insurance policies.
SECTION 4.15 INVENTORY
(1) Except as set forth in Schedule 4.15, the Inventory has been acquired in
the ordinary course of business. Save and except for the Bonepile
Inventory and components dealt with in accordance with the provisions of
Section 5.15(2)(b), the Inventory forming part of the Assets is at the
Closing useable and saleable to, the Seller or Designated Sellers, in the
ordinary course of business. The Inventory is forecasted to be used in the
twelve (12) months immediately following the applicable Closing Date based
on the Seller's forecasts of orders to be fulfilled (which forecast is set
forth in Schedule 4.15(1) which is to be provided on the relevant
Facility/ Design Closing Date); provided, however, that all Inventory not
forecasted to be used in twelve (12) months from Closing by the Purchaser
will be managed by Purchaser on a consignment basis, the terms and
conditions of which are set out in the Amended and Restated Master
Contract Manufacturing Services Agreement.
(2) The Repair Inventory forming part of the Assets is useable by and saleable
to, the Seller or Designated Sellers, in the ordinary course of business.
The Repair Inventory is forecasted to be used in the twelve (12) months
immediately following the applicable Closing Date based on the Seller's
forecasts of orders to be fulfilled (which forecast is set forth in
Schedule 4.15(1)) which is to be provided on the relevant Facility/ Design
Closing Date); provided, however, that all Repair Inventory not forecasted
to be used in twelve (12) months from Closing by the Purchaser will be
managed by the Purchaser on a consignment basis, the terms and conditions
of which are set out in the Repair Services Agreement.
(3) The End of Life Inventory forming part of the Assets is useable by and
saleable to, the Seller or Designated Sellers, in the ordinary course of
business.
SECTION 4.16 ENVIRONMENTAL MATTERS
(1) In accordance with Article 514-20 of the French Environmental Code, the
Seller represents that the Chateaudun Facility includes " CLASSIFIED
INSTALLATIONS FOR PURPOSES OF THE PRESERVATION OF THE ENVIRONMENT"
(installations classees pour la protection de l'environnement), the
operation of which is governed by Law n degrees 76-663 of July 19, 1976
and Decree n degrees 77-1133 of
Execution Copy
-61-
September 21, 1977. The Chateaudun Facility and the impact of the
operation thereof on the environment are described in Schedule 4.16.
(2) Except as set forth in Schedule 4.16 and to the Seller's knowledge, no
Hazardous Substance or other polluting material used in or generated by
the Operations or the Chateaudun Facility have been or are currently
placed, used, stored, treated, manufactured, disposed of, released,
discharged, spilled or emitted in violation of any French Environmental
Law. Except as set forth in Schedule 4.16, all Hazardous Substances
generated, used, handled, stored on, disposed of, removed, emitted,
released, discharged or spilled from or treated on the Chateaudun Facility
were and are documented, handled, transported and disposed of in
compliance with all French Environmental Laws and Operating Permits.
(3) Except as set forth in Schedule 4.16 and to the Seller's Knowledge, the
Seller and the applicable Designated Seller have complied in all material
respects with all French Environmental Laws applicable to the Operations
at the Chateaudun Facility.
(4) Except as set forth in Schedule 4.16, all of the installations on the
Chateaudun Facility that were or are used for the disposal of Hazardous
Substances or other polluting material used in or generated by the
Chateaudun Facility have been and are properly permitted and operated in
compliance in all material respects with all French Environmental Laws and
Operating Permits. Except as set forth in Schedule 4.16, and to the
Seller's Knowledge, the Chateaudun Facility has not produced and the
Chateaudun Facility does not currently produce, any Hazardous Substance.
(5) Except as set forth in Schedule 4.16, there have been no orders issued or,
to the Seller's Knowledge, threatened and no investigations conducted,
taken or, to the Seller's Knowledge, threatened under or pursuant to any
French Environmental Laws or Operating Permits with respect to the
Chateaudun Facility is aware other than routine inspections. Except as set
forth in Schedule 4.16, the Seller is not aware of any circumstances or
events that have any reasonable prospect of resulting in any claim, action
or other proceeding with respect to Hazardous Substances or in an order or
investigation under or pursuant to any French Environmental Laws or any
Operating Permit.
(6) Except as set forth in Schedule 4.16, all permits, licences, approvals,
authorizations, consents, registrations, privileges, waivers, exemptions,
orders, certificates, rulings, agreements or other concessions required
under French Environmental Laws to own or operate the Chateaudun Facility
have been obtained and all terms and conditions attached thereto have been
and are duly complied in all material respects and all such permits,
licences,
Execution Copy
-62-
approvals, authorizations, consents, privileges, waivers, exemptions,
orders, certificates, rulings, agreements and registrations are in full
force and effect and in good standing.
(7) Except as set forth in Schedule 4.16, neither the Seller nor the
applicable Designated Seller has received any written notice or
communication by any French Governmental Entity to the effect that it is
not in compliance with, or is in violation of, any of such permits,
licences, approvals, authorizations, consents, privileges, waivers,
exemptions, orders, certificates, rulings, agreements and registrations.
(8) Except as set forth in Schedule 4.16, there have been no Actions
commenced or, to the Seller's Knowledge, threatened with respect to
Chateaudun Facility pursuant to French Environmental Laws or with respect
to Hazardous Substances.
(9) Except as set forth in Schedule 4.16 and to the Seller's Knowledge, the
use of, and operations relating to, the Chateaudun Facility do not
constitute a nuisance such as would trigger the Seller's or applicable
Designated Seller's liability in tort towards any Person, nor has any
claim been made on such ground in respect of such use and operations by
any Person.
(10) Except as set forth in Schedule 4.16, there are no underground storage
tanks on or under the Chateaudun Facility.
SECTION 4.17 EQUIPMENT
Except as set forth in Schedule 4.17: the Equipment is in good working
order and condition, ordinary wear and tear excepted, is operational and has
been maintained in accordance with normal industry standards. None of the
Equipment which is material to the current operation of the Operations requires
any repairs which are material in the context of such assets and their continued
use; and all of the Equipment is used primarily in the Operations. As at
Closing, Schedule 1.1(63) is a complete list of the Equipment at Third Party
Locations and the Seller (and the applicable Designated Seller have reasonable
access to all Equipment at the Third Party Locations) and Schedule 2.1(1)(d) is
a complete list of all the Owned Equipment.
SECTION 4.18 CHATEAUDUN REAL ESTATE
Except as set forth on Schedule 4.18:
(a) as of the date hereof, the Seller or a Designated Seller is (and at
the applicable Closing, French Newco will be) the registered and
beneficial owner of, and has good and marketable title to, the
Chateaudun Facility, free and clear of any Lien except for Permitted
Encumbrances;
Execution Copy
-63-
(b) there are no leases, subleases, licences, concessions, or other
agreements, written or oral, granting to any Person the right of
use or occupancy of any portion of the Chateaudun Facility;
(c) the properties set out in Schedule 4.18 comprise all the real
property that will be owned at the applicable Closing by French New
co, which include all of the real estate property owned or leased by
any Affiliate of Seller in France that are used in the Operations.
Copies of all the contracts and administrative documents relating to
the Chateaudun Facility;
(d) the Chateaudun Facility is not subject to any procedure or action
which may affect its quiet use. To the Seller's Knowledge, there is
no proposed planning regulation or decision of a French Government
Entity which would materially and adversely impact the Designated
Seller's quiet use of the Chateaudun Facility;
(e) the Chateaudun Facility is sufficient and suited, in all material
respects, for the Operations as presently conducted by the
Designated Seller at the Chateaudun Facility;
(f) to the Seller's Knowledge, there are no major repairs (any single
repair costing in excess of $50,000), or repairs costing in
aggregate in excess of $250,000) required to the structure or
building systems of the buildings located on the Chateaudun Facility
and the electrical, mechanical, plumbing, heating, air-conditioning,
ventilating, security and other systems serving the buildings
located on the Chateaudun Facility are in good working order;
(g) neither the Seller nor any Designated Seller has received actual
notice of any threatened special assessments or improvements or
activities of any French public or quasi-public body either planned,
in process, or completed which may give rise to any special
assessment against the Chateaudun Facility or any portion thereof;
(h) neither the Seller nor any Designated Seller has received actual
notice of any pending or threatened condemnation or similar
proceeding affecting the Chateaudun Facility or any portion thereof;
and
(i) neither the Seller nor any Designated Seller has received actual
notice of any judicial or administrative action, or action by any
adjacent landowners, affecting the Chateaudun Facility that would
materially and adversely impact the operation of the Operations at
the Chateaudun Facility.
Execution Copy
-64-
SECTION 4.19 SUFFICIENCY OF ASSETS
With the exception of (i) the Excluded Assets listed in Section 2.1(2)(a)
through to (p), inclusive, (ii) the Contracts other than the Assumed Contracts,
(iii) the Company-Wide Contracts, (iv) Excluded Business Applications, and (v)
the Facilities (except for Chateaudun Facility), the Assets to be transferred
at Facility/ Design Closings, and the Assets of French Newco, collectively
comprise all of the Assets used by the Seller or the Designated Sellers in the
Operations as presently conducted . Except as set forth on Schedule 4.19 and
provided that the Canada Design Employees and the U.K. Design Employees become
Transferring Employees at the applicable Closing Date, then such employees would
be sufficient in number and would have sufficient skills to permit the Purchaser
and Designated Purchasers to perform the Sustaining Design Services to the
degree required or requested by the Seller or Designated Sellers pursuant to the
Amended and Restated Master Contract Manufacturing Services Agreement at the
applicable Facility/ Design Closing Date.
SECTION 4.20 NO OTHER PURCHASE AGREEMENTS
Except as disclosed in Schedule 4.20, no other Person has any agreement
or other right for the purchase or other acquisition from the Seller or any of
its Affiliates of any of the Assets other than agreements for acquisition of
Inventory in the ordinary course of the Operations.
SECTION 4.21 GOVERNMENT ASSISTANCE
Schedule 4.21 attached hereto describes all agreements, loans, other
funding arrangements and assistance programs (collectively called " GOVERNMENT
ASSISTANCE PROGRAMS") which have been provided to the Seller and its Affiliates
in respect of the Operations from any Government Entity.
SECTION 4.22 LEASED EQUIPMENT
Schedule 1.1(125) contains an accurate and complete list of all Leased
Equipment. True and complete copies of the leases with respect to all Leased
Equipment have been provided to Purchaser.
SECTION 4.23 REPRESENTATIONS AND WARRANTIES
Neither the Seller nor any of the Designated Sellers makes any
representation or warranty with respect to the Assets or the Operations,
express or implied , beyond those expressly made by the Seller in this Article
4 and the relevant Transaction Documents, including any implied representation
or warranty as to the condition, merchantability, suitability or fitness for a
particular purpose of any of the Assets, and it is understood that, except for
the express representations and warranties of the Seller contained in this
Article 4, the Purchaser takes the Assets on an " AS IS" and " WHERE IS" basis.
Execution Copy
-65-
ARTICLE 5
COVENANTS AND OTHER AGREEMENTS
SECTION 5.1 GENERAL
(1) Closing Cooperation. Each of the Parties shall use its commercially
reasonable efforts to satisfy the closing conditions for each Closing set
forth in Article 8 and to take, or cause to be taken, or to do, or cause
to be done, all things necessary to satisfy the conditions to the
obligations under the Transaction Documents of the Parties over which
each has Control and to cause the transactions contemplated under the
Transaction Documents to be consummated, in accordance with the terms
thereof, and, where required by the Transaction Documents, prior to the
applicable Closing.
(2) Filings and Approvals. The Purchaser and the Seller shall, as promptly as
practicable, file or supply, or cause to be filed or supplied , all
applications, notifications and information required to be filed or
supplied by any of them pursuant to applicable Laws in connection with
the consummation of the transactions contemplated by this Agreement,
including, if necessary, those required by the Competition Act (Canada),
the EC Merger Regulation, the U.S. Hart Scott Rodino Anti-Trust
Improvements Act of 1976 (the " Antitrust Approvals" ). The Purchaser and
the Seller shall each be responsible for half of any filing fees or other
fees payable to a Government Entity as referred on Schedule 5.1(2) and,
in respect of all other fees, the Party obligated to pay by Law in
connection with any such filings and approvals shall be solely
responsible for such fees. The Purchaser and the Seller shall keep each
other informed as to the status of all such filings and requests for all
licenses, permits, certificates, registrations, authorizations, consents
and approvals of Government Entities necessary for the lawful consummation
of the transactions contemplated by this Agreement and shall co-ordinate
and cooperate in providing any information concerning their respective
businesses, operations, prospects or affairs required or requested to be
provided to or by any Government Entity in connection with the
transactions contemplated by this Agreement; provided , however, that (x)
no such information shall be required to be provided by the Purchaser
or the Seller to the other if the Person required to provide such
information determines, acting reasonably, that, such information is
competitively sensitive or that the provision of such information could
reasonably be expected to have a material adverse effect upon it if the
transactions contemplated by this Agreement were not completed, and (y)
in any such case the Purchaser and the Seller shall cooperate with a view
to establishing a mutually satisfactory procedure for providing such
information directly to the Government Entity requiring or requesting
such information, and the Person required to provide such information
shall provide it directly to such Governmental Entity, unless
Execution Copy
-66-
competitively sensitive information, in which case it shall be provided
directly to such Governmental Entity by the possessor of such information.
(3) Delivery and Revision of Schedules.
DELIVERY
(a) Concurrent with the execution of this Agreement the Seller shall
deliver to the Purchaser the Execution Schedules.
(b) Within thirty (30) days of execution of this Agreement the Seller
shall deliver to the Purchaser the Post Execution Schedules.
(c) Between seven (7) and ten (10) Business Days before the Applicable
Closing the Seller shall deliver to the Purchaser the Pre-Closing
Schedules.
(d) Two (2) Business Days prior to the applicable Closing Date the
Seller shall deliver to the Purchaser the Closing Schedules;
provided Seller has delivered copies to the Purchaser seven (7) and
ten (10) Business Days prior to the applicable Closing Date a draft
of such schedules, which shall be identical to the final Closing
Schedules except with respect to (i) changes to reflect events or
conditions of which Seller did not have Knowledge prior to the
delivery of the draft, (ii) events or changes in conditions arising
after delivery of the draft, and (iii) changes approved or requested
by Purchaser.
REVISING
(a) Employee Schedules. On or before the end of each month after
execution of this Agreement (beginning with the month of June 2004)
until the last Facility/ Design Closing, the Seller shall update the
Employee Information entered on Schedule 4.12(1) with the respect to
all Employees who have, as at the time of such update, not yet
transferred to Purchaser's or Designated Purchaser's employ as part
of a Facility/ Design Closing. Each update shall reflect: (i)
deletion of the name and associated Employee Information of any
individual who is no longer an Employee, (ii) addition of the name
and associated Employee Information of any individual who has become
an Employee primarily engaged in the Operations. Seller shall also:
not less than (5) five Business Days nor more than ten (10) Business
Days prior to issuance to Employees of an Employment Offer, Quebec
Employment Notice or European Contract of Employment Offer, update
the Employee Information entered in Schedule 4.12(1) with respect to
all Employees who would become a Transferring Employee
Execution Copy
-67-
following a Facility/ Design Closing; and, following the
execution of this Agreement, reasonably regularly update all other
Employee Schedules other than Schedule 4.12(1).
(b) Notwithstanding the foregoing paragraph, within fifteen (15)
calendar days of the date hereof, Seller will deliver to
Purchaser revised Employee Schedules. Following delivery of said
schedules ("THE TRUED-UP EMPLOYEE SCHEDULES" ): (i) Seller will
obtain the Purchaser's consent if Seller proposes to revise Trued-Up
Employee Schedule 4.12(1) (and make corresponding changes to the
other Employee Schedules) where the proposed revision to that
Trued-Up Employee Schedule would result in a net increase of greater
than ten (10) percent in the number of Employees listed in Trued-Up
Employee Schedule 4.12(1) in any of the following categories:
Calgary Westwinds Facility; the Montreal facilities referred to as
Montreal BAN 1, 3 and OPTO 1; Monkstown Facility; Chateaudun
Facility; or Design Employees; and (ii) Seller and Purchaser will
abide by the mobility principles as agreed by the Parties.
(c) Exception Schedules.
(i) The Seller shall have the right to deliver to the Purchaser,
at least five (5) Business Days prior, to the applicable
Closing Date, updated Schedules setting forth exceptions to
the representations and warranties set forth in Article 4 and
the Local Sales Agreement (if applicable), or any covenants
set forth in Section 5.2 and the Local Sales Agreements (if
applicable) to reflect any matters related to the Closing at
issue that have occurred from and after the date of this
Agreement, that, if existing on the date of execution of this
Agreement, would have resulted in a disclosure or exception
with regard to any such representation, warranty or covenant.
(ii) If the new or changed information disclosed in the updated
Schedules by the Seller pursuant to this Section 5.1(3)(b)
would have, or could reasonably have been expected to have,
affected the Product pricing had such information been
disclosed prior to the completion of the VSHA pricing setting
process set for in Section 5.22, then, if the applicable
parties proceed with such Closing, the applicable Parties
agree to follow, after the applicable Closing, the process set
forth in Section 11.1.1 of the Amended and Restated Master
Contract Manufacturing Services Agreement for renegotiating
"Prices" (as that term is
Execution Copy
-68-
defined therein) to reflect the new or changed information set
forth in such disclosure.
(iii) If Purchaser determines in good faith that any updated
Schedules delivered by the Seller pursuant to this Section
5.1(3)(b) are not acceptable to the Purchaser, then Purchaser
shall so notify the Seller in writing prior to the applicable
Closing.
(iv) The Seller undertakes in good faith to advise the Purchaser
as soon as reasonably practicable of any information that to
the Seller's Knowledge results in an update to the Schedules
in accordance with the provisions of this Section 5.1(3)(b).
(d) Any updated Schedules referenced in this Section 5.1(3) which are
acceptable to both Parties shall be incorporated into a writing
designated as an Amendment to this Agreement, and executed by the
Purchaser and the Seller in accordance with Section 9.6 hereof prior
to the applicable Closing. For purposes of Article 7 hereof, the
representations and warranties of the Seller set forth in Article 4
and the Local Sales Agreement (if applicable), and the covenants set
forth in Section 5.2, shall be deemed qualified by, and subject to,
any such updated Schedules delivered by the Seller pursuant to this
Section 5.1(3).
(4) Public Announcements. From time to time prior to the final Closing Date
effected pursuant to this Agreement, subject to each Primary Party's
disclosure obligations imposed by Law, the Purchaser and the Seller shall
cooperate, and shall cause each of the Designated Purchasers and
Designated Sellers to cooperate, with each other in the development and
distribution of all news releases, other public information disclosures
and announcements, including announcements and notices to customers,
suppliers and Employees, with respect to this Agreement, or any of the
transactions contemplated by this Agreement and the other Transaction
Documents and shall not issue any such announcement or statement prior to
consultation with, and the approval of, the other Primary Party (such
approval not to be unreasonably withheld or delayed; provided that
approval shall not be required where the disclosing party reasonably
determines, after consultation with such other Primary Party, that such
disclosure is required by Law).
SECTION 5.2 CONDUCT OF OPERATIONS
The Seller covenants that, except as set forth in Schedule 5.2, from the
date hereof to the applicable Effective Time, except as the Purchaser may
approve otherwise in writing (such approval not to be unreasonably withheld or
delayed) or
Execution Copy
-69-
as otherwise expressly contemplated by this Agreement or the applicable Local
Sales Agreement, the Seller shall conduct the Operations or cause the
Facility/ Design Operations, as conducted by the applicable Designated Seller,
to be conducted in the ordinary course consistent with past practice and
will make all commercially reasonable efforts consistent with past practice to
maintain the Operations and Assets, and to preserve its relationship with the
Transferring Employees, suppliers, contractors and other service providers
with whom the Seller or such Designated Seller deals in connection with the
Operations, and so as to ensure all representations and warranties of the
Seller remain true and correct in all material respects as of such Closing.
Except as expressly contemplated or permitted by this Agreement or set forth in
Schedule 5.2 (which Schedule may not be amended after the date hereof),
from the date hereof until the applicable Effective Time, the Seller will not
do, and will cause the applicable Designated Seller not to do, any of the
following without the prior written consent of the Purchaser, not to be
unreasonably withheld :
(a) sell, lease, license or otherwise dispose of, or agree to sell,
lease, license or otherwise dispose of, any interest in any of the
Facility/ Design Assets, except for sales of Inventory in the ord-
inary course and Equipment no longer required in the Operations;
(b) permit, allow or subject any of the Facility/ Design Assets or any
part thereof to any material Lien, or suffer such to be imposed,
except for Permitted Encumbrances;
(c) amend any Assumed Contracts in a manner that is not in the ordinary
course of business or that is material to the Operations, or
terminate any Assumed Contracts, or enter into any Contracts which
would be Assumed Contracts;
(d) announce or make any material modification to any of the Seller's
Employees Plans applicable to any Transferred Employee, except as
required by applicable Law or in the ordinary course of business;
(e) increase the base salary or wage rate payable to any Employee,
except for increases required by a Collective Labour Agreement or
otherwise required by Law, or made in the ordinary course of
business consistent with past practice;
(f) terminate, other than for cause, greater than fifteen (15) percent
of the Key Employees, or greater than fifteen (15) percent of the
Design Employees, provided, however, that Seller or Designated
Seller shall inform Purchaser as soon as practicable prior to
terminating, other that for cause, the employment of any such
Employee.
Execution Copy
-70-
During the period from the date of this Agreement until the final Closing
Date effected pursuant to this Agreement, both the Seller and the Purchaser
shall advise on a regular and frequent basis the designated representative(s)
of the Purchaser or a Designated Purchaser or Seller or Designated Seller, as
the case may be, on the general status of ongoing operations and any Employee
terminations and labour relations matters in relation to the portion of the
Operations that remains to be transferred to Purchaser as of such date, or any
circumstance or event which to the Knowledge of the applicable Primary Party
constitutes either a Material Adverse Effect on the Operations or the Assets,
or a material adverse effect on the Purchaser's or the Designated Purchaser's
ability to perform its obligations pursuant to the Amended and Restated Master
Contract Manufacturing Services Agreement. Notwithstanding the foregoing, the
Seller shall be entitled to terminate any Open Purchase Orders and the purchase
orders relating to contract workers, with notice to the Purchaser. In addition,
Seller shall consult with Purchaser to the extent reasonable practicable prior
to any amendment of an Assumed Contract, and shall advise as soon as reasonably
practicable following any execution of such amendment.
SECTION 5.3 ACCESS AND INFORMATION
From the date the transaction is disclosed to the Employees (or, if
earlier, the date five (5) days after execution of this Agreement) up to the
applicable Closing Date, the Seller shall, on reasonable notice and subject to
applicable Law, attorney privilege rights and competitively sensitive
information regarding Contracts which are not Assumed Contracts, (i) give the
Purchaser and its accountants, counsel, consultants, employees and agents,
access for inspection for reasonable periods of time during normal business
hours to all documents, records and information relating to the extent
applicable to the Operations, the Transferring Employees (other than the
employee data that is an Excluded Asset under Section 2.1(2)(g)) currently
employed in the Operations conducted by such Designated Seller, and the
Facility/ Design Assets as the Purchaser shall reasonably request, and (ii) give
the Purchaser and its employees reasonable access to employees of the Seller or
the Designated Seller involved in the transition of the Operations from the
Seller and the Designated Seller to the Purchaser and the Designated Purchaser.
In addition, the Seller shall, on reasonable notice, permit the Purchaser and
its accountants, counsel, consultants, employees and agents reasonable access
during normal business hours to the Facility/ Design Assets for the purpose of
conducting such inspections and performing such investigations as the Purchaser
may reasonably require to satisfy itself as to the condition, quality, quantity
and state of repair of the Facility/ Design Assets as the Purchaser may
reasonably request in its review of the properties, assets and business affairs
of the Operations and the above-mentioned documents, records and information.
All information that is made available, disclosed or provided to the Purchaser
and its representatives shall be subject to the terms of the Confidentiality
Agreement. The Purchaser shall conduct any inquiries pursuant to
Execution Copy
-71-
this Section 5.3 in such a manner so as not to unreasonably interfere with the
normal operations of the Operations or the Seller. All requests for access shall
be directed to Joseph Grubic, Nortel Networks Limited, or his delegates.
SECTION 5.4 LITIGATION SUPPORT
In the event and for so long as any Primary Party to this Agreement is
actively contesting or defending against any Third Party Action in connection
with (a) any transaction contemplated under any Transaction Document or (b)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction, with
respect to the Seller or any of its Affiliates on or prior to the applicable
Closing Date, or with respect to the Purchaser and any of its Affiliates on or
after such Closing Date, as applicable, the Primary Party not so contesting or
defending agrees to (and each of the Seller and Purchaser shall cause its
Affiliates to) (i) cooperate as reasonably requested with the contesting or
defending Party and its counsel, (ii) use commercially reasonable efforts to
make available its employees, as reasonably necessary, to provide testimony, to
be deposed, to act as witnesses and to assist counsel, and (iii) as permitted
by Law, provide reasonable access to its books and records as shall be
reasonably necessary in connection with the defence, contestation or
participation, all at the sole cost and expense of the Primary Party so
contesting, defending or participating; provided, however, that such
assistance does not prejudice any rights of the assisting Party, and provided,
further, that the foregoing provisions in this Section 5.4 shall not apply if
the Primary Party contesting, defending or participating is entitled to ind-
emnification therefore under Article 7, in which case such article shall
govern.
SECTION 5.5 RECORD RETENTION; POST CLOSING ACCESS
(1) Purchaser's Obligations. From and after each applicable Closing Date but
subject to any limitations imposed by the privacy Laws of the countries
where the Facilities/ Design Employees are located and applicable
attorney-client privilege, the Purchaser shall make available to the
Seller, its agents and employees, for inspection all books, records and
documents in its possession or that of the applicable Designated Purchaser
relating to or used in the Operations or the Facility/ Design Operations,
respectively, or to the Assets, Assumed Liabilities and the Transferring
Employees (and the reasonable assistance of the employees of the Purchaser
and the Designated Purchaser responsible for such books, records and
documents) during regular business hours as may be reasonably necessary
for the purposes of: (i) preparing Tax Returns and financial statements
and responding to tax audits covering operations and transactions at or
prior to the Closings, (ii) investigating, preparing for the defence or
prosecution of, prosecuting or defending any Action pending, threatened or
anticipated by or against the Seller or any Affiliate or any of their
properties, officers and directors before any Government Entity or
arbitration tribunal, that is based upon, arises out of or
Execution Copy
-72-
otherwise is in respect of the Operations, any of the Excluded
Liabilities or any of the Excluded Assets, (iii) preparing, auditing or
reviewing financial statements and preparing reports to shareholders and
Government Entities, (iv) preparing the Closing Statement of Assets and
Liabilities, or (v) for such other purposes for which access to such
documents is believed by the Seller to be reasonably necessary; provided,
however, access to such books, records and documents shall not
unreasonably interfere with the normal operation by the Purchaser of the
Operations. The Purchaser shall maintain and preserve all such books, and
records and other documents for the longer of (x) four (4) years from
the relevant Closing Date, or (y) any applicable statutory or regulatory
retention period, as the same may be extended, or any applicable
limitation period .
(2) Seller's Obligations. From and after each applicable Closing Date, as
permitted by Law but subject to applicable attorney-client privilege, the
Seller shall make or cause to be made available to the Purchaser for
inspection all books, records and documents in the possession of the
Seller or the applicable Designated Seller relating exclusively to or used
exclusively in the Operations or the Facility/ Design Operations,
respectively, or to the Assets, Assumed Liabilities and the Transferring
Employees at issue prior to the relevant Closing Date (and the reasonable
assistance of the employees of the Seller and the Designated Seller
responsible for such books, records and documents) for the purposes of (i)
investigating, preparing for the defence or prosecution of, prosecuting or
defending any Action by or against the Purchaser, the Designated Purchaser
or any of their properties, officers and directors before any Government
Entity or arbitration tribunal, that is based upon, arises out of or
otherwise is in respect of the Operations, any of the Facility/ Design
Assumed Liabilities or any of the Facility/ Design Assets, (ii) preparing,
auditing or reviewing financial statements and preparing reports to
shareholders and Government Entities, (iii) reviewing the Closing
Statements of Assets and Liabilities, or (iv) for such other purposes for
which access to such documents is believed by the Purchaser to be
reasonably necessary; provided, however, access to such books, records and
documents shall not unreasonably interfere with the normal operation by
the Seller of its business and shall not include employee data that is an
Excluded Asset under Section 2.1(2)(g). The Seller shall maintain and
preserve all such books, and records and other documents for the longer of
(x) four (4) years from the relevant Closing Date, or (y) any applicable
statutory or regulatory retention period, as the same may be extended, or
any applicable limitation period. The Seller shall take such action as may
be necessary to make any audit workpapers of its auditors relating to the
Operations and the Assets available to the Purchaser and its auditors, to
the extent such material is reasonably
Execution Copy
- 73 -
required for the above-noted purposes and not subject to
attorney-client privilege that would be waived by making such
disclosure.
As permitted by Law and subject to applicable attorney-client
privilege, Seller agrees to provide the Purchaser (at the Purchaser's
cost) with reasonable access to Seller's and its Affiliates' books and
records related to the Operations and the Assets and Assumed
Liabilities, to its non-officer employees, to its officers to the
extent reasonable and customary, and to its independent accountants, in
order to assist the Purchaser with its regulatory filings; provided,
however, that such access shall not be unduly burdensome to the Seller
or its Affiliates or shall not unduly disrupt the Seller's or its
Affiliates' ongoing business or financial reporting obligations.
SECTION 5.6 TRANSACTION EXPENSES; FILINGS AND CERTIFICATES
(1) Each of the Purchaser and the Seller shall bear its own costs and
expenses (including brokerage commissions, finders' fees or similar
compensation, and legal fees and expenses) incurred in connection with
this Agreement, the Transaction Documents and the transactions
contemplated hereby except as otherwise expressly provided herein or in
any other Transaction Document.
(2) The Parties agree that the Purchase Price is exclusive of any Transfer
Taxes and Transfer Fees. Any Transfer Taxes incurred in connection with
the transactions contemplated in this Agreement shall be allocated
among, and paid by, the Parties in accordance with Section 5.6.
(3) The Purchaser or Designated Purchaser, as applicable, shall pay
directly to the appropriate taxing authority, within the time
prescribed all applicable Refundable Transfer Taxes payable in
connection with the transactions contemplated in this Agreement,
provided that if any such Refundable Transfer Taxes are required to be
collected, remitted or paid by the Seller or the Designated Seller, as
applicable, such Refundable Transfer Taxes shall be paid by the
Purchaser or the Designated Purchaser, to the Seller or the Designated
Seller, at the Closing, or thereafter as requested of or by the Seller
or the Designated Seller. The Purchaser or Designated Purchaser, as
applicable, shall be entitled to all refunds of any Refundable Transfer
Taxes.
(4) All Transfer Taxes incurred in connection with the transactions
contemplated in this Agreement, other than those paid or payable by the
Purchaser or Designated Purchaser, as applicable, pursuant to Section
5.6(3) shall be allocated one-half to the Purchaser, the Designated
Purchaser or French Newco, as applicable, and one-half to the Seller or
the Designated Seller, as applicable. All such Transfer Taxes shall be
paid by the Purchaser, the Designated Purchaser or French Newco to the
appropriate taxing authority, within the time prescribed, and the
Seller or Designated Seller, shall remit
Execution Copy
- 74 -
payment to the Purchaser, Designated Purchaser or French Newco its
allocable share of such Transfer Taxes in accordance with the terms of
Section 5.6(5); provided, however, if such Transfer Taxes are required
to be collected, remitted or paid by the Seller or Designated Seller,
the Purchaser, Designated Purchaser or French Newco shall pay its
allocable share of such Transfer Taxes to the Seller or Designated
Seller, in accordance with the terms of Section 5.6(5).
(5) Any Refundable Transfer Taxes or Transfer Taxes required to be
remitted by the Purchaser, the Designated Purchaser or French Newco,
as applicable, to the Seller or Designated Seller, as applicable, or by
the Seller or Designated Seller, to the Purchaser, the Designated
Purchaser or French Newco shall be paid to the appropriate party in
immediately available funds on the Closing Date. The Parties
acknowledge and agree that the amounts paid on the Closing Date
pursuant to this Section 5.6(5) will be based upon estimates and that
the amounts paid at the Closing will be subsequently adjusted to take
into account the final purchase price allocation pursuant to Section
2.3 or after a taxing authority has finally determined the amount of
Taxes to be paid. Any Tax amounts due and owing in connection with the
final purchase price allocation or pursuant to the final determination
of a taxing authority shall be paid by the party owing such amounts
promptly (and in any event within fifteen (15) Business Days) following
receipt of written notice from the other party of the amount due,
together with appropriate documentation thereof.
(6) The Parties agree to allocate one-half (1/2) of all out-of-pocket costs
to the Purchaser, Designated Purchaser, on the one hand, and one-half
(1/2) to the Seller, Designated Seller, on the other, of related to the
formation of French Newco and the transfer of the French Contributed
Assets to French Newco, such costs to include fees and expenses of
counsel, accountants and other advisors (provided (i) the Seller and
the Designated Seller will endeavour to minimize such costs and (ii)
with respect to French Newco accounting fees, such costs shall only be
out-of-pocket costs to the extent incremental to Purchaser's ordinary
accounting fees associated with audits). In addition, the Parties agree
to allocate all Transfer Taxes related to the transfer of the French
Contributed Assets to French Newco in accordance with the applicable
provisions of this Section 5.6 and subject to the limitations set forth
in Section 5.28(5).
(7) The Parties acknowledge that certain exemptions from Transfer Taxes may
be available in certain taxing jurisdictions. If the Purchaser or any
Designated Purchaser, as applicable, wishes to claim any such exemption
for the purposes hereof, the Purchaser or Designated Purchaser will be
solely responsible for ensuring that any such exemption applies and, in
that regard, shall provide the Seller or Designated Seller, as
applicable, prior to each
Execution Copy
- 75 -
applicable Closing with its or the Designated Purchaser's vendor permit
number and the applicable certificate of exemption or election form
under such law to support the Purchaser's or Designated Purchaser's
claim to entitlement to such exemption or election. The Seller or
Designated Seller will cooperate with the Purchaser or Designated
Purchaser in its claiming of any such exemption, provided such
exemption or election is lawful and appropriate under the local tax
legislation. The Purchaser and such Designated Purchaser shall
indemnify and hold harmless the Seller and the applicable Designated
Seller for the Purchaser's and such Designated Purchaser's allocable
share of the Transfer Taxes pursuant to this Section, interest,
penalties and Damages relating to Transfer Taxes (including legal,
accounting and other expense) payable by the Purchaser pursuant to this
Section 5.6(7) to the extent the Seller and the applicable Designated
Seller pays, and does not charge the Purchaser or any Designated
Purchaser, any such Transfer Tax at the applicable Closing and the
Purchaser's and such Designated Purchaser's claimed entitlement to an
exemption or election is subsequently disallowed or not accepted by the
relevant authorities.
(8) Each of the Purchaser and the Designated Purchaser, the Seller and the
Designated Seller shall, if applicable, register on or before Closing
for Transfer Taxes in each of the jurisdictions where the Assets are
located.
SECTION 5.7 CONFIDENTIALITY
The Parties acknowledge that the Confidentiality Agreement remains in
full force and effect in accordance with its terms, which are incorporated
herein by reference, and the Parties agree to be bound thereby in the same
manner and to the same extent as if the terms had been set forth herein in full.
SECTION 5.8 FORWARD LOOKING INFORMATION
In connection with the Purchaser's investigation of the Operations, the
Purchaser has received certain estimates, projections and other forecasts for
the Operations, and certain plan and budget information (collectively, or
individually, " Forward Looking Information" ). The Purchaser acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets and that the Purchaser is familiar
with such uncertainties. The Seller makes no representation or warranty in any
Transaction Document herein with respect to any Forward Looking Information
referred to in this Section 5.8.
SECTION 5.9 NECESSARY CONSENTS
Between the date hereof and each Facility/ Design Closing Date with
respect to the Operations and Assets that are the subject of such Closing:
Execution Copy
- 76 -
(a) The Seller, for itself and on behalf of the applicable Designated
Seller agrees to use commercially reasonable efforts to:
(i) make all notifications and obtain all consents to the Assumed
Contracts and license agreements for the Transferred
Applications that are required under the terms thereof in
order to assign the same to the Purchaser or the applicable
Designated Purchaser (collectively, the " NECESSARY
CONSENTS"); and
(ii) comply with applicable Law to commence and pursue diligently
such information and consultation process and procedures with
workers' councils and employee representatives as are within
its control, in accordance with Sections D-1.3 and D-2.3 of
Exhibits D-1 and D-2, respectively.
(b) The Purchaser, for itself and on behalf of the applicable Designated
Purchaser, agrees to use commercially reasonable efforts to comply with
applicable Law to provide diligently sufficient information to enable
the Seller itself, and on behalf of the applicable Designated Seller,
as necessary to comply with its obligations under Section 5.9(a),
(collectively, the " NECESSARY CONSENTS" ).
(c) In the event that either Party becomes aware at any time within four
(4) months following the applicable Facility/ Design Closing of any
Third Party software application that was used by Seller or a
Designated Seller primarily in the Operations that is not identified in
Schedule 1.1(118), such software application will be treated as a
Transferred Business Application and Seller, for itself and on behalf
of the applicable Designated Seller, agrees to use commercially
reasonable efforts to transfer and assign such software application and
any license agreements related thereto to Purchaser.
(d) Notwithstanding anything in Section 2.1(3) of this Agreement to the
contrary, in the event that obtaining consent to assignment of a
license agreement for a Transferred Business Application would require
Seller or any Designated Seller or Purchaser or Designated Purchaser to
pay money to a Third Party, including any requirement by a licensor
that the Seller or Designated Seller make any payments for maintenance
for prior periods or the current period, the Parties will cooperate in
good faith to negotiate the amount of such payments and each Party will
pay either (i) fifty percent (50%) of such amount in order to obtain
such consent provided that such payment need not be made if the amount
is unreasonable compared to the cost of obtaining a new license or
Execution Copy
- 77 -
(ii) fifty percent (50%) of costs incurred to obtain
comparable software licences if consent cannot be obtained or
the cost of obtaining consent is unreasonable compared to the
cost of obtaining a new license.
SECTION 5.10 MAINTAIN INSURANCE
The Seller shall continue to maintain or cause to be continued in full
force and effect until each applicable Closing Date sufficient insurance
coverage with respect to the Operations and the Assets.
SECTION 5.11 OPERATIONS AT THE CHATEAUDUN FACILITY
Prior to the applicable Closing Date, the Designated Seller shall
complete the corrective actions to address the following matters described
in Schedule 4.16: Item 1(A) (new cooling system); Item 1(B) (battery charging
facility, redesign or outsourcing); Item 3 (oil/ water separator); and Item 4
(hydrocarbon containment).
SECTION 5.12 COOPERATION
(1) The Purchaser and the Seller shall cooperate in commercially reasonable
fashion with each other and shall cause the Designated Purchasers and
the Designated Sellers and their respective officers, employees, agents
and representatives to cooperate with each other following each Closing
Date to provide for an orderly transition of the Transferring
Employees, the Assets and the Assumed Liabilities to the Purchaser and
the Designated Purchasers. Save and except for the Transition Payment,
each Party shall bear its own out-of-pocket costs and expenses incurred
in assisting the other pursuant to this Section 5.11. No Party shall be
required by this Section 5.11 to take any action that would
unreasonably interfere with the conduct of its business.
(2) Subject to the other provisions of this Agreement and provided it does
not interfere with the Seller's, commercial interests or require any
payments to any Third Parties, the Seller will provide for a reasonable
period of time after the date of this Agreement, reasonable assistance
to the Purchaser in encouraging the suppliers and other business
associates of the Operations to maintain a similar business arrangement
with the Purchaser after the Closing Date as the Seller maintained with
such party prior to the Closing Date.
SECTION 5.13 PURCHASER'S ACQUISITION OF SOFTWARE
The Purchaser acknowledges that, except for the Single Use Desktop
Software and the Transferred Business Applications licensed from Third Parties
which are to be assigned to the Purchaser or Designated Purchasers as set forth
in Schedule 1.1(118), it is not acquiring any right, title or interest in
software contained in any computer equipment, which may form part of the Assets.
Subject to the provisions of the Shared Services Agreement, if such a license is
required to use any Third Party software so contained and the Purchaser is not
able to renew or obtain its own
Execution Copy
- 78 -
license for such software, the Purchaser agrees to remove such software from
any computer equipment forming part of the Assets no later than sixty (60) days
after the applicable Closing Date.
SECTION 5.14 TRANSFERABLE EQUIPMENT
(1) Except to the extent described in Section 2.6 and the remainder of
this Section 5.14, Seller does not intend to purchase, or cause to be
purchased , any of the Leased Equipment out of lease or to convey, or
cause to be conveyed , title to such Leased Equipment to Purchaser or
the Designated Purchasers on a country by country basis as part of the
transfer of the Facility/ Design Assets for each Facility or the Design
Operations, as applicable. Subject to the buyout provision in Section
5.14(2), the Parties agree that the Leased Equipment (as opposed to the
leasehold rights related thereto) itself is not intended to form part
of the Facility/ Design Assets for such Facility or Design Operations,
as applicable, hereunder. The Seller's inability to transfer, or to
cause to be transferred, title to any of the Leased Equipment for any
particular Facility or the Design Operations, as applicable, as at the
relevant Effective Time shall not be considered to constitute a
Material Adverse Effect.
(2) If any of the Leased Equipment shall not have been transferred to the
Purchaser or the Designated Purchaser within forty-five (45) days after
the relevant Closing Date (" TRANSFERABLE EQUIPMENT" ), then the Seller
or the Designated Seller, as the case may be, shall promptly initiate
the buy-out provisions under the relevant lease agreement in order to
transfer, or to cause to be transferred , title to the Transferable
Equipment to the Purchaser or the relevant Designated Purchasers within
the next forty-five (45) days. The Seller will notify the Purchaser
of the proposed transfer date (the "TRANSFERABLE EQUIPMENT TRANSFER
DATE" ) and a proposed determination of the fair market value thereof
for each piece of Transferable Equipment so being transferred. In the
event that the Purchaser does not agree with Seller's proposed fair
market value, Purchaser shall so notify Seller and Purchaser and Seller
shall use commercially reasonable effects to agree on such fair market
value, and if the parties are not able to so agree, then the fair
market value shall be determined by the Independent Accountant pursuant
to Section 2.4(3) (the " TRANSFERABLE EQUIPMENT TRANSFER VALUE" ). Upon
receipt of a bill of sale from the Seller evidencing transfer of title
of the Transferable Equipment, the Purchaser agrees to pay to the
Seller on the relevant Transferable Equipment Transfer Date, in
immediately available US dollar funds, the fair market value (and
applicable Transfer Taxes in accordance with Section 5.6 arising out of
either the purchase of such Transferable Equipment by the Seller or any
of its Affiliates or out of the transfer of such Transferable Equipment
to the Purchaser or the relevant Designated Purchaser hereunder). The
Seller's ability to only recoup from the Purchaser
Execution Copy
- 79 -
the Transferable Equipment Transfer Value Portion of any payment to the
applicable lessor (and not to recoup from the Purchaser the full buyout
payment) pursuant to this Section 5.14(2) is limited only so long as,
(i) the Purchaser meets the applicable lessor's standard of
creditworthiness for its lessees, and (ii) any applicable lessor
contractual limitations regarding asset movement outside of North
America (i.e., Canada, the United States and Mexico). Once transferred,
the Transferable Equipment shall be deemed by the parties to this
Agreement to be included with the Owned Equipment and transferred
pursuant to the terms of this Agreement as part of the transfer of the
Facility/Design Assets for each Facility.
(3) Any temporary use of the Transferable Equipment by the Purchaser and
the Designated Purchaser, as the case may be, following the applicable
Closing Date and pending the Transferable Equipment Transfer Date shall
be governed by the Shared Services Agreement.
SECTION 5.15 INVENTORY PUT OPTION
(1) The Purchaser and the Designated Purchasers shall have the following
options to sell to the Seller or the Designated Sellers:
(a) all Unused Inventory (the "INVENTORY PUT OPTION" );
(b) all Unused Unassigned Finished Goods Inventory (the
"UNASSIGNED FINISHED GOODS PUT OPTION" ); and
(c) all Unrepairable Bonepile Inventory (the "BONEPILE INVENTORY
PUT OPTION").
(2) Notwithstanding the foregoing:
(a) Unused Inventory and the Unused Unassigned Finished Goods
Inventory shall be deemed to be reduced by (i) the amount of
inventory, if any, of the same kind, or suitable for the same
purpose, that is acquired for use by the same Facility (after
the applicable Closing) and sold to Seller or Designated
Seller during the applicable put period, and (ii) the amount
of inventory, if any, of the same kind, or suitable for the
same purpose, that is acquired (other than from the same
Facility and after the applicable Closing) for use by another
facility to which manufacturing is transferred or has been
transferred in whole or in part;
(b) components that are Inventory and subsequently revealed during
the Inventory Put Period to have shelf life that has expired
as at the applicable Closing Date, or which have a date code
expiring during the
Execution Copy
- 80 -
Inventory Put Period, shall be reported to the Seller or
Designated Seller as soon as reasonably practicable following
discovery. Seller or Designated Seller shall either, (i) pay
the Purchaser or Designated Purchaser to rework such
components in an amount equal to their costs incurred in
reworking, (ii) repurchase as soon as reasonably possible such
components for the price paid by the Purchaser or Designated
Purchaser for such components, or (iii) authorize their use in
the Products (provided that to the extent such components
are authorized for use in the Products, the Seller or
Designated Seller waives any indemnification or warranty
rights it may have against the Purchaser or Designated
Purchaser in relation to the usage of such components), with
respect to the specific condition waived, and the Seller or
Designated Seller shall be entitled to select the applicable
clause of this sentence that shall apply; and
(c) components that are Inventory and have a shelf life that
expires prior to the end of the applicable Put Period and
because of such expired shelf life cannot be consumed within
the Put Period in the ordinary course of business, shall be
reported to the Seller or Designated Seller as soon as
reasonably practicable following discovery. Seller or
Designated Seller shall either (i) pay the Purchaser or
Designated Purchaser to rework such components in an amount
equal to their costs incurred in reworking, (ii) repurchase
such components for the price paid by the Purchaser or
Designated Purchaser for such components, or (iii) authorize
their use in the Products (provided that to the extent such
components are authorized for use in the Products, the
Seller or Designated Seller waives any indemnification or
warranty rights it may have against the Purchaser or
Designated Purchaser in relation to the usage of such
components with respect to the specific condition waived,
and the Seller or Designated Seller shall be entitled to
select the applicable clause of this sentence that shall
apply). Not withstanding the foregoing, the Purchaser or
Designated Purchaser shall use or be deemed to have used such
components, assuming they have a useable shelf life, prior to
components of the same kind, or suitable for the same
purpose, that are acquired by the Purchaser or Designated
Purchaser from other than the Seller or Designated Seller.
(d) At the end of the Inventory Put Period, if the Purchaser or
Designated Purchaser physically holds Unused Inventory that
has been used, transformed, or otherwise consumed, but has
not been sold to the Seller or Designated Seller and cannot be
sold to the Seller or Designated Seller in its original state,
the Purchaser or Designated Purchaser shall have the right to
deem a piece of inventory of the same
Execution Copy
- 81 -
kind, or suitable for the same purpose, and equivalent value
to be Unused Inventory and can be sold back to the Seller or
Designated Seller in place of the original Unused Inventory
item.
(e) At the end of the Unassigned Finished Goods Put Period, if
the Purchaser or Designated Purchaser physically holds Unused
Unassigned Finished Goods Inventory that has been used,
transformed, or otherwise consumed, but has not been sold to
the Seller or Designated Seller and cannot be sold to the
Seller or Designated Seller in its original state, the
Purchaser or Designated Purchaser shall have the right to deem
a piece of inventory of the same kind, or suitable for the
same purpose, and equivalent value to be Unused Unassigned
Finished Goods Inventory and can be sold back to the Seller
or Designated Seller in place of the original Unused
Unassigned Finished Goods Inventory item.
(3) The applicable put option may be exercised by the Purchaser within
ninety (90) days after the expiration of the applicable Inventory Put
Period, Unassigned Finished Goods Put Period, or Bonepile Inventory
Put Period, as the case may be, by sending a notice in writing to
the Seller specifying (i) the identity of the Unused Inventory, Unused
Unassigned Finished Goods, or Unrepairable Bonepile Inventory; (ii)
the quantity of the Unused Inventory, Unused Unassigned Finished Good s
or Unrepairable Bonepile Inventory; and (iii) the original purchase
price for the Unused Inventory, Unused Unassigned Finished Goods or
Unrepairable Bonepile Inventory paid pursuant to this Agreement
(individually, or collectively, the "INVENTORY PUT PURCHASE PRICE" )
and (iv) that the Unused Inventory, Unused Unassigned Finished Goods or
Unrepairable Bonepile Inventory, has been calculated and determined in
accordance with Section 5.14(1) above. The Seller shall have ten (10)
Business Days within which to discuss with the Purchaser and the
Purchaser shall make itself available to discuss with the Seller any
questions or outstanding issues with respect to the Purchaser's
exercise of the applicable put option. The Seller shall either (i) pay,
or cause the applicable Designated Seller to pay, to the Purchaser the
Inventory Put Purchase Price, within thirty (30) Business Days of
receipt of each notice of exercise of the applicable put option, or
(ii) send a written notice to the Purchaser within twenty (20) Business
Days of receipt of each notice of exercise of the applicable put option
that it objects to the calculation of the Inventory Put Purchase Price,
failing which the Seller shall be deemed to have accepted the Inventory
Put Purchase Price calculation. Any such written notice of objection
from the Seller must state (a) the specific items of Unused Inventory,
Unused Unassigned Finished Goods or Unrepairable Bonepile Inventory,
which the Seller contends should not be repurchased, and (b) the
Execution Copy
- 82 -
basis for its position with respect to each of such items of Unused
Inventory, Unused Unassigned Finished Goods or Unrepairable Bonepile
Inventory, which will be limited to mathematical errors or matters
of the nature described in Section 5.14(1) and Section 5.14(2) above.
In addition, any such written notice of objection must be accompanied
within ten (10) Business Days by payment in full for the items of
Unused Inventory, Unused Unassigned Finished Goods or Unrepairable
Bonepile Inventory which are not subject to such written notice of
objection.
(4) If the Seller objects to the Inventory Put Purchase Price calculation
pursuant to Section 5.15(3) above then either the Seller or the
Purchaser may refer the matter in writing to the Independent
Accountant, who will promptly resolve the issue after discussions with
each of the Seller and the Purchaser and in consideration of the
concerns of each of the Seller and the Purchaser, and will prepare an
Inventory Put Purchase Price schedule which shall be final and binding
on the Seller and the Purchaser and their respective Affiliates. The
Seller shall pay, or cause the applicable Designated Seller to pay, to
the Purchaser the balance of the Inventory Put Purchase Price
determined by the Independent Accountant (in his capacity as an expert)
within ten (10) Business Days of any such determination, together with
interest thereon at a rate equal to six percent (6%) per annum,
calculated from the last date notice of objection was due pursuant
to Section 5.15(3) above.
(5) The foregoing provisions of this Section 5.15 shall not apply to End of
Life Inventory or Repair Inventory which shall be dealt with in
accordance with the terms and conditions of the Amended and
Restated Master Contract Manufacturing Services Agreement and the
Repair Services Agreement.
(6) The Purchaser shall provide to the Seller commencing from the first
Closing Date until the end of the Inventory Put Period, monthly
reports (by part number of the unit quantity and the dollar amount)
of the Inventory consumed and Unused Inventory, Bonepile Inventory, and
Unassigned Finished Goods remaining at such month end in each
Facility. In addition, the Purchaser shall provide, for each
Facility and for each facility to which the Purchaser or a Designated
Purchaser has transferred Products during the Inventory Put Period,
at the end of the applicable put period a list of all inventory of
the Purchaser or Designated Purchaser of the same kinds as the
Inventory (by a format similar to Schedule 1.1(113)). At any time
prior to exercising the applicable put option, if the Purchaser
believes any Inventory purchased hereunder is likely to be Unused
Inventory or Unused Unassigned Finished Goods, it shall advise the
Seller on a reasonably timely basis of such likely Unused Inventory or
Unused Unassigned Finished Goods, and shall act in good faith to (a)
assist the Seller to identify opportunities (such as demand trends,
current forecasts or cross sales) to use or consume such likely Unused
Execution Copy
- 83 -
Inventory or Unused Unassigned Finished Goods prior to exercising of
the applicable put option, and (b) identify any cost-effective
opportunities for Purchaser to use or consume such likely Unused
Inventory at other Facilities or sites, to the extent practicable;
provided, however, that such action by Purchaser and Seller shall not
be a condition to the exercise of the applicable put option and the
failure by Purchaser to take any such action shall not limit
Purchaser's rights under this Section 5.15.
(7) After exercising the applicable put option, the Unused Inventory or
Unused Unassigned Finished Goods Inventory, as the case may be, shall
at the option of the Seller or Designated Seller be managed on a
consignment basis by the applicable provisions of the Amended and
Restated Master Contract Manufacturing Services Agreement.
SECTION 5.16 EQUIPMENT PUT OPTION
(1) The Purchaser and the Designated Purchasers shall have the following
options to sell to Seller or the Designated Sellers:
(a) all Initial Obsolete Equipment (" INITIAL OBSOLETE EQUIPMENT
PUT OPTION" ); and
(b) all Subsequent Obsolete Equipment (" SUBSEQUENT OBSOLETE
EQUIPMENT PUT OPTION" ).
(2) Notwithstanding the foregoing, the amount of the Initial Obsolete
Equipment and Subsequent Obsolete Equipment shall be deemed to be
reduced by:
(a) the amount of Substitutable Equipment purchased or leased by
the Purchaser or Designated Purchasers or one of its
Affiliates, if any, during the applicable put period , unless
such purchased or leased Substitutable Equipment is required
to support forecasted requirements in excess of that support
by the Initial Obsolete Equipment and Subsequent Obsolete
Equipment;
(b) Equipment which is lost, stolen, destroyed or otherwise
damaged (ordinary wear and tear excluded) during the
applicable put period ; and
(c) Equipment that has a depreciated value at the end of the
applicable put period of less than five thousand dollars
($5,000) (as calculated in accordance with the provisions of
Section 1.1(79)) shall be excluded from the Initial Obsolete
Equipment Put Option or the Subsequent Equipment Put Option.
Execution Copy
- 84 -
(3) If the Purchaser believes at any time prior to the applicable Equipment
Usage Period or Subsequent Equipment Usage Period that any Equipment is
likely to be Initial Obsolete Equipment or Subsequent Obsolete
Equipment, the Purchaser shall advise the Seller on a reasonably
timely basis of such likely Initial Obsolete Equipment or Subsequent
Obsolete Equipment and the Purchaser agrees to act in good faith to (a)
assist the Seller to identify opportunities to use such Initial
Obsolete Equipment or Subsequent Obsolete Equipment prior to such
exercise of the applicable put option and (b) identify any
cost-effective opportunities for Purchaser to use such Initial Obsolete
Equipment or Subsequent Obsolete Equipment including at other
Facilities or Purchaser sites, to the extent practicable, provided
that such action by Purchaser and Seller shall not be a condition to
the exercise of the applicable put option, and the failure by Purchaser
to take any such action shall not limit Purchaser's rights under this
Section 5.16.
(4) The applicable put option may be exercised by the Purchaser within
sixty (60) days after the expiration of the Equipment Put Usage Period
or Subsequent Equipment Usage Period, as the case may be, by sending a
notice in writing to the Seller specifying (i) the identity of the
Initial Obsolete Equipment or Subsequent Obsolete Equipment; (ii) the
purchase price for the Initial Obsolete Equipment or Subsequent
Obsolete Equipment paid pursuant to this Agreement, less applicable
depreciation under GAAP (individually or collectively, the "EQUIPMENT
PUT PURCHASE PRICE"); and (iii) that the Initial Obsolete Equipment or
Subsequent Obsolete Equipment has been calculated and determined in
accordance with Section 5.16(1) and Section 5.16(2). The Seller shall
have ten (10) Business Days within which to discuss with the Purchaser
and the Purchaser shall make itself available to discuss with the
Seller any questions or outstanding issues with respect to the
Purchaser's exercise of the applicable put option. The Seller shall
either (i) pay, or cause the applicable Designated Seller to pay, to
the Purchaser the Equipment Put Purchase Price, within thirty (30)
Business Days of receipt of each notice of exercise of the applicable
put option, or (ii) send a written notice to the Purchaser within
twenty (20) Business Days of receipt of each notice of exercise of the
applicable put option that it objects to the calculation of the
Equipment Put Purchase Price, failing which the Seller shall be deemed
to have accepted the Equipment Put Purchase Price calculation. Any such
written notice of objection from the Seller must state (a) the specific
items of Initial Obsolete Equipment or Subsequent Obsolete Equipment
which the Seller contends should not be included within the Equipment
to be repurchased, and (b) the basis for its position with respect to
each of such items of Initial Obsolete Equipment or Subsequent Obsolete
Equipment which will be limited to mathematical errors or matters of
the nature described in Section 5.16(1) and Section 5.16(2) above. In
addition, any such
Execution Copy
- 85 -
written notice of objection must be accompanied within ten (10)
Business Days by payment in full for the items of Initial Obsolete
Equipment or Subsequent Obsolete Equipment which are not subject to
such written notice of objection.
(5) If any of the Initial Obsolete Equipment or Subsequent Obsolete
Equipment subject to put option by the Purchaser or applicable
Designated Purchaser is not Transferable Equipment (i.e., a leasehold
interest only in favour of the Purchaser or Designated Purchaser), then
the remedy for exercising the Initial Obsolete Equipment Put Option or
Subsequent Obsolete Equipment Put Option, as the case may be, is not
for the Seller or Designated Seller to pay an Equipment Purchase Price
for such equipment, but rather for the Purchaser or Designated
Purchaser, as determined by the Purchaser in its sole reasonable
discretion, (i) to terminate the applicable lease without cost or
penalty to the Purchaser or Designated Purchaser, or (ii) to reassign
the applicable lease back to the Seller or Designated Seller without
cost or penalty to the Purchaser or Designated Purchaser.
(6) If the Seller objects to the Equipment Put Purchase Price calculation
pursuant to Section 5.16(1) and Section 5.16(2) above then either the
Seller or the Purchaser may refer the matter in writing to the
Independent Accountant, who will promptly resolve the issue after
discussions with each of the Seller and the Purchaser and in
consideration of the concerns of each of the Seller and the Purchaser,
and will prepare an Equipment Put Purchase Price schedule which
shall be final and binding on the Seller and the Purchaser. The Seller
shall pay, or cause the applicable Designated Seller to pay, to the
Purchaser the balance of the Equipment Put Purchase Price determined
by the Independent Accountant (acting as an expert and not as an
arbitrator) within ten (10) Business Days of any such determination,
together with interest thereon at a rate equal to six percent (6%) per
annum, calculated from the last date notice of objection was due
pursuant to Section 5.16(1) and Section 5.16(2) above.
(7) At the request of the Seller, the Purchaser shall provide to the
Seller, to the extent reasonably practicable, such regular written
reports relating to the Equipment (including Transferable Equipment
deemed included in Owned Equipment pursuant to Section 5.14) as
Seller may reasonably request as may be necessary to enable the Seller
to comply with its statutory financial reporting requirements in
relation to the accounting of the Equipment.
SECTION 5.17 CONSIGNMENT OBLIGATIONS
All Inventory and Repair Inventory used in connection with the Products
and not purchased by the Purchaser or Designated Purchaser because it is not
forecasted
Execution Copy
- 86 -
to be used by the Purchaser in the twelve (12) months from the applicable
Closing will be deemed "Consigned Inventory" as defined in the Amended and
Restated Master Contract Manufacturing Services Agreement and the Repair
Services Agreement, respectively, and as of the applicable Closing Date is
consigned to the Purchaser or Designated Purchaser in accordance with such
agreements.
SECTION 5.18 [***]
[***]
SECTION 5.19 OPERATIONS AT CHATEAUDUN FACILITY
Except as otherwise provided for in Section 5.28, prior to the Closing
with respect to the Assets located at the Chateaudun Facility, the Seller shall
cause the entity owning such Assets to contribute such Assets (including the
French Real Estate but excluding the intangible assets described in Section
2.1(1) to French Newco, and shall cause such entity to assume any associated
Assumed Liabilities. The Purchaser and the Seller each undertakes to comply with
the provisions of Article 34 of Decree no. 77-1133 of September 21, 1977 .by
notifying the relevant prefect (prefet) of the change in the operation of the
Chateaud Facility as soon as practicable, and in any event within thirty
(30) days the contribution of the French Assets to French New co.
SECTION 5.20 GDNT ASSET SALE DISCUSSIONS
The Primary Parties agree to enter into principled negotiations within
one hundred and eighty (180) days of the initial Closing to discuss a
possible transaction whereby the Seller would transfer to the Purchaser
certain assets of Guandong-Nortel Limited Liability Company ("GDNT ASSETS")
on mutually beneficial terms and conditions. The Primary Parties acknowledge
that there is no positive obligation to transfer the GDNT Assets arising from
this Section 5.20 and this covenant does not constitute a right of refusal for
either Purchaser or the Designated Purchasers to purchase the GDNT Assets.
SECTION 5.21 MONKSTOWN INCENTIVE GRANT
The Seller received certain financial incentives from the Department of
Enterprise, Trade and Investment acting through the Executive of the Industrial
Development Board of Northern Ireland ("MONKSTOWN DEVELOPMENT AGENCY"),
pursuant to a financial assistance agreement dated February 14, 2001 between
Nortel PLC and the Department of Enterprise ("MONKSTOWN GRANT") in exchange
for agreeing to maintain certain employment levels at the Monkstown Facility.
The Seller and the Purchaser agree to approach the Monkstown Development Agency
Execution Copy
*** Portions of this exhibit have been omitted pursuant to a request for
confidential treatment and that material has been filed separately with the
Securities and Exchange Commission.
- 87 -
within two (2) weeks of the date hereof to negotiate in good faith an
apportionment between the Parties of the repayment obligations related to the
Monkstown Grant, in order that Purchaser or a Designated Purchaser shall
assume a share of the financial obligations thereunder based upon the
proportion that the Transferring Employees at Monkstown Facility, represent of
the total number of Designated Seller employees at Monkstown. If the Monkstown
Development Agency agrees to such apportionment, the execution and delivery of
the appropriate assumption document by Purchaser or a Designated Purchaser
shall be added as a Closing condition to this Agreement under Article 8,
provided, however, the Seller shall indemnify and hold harmless the
Purchaser and its Affiliates from and against all Losses that the Purchaser or
any of its Affiliates may suffer, sustain or become subject to as a result of
the Monkstown Grant (including any portion thereof assumed by Purchaser or a
Designated Purchaser) or as a result of the failure by Seller or its Affiliates
to comply with the terms and conditions thereof or maintain any required level
of employment. The Purchaser or a Designated Purchaser shall promptly notify
Seller of (1) any anticipated reduction in the number of employees at the
Monkstown Facility; and (2) any claim asserted by the Monkstown Development
Agency, and shall permit Seller to negotiate with the Monkstown Development
Agency in order to reduce or eliminate any amounts claimable or claimed.
SECTION 5.22 VSHA PRICE SETTING
No later than forty-five (45) days prior to the anticipated initial
Closing Date, each of Seller and Purchaser shall cause their respective pricing
teams to meet and negotiate in good faith, and in accordance with the pricing
process agreed upon by the Parties prior to the date hereof, the prices for the
Products to be ordered by Seller pursuant to the Amended and Restated Master
Contract Manufacturing Services Agreement's Virtual Systems House Agreements
related to the respective Facility VSHA's. The Parties acknowledge that their
intent is to have the VSHA Product prices set no later than ten (10) days prior
to the anticipated Facility applicable Closing Date.
SECTION 5.23 EQUIPMENT AT THIRD PARTY LOCATIONS
The Seller shall take such action as may be necessary or appropriate in
order that the Purchaser and the applicable Designated Purchaser shall have
reasonable access to any Equipment at Third Party Locations, and Seller shall
after the relevant Closing Date cooperate with the Purchaser as reasonably
requested to facilitate access to such Equipment at Third Party Location in
order for the Purchaser or Designated Purchaser to relocate such Equipment at
Third Party Locations to a Facility.
SECTION 5.24 CUCW COLLECTIVE LABOUR AGREEMENT
The Seller and its Affiliates shall not enter into any amendment,
modification, replacement or supplement to the Collective Labour Agreement
between the Seller
Execution Copy
- 88 -
and the CUCW without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld.
SECTION 5.25 COVENANT NOT TO SUE
Notwithstanding any other provisions of this Agreement, Purchaser,
Designated Purchasers and its or their respective Affiliates and employees,
agents or customers shall have the unrestricted right to use for any purpose the
Residual Knowledge. Each of the Seller and each of the Designated Sellers, on
behalf of themselves and their Affiliates irrevocably release Purchaser,
Designated Purchasers and its or their respective Affiliates, agents, employees
or customers, from any and all causes of action, claims, of any kind whatsoever
which it may have, arising after the first Closing Date, with respect to the
use by the Purchaser, any Designated Purchaser or any of its or their
Affiliates, agents, employees or customers, of the Residual Knowledge and
agrees not to claim or assert that any such use violates any Intellectual
Property rights of Seller or any Designated Seller. The rights of Purchaser,
Designated Purchasers and its or their respective Affiliates, employees, agents
and customers to use Residual Knowledge in accordance with this Agreement will
not be deemed to grant to Purchaser, Designated Purchasers and its or their
respective Affiliates, agents or customers any rights or licenses under the
Seller's or any of its Affiliate's patents, copyrights or trademarks.
SECTION 5.26 POST CLOSING TAX LIENS
If after the relevant Closing Date a Lien, other than a Permitted
Encumbrance, which relates to Taxes for any period or portion thereof ending
prior to the relevant Effective Time is asserted against or placed on any of the
Assets, Seller shall, or shall use its reasonable best efforts to cause the
appropriate Designated Seller to, satisfy such Lien and cause it to be released;
provided, however, that if the Seller or Designated Seller, as applicable, is in
good faith contesting a Lien in accordance with applicable Law, then so long as
Seller or Designated Seller, as applicable, is diligently pursuing such action
it may continue to dispute such Lien to the conclusion of the action (but shall
take all steps, including but not limited to the posting of a bond or other
security, that may be necessary to enable the Purchaser or a Designated
Purchaser, as applicable, may have the use and benefits of such Assets while the
action is proceeding and may dispose of or sell such Assets free of such Lien).
SECTION 5.27 EMPLOYER PAYROLL CONTRIBUTION REIMBURSEMENT
(1) To the extent that the Excess CPP/ QPP/ EI Amount is not recovered by
the Purchaser or Designated Purchaser under the Product prices
(although the intent of the Parties is not to include it at this time)
under the Amended and Restated Contract Manufacturing Services
Agreement, the Seller agrees to pay one half (1/2) of the Excess CPP/
QPP/ EI Amount to the Purchaser.
Execution Copy
- 89 -
(2) Within ninety (90) days following the end of the calendar year in which
an applicable Closing has occurred, Seller shall send to Purchaser a
statement showing the Total Seller CPP/ QPP/ EI Payments and the
Maximum CPP/ QPP/ EI Amounts for such year and Purchaser shall send to
Seller a statement showing the Total Purchaser CPP/ QPP/ EI Payments
for such year. If a Party desires to review the basis for the statement
from the other Party it shall have thirty (30) days following receipt
of such statement in which to do so, and the Party which sent the
statement shall allow the other Party access to such information as may
be reasonably required to allow the receiving Party to review the
amounts indicated in such statement. Following the end of such thirty
(30) day period, the Seller shall promptly prepare a final statement
listing the Total Seller CPP/ QPP/ EI Payments, the Total Purchaser
CPP/ QPP/ EI Payments, the Maximum CPP/ QPP/ EI Amount and the Excess
CPP/ QPP/ EI Amount, and shall send such final statement and one-half
(1/2) of the Excess CPP/ QPP/ EI Amount, if any, to the Purchaser.
(3) If either Party disputes the amount shown on the other Party's initial
statement (e.g., the Total Seller CPP/ QPP/ EI Payment or the Total
Purchaser CPP/ QPP/ EI Payments), any such dispute shall be submitted
to the Independent Accountant for resolution, and the cost relating
thereto shall be borne as set forth in Section 9.27.
SECTION 5.28 TRANSFER OF ASSETS TO FRENCH NEWCO
(1) No later than the French Facility/ Design Closing, the Seller shall
cause the applicable Designated Seller to transfer all of the French
Contributed Assets to French Newco by way of contribution, and shall
cause French Newco to assume any associated Assumed Liabilities. The
Seller shall consult with the Purchaser to the extent practicable
regarding the formation of French Newco.
(2) As of the French Designated Closing, French Newco shall (i) have no
activity other than the Operations at the Chateaudun Facility, (ii)
hold no assets other than its share capital and the French Contributed
Assets, and (iii) not have carried on the business as a going concern
for more than three (3) Business Days prior to the applicable Effective
Date and any liability, not incurred in the ordinary course, for any
such short period shall be addressed through an appropriate adjustment
mechanism to the French Newco share value or an appropriate asset/
liability adjustment.
(3) The Seller shall be responsible to complete or cause to complete all
formalities required by French law with respect to the contribution to
French Newco (i) that have to be carried out prior to or concurrent
with the completion of such contribution, or (ii) that have to be
carried out subsequent to the completion of such contribution and may
practically be completed prior to or
Execution Copy
- 90 -
concurrent with the French Facility/Design closing. The Seller and the
Purchaser each undertake to cooperate in order to complete or cause to
complete all formalities required by French law with respect to the
contribution to French Newco that have to be carried out subsequent to
the completion of such contribution and could not practically be
completed prior to or concurrent with the French Facility/ Design
Closing.
(4) The Seller undertakes to cause French Newco to comply with the
provisions of Article 34 of Decree no. 77-1133 of September 21, 1977 by
notifying the relevant prefect (prefet) of the change in the operation
of the Chateaudun Facility as soon as practicable after the completion
of the contribution to French Newco, and in any event no later than the
French Facility/ Design Closing.
(5) Notwithstanding the other provisions of this Section 5.28 or otherwise
in this Agreement, in the event (i) the Parties have mutually agreed to
proceed with the establishment of French Newco as set forth in Section
5.28(i) , and (ii) that the applicable Designated Seller is unable
prior to August 1, 2005 to produce the audited financial statements
required to effect the transfer the French Contributed Assets to French
Newco as set forth in Section 5.28(1), the Parties acknowledge and
agree that instead of a sale of the shares of French Newco as
contemplated in Section 2.1(1)(p), the French Contributed Assets shall
be sold instead through an asset transaction in the same manner as for
the other Facility/ Design Closings referenced in Article 2. In such
case, notwithstanding Section 5.6(6), Purchaser shall not be
responsible for any of the costs of establishing French Newco and the
Seller shall also reimburse the Purchaser for one-half (1/2) of the
carry costs of any Refundable Taxes for up to a nine (9) month period
arising as a result thereof, based on an assumed carrying cost interest
rate for this period equal to six (6%) percent per annum.
(6) Notwithstanding the other provisions of this Section 5.28 or otherwise
in this Agreement, in the event the Parties do not proceed with the
establishment of French Newco as set forth in Section 5.28(1) on the
basis that either (i) the transfer of the French Contributed Assets
cannot be made effective within three (3) Business Days of the
Effective Time of the French/ Design Closing or, (ii) either Party
determines not to proceed with the establishment of French Newco within
two (2) weeks of the signing of this Agreement, the Parties acknowledge
and agree that instead of a sale of the shares of French Newco as
contemplated in Section 2.1(1)(p), the French Contributed Assets shall
be sold instead through an asset transaction in the same manner as for
the other Facility/ Design Closings referenced in Article 2. In such
case, the costs of establishing French Newco, including the allocation
of all the related Transfer Taxes, shall be as set forth in Section
5.6(6).
Execution Copy
- 91 -
SECTION 5.29 REIMBURSEMENT FOR FRENCH ACCRUALS
The Seller shall reimburse the Purchaser and the Designated Purchasers
at any time after Closing for amounts accrued as of Closing for the French
Transferring Employees (and subsequently paid out to these French Transferring
Employees) in relation to any retraite and medaille du travail entitlements,
determined in accordance with GAAP and such amounts jointly reviewed by the
Parties prior to the applicable Facility/ Design Closing. The Seller maintains
the right in its sole discretion to pay out to the Purchaser at any time the per
employee lump sum amount (as such amounts are updated using the calculation
methodology used by and consistent with the books and records of the
Designated Seller and confirmed as at the applicable Facility/ Design Closing
Date, provided that such methodology is in accordance with GAAP) for each
French Transferring Employee who at that time is employed by Purchaser or
Designated Purchasers.
SECTION 5.30 RESTATEMENT ADJUSTMENTS
To the extent that completion of the restatement of the Seller's
financial statements disclosed in Schedule 4.3 occurs after an applicable
Closing Date and results in further adjustment to the books and records of the
Seller or Designated Sellers such that the values set forth in the applicable
Closing Statement of Assets and Liabilities would have been more favourable to
the Purchaser if such Statement had reflected the restated amounts, then,
notwithstanding the period for adjustments or disputes set forth in Section 2.4
shall have passed, there shall be a corresponding adjustment to the applicable
Closing Statement of Assets and Liabilities in accordance with the provisions
set forth in Section 2.4.
SECTION 5.31 MINDREADY EMPLOYEES
The Parties intend a Master Services Agreement between Nortel Networks
Limited and Mindready Solutions Inc. " MINDREADY" ) dated January 27, 2002 for
the provision of calibration and test building services be assigned to Purchaser
or a Designated Purchaser. However, as the CUCW filed a labour grievance against
Seller, regarding Seller's business transaction with Mindready (" THE GRIEVANCE"
), which has not yet been finally adjudicated, the Parties agree as follows:
(1) If prior to the applicable Closing Date, Arbitrator Lussier's
arbitration decision (relating to the Grievance) is upheld following
judicial review, or alternatively, Seller settles the Grievance with
the CUCW and, as a consequence, certain Mindready employees become
employees of Seller or Designated Seller, then:
(a) the names and related Employee Information of such individuals
(or their replacements, given that the list of individuals is
subject at all times to change in accordance with the
provisions of the CUCW Collective Labour Agreement) will be
added to the Employee
Execution Copy
- 92 -
Schedules as contemplated in Section 5.1(3)(a), and they shall
become Transferring Quebec Employees and be employed by
Purchaser or Designated Purchaser on the terms and conditions
of the CUCW Collective Labour Agreement and in accordance with
the provisions of Article 6 and Exhibit D-5, and
(b) the Mindready contract will be removed from the list of
"Assumed Contracts" and will be retained by Seller.
(2) If on the applicable Closing Date, Arbitrator Lussier's arbitration
decision has not been finally adjudicated or settled and, as a
consequence, the individuals remain employees of Mindready, then the
Mindready contract shall be an Assumed Contract, with the result that
Flextronics will be required to use such Mindready employees to perform
calibration and test set build work.
(3) If subsequent to the applicable Closing Date, and thus following
Purchaser or Designated Purchaser's assumption of the Mindready
contract, Arbitrator Lussier's arbitration decision is upheld following
judicial review, or alternatively, Seller settles that Grievance with
the CUCW and, as a consequence, certain Mindready employees become
employees of Seller or Designated Seller, then:
(a) the Parties will enter into a post-Closing amendment to this
Agreement in order that the individuals be treated in the same
manner as if they had been Transferring Quebec Employees as of
the applicable Closing Date, and they shall be employed by
Purchaser or Designated Purchaser on the terms and conditions
of the CUCW Collective Labour Agreement and in accordance with
the provisions of Article 6 and Exhibit D-5, and
(b) if the Mindready contract cannot, as a result of any terms and
conditions existing in such contract at the applicable Closing
Date and not as a result of any actions or omission by
Purchaser or Designated Purchaser, be terminated by Purchaser
or Designated Purchaser without additional cost, the Purchaser
or Designated Purchaser shall assign the Mindready contract
back to Seller.
(4) If subsequent to the applicable Closing Date Arbitrator Lussier's
arbitration decision is reversed following final judicial review and,
as a consequence, the individuals remain employees of Mindready, then
the Mindready contract shall remain an Assumed Contract of Purchaser or
Designated Purchaser.
(5) If any action taken by the parties pursuant to this Section 5.31 would
have, or could reasonably have been expected to have, affected the
Product pricing
Execution Copy
- 93 -
(whether upward or downward) had such action been taken prior to the
completion of the VSHA pricing setting process set forth in Section
5.22, then the applicable Parties agree to follow, after the applicable
Closing, the process set forth in Section 11.1.1 of the Amended and
Restated Master Contract Manufacturing Services Agreement for
renegotiating "Prices" (as that term is defined therein) to reflect
such action.
SECTION 5.32 SECURITY DOCUMENTATION
The Purchaser shall deliver at the first Facility/ Design Closing the
Security Documentation in customary form acceptable to the Seller and the
Purchaser and containing such provisions as are necessary or appropriate to
provide the Seller with a first priority (subject to permitted encumbrances)
fully perfected security interest in the shares of French Newco, the Equipment
and the Inventory (collectively, the "SECURED ASSETS"). If and to the extent
the Purchaser causes a Designated Purchaser (other than the Purchaser) to
purchase all or a portion of the Secured Assets, then the Purchaser shall cause
such Designated Purchaser, on or prior to the Closing in respect of the relevant
Secured Assets, to agree to be bound by this Agreement in respect of such
Secured Assets as if it were the Purchaser under this Agreement, but without
prejudice to the liabilities of the Purchaser hereunder, or enter into with the
Seller or applicable Designated Seller of the relevant Secured Assets an asset
purchase agreement in substantially the form of this agreement and the Purchaser
shall guarantee, and cause such Designated Purchaser to perform, all of the
obligations of such Designated Purchaser under this Agreement, any other asset
purchase agreement executed and delivered pursuant hereto and any other
agreement or instrument delivered pursuant to this Agreement or any such other
asset purchase agreement. The Purchaser or applicable Designated Purchaser shall
also be permitted after the first Facility/ Design Closing to have an Affiliate
of the Purchaser purchase all or a portion of the Secured Assets provided the
same procedure in relation to the sale of the Secured Assets from the Purchaser
to the Designated Purchaser (other than the Purchaser) is followed, mutatis
mutandis.
SECTION 5.33 FACILITIES LICENSES
No later than forty-five (45) days prior to the anticipated first
Closing Date, each of Seller and Purchaser shall determine, and in the event of
any disagreements shall negotiate in good faith with a view towards reaching
agreement by such date as to use (i) which sites, in addition to those at which
the Design Operations are conducted at the Ottawa Lab 2/ Lab 10 Facility and the
Monkstown Facility, will be the subject Licenses of Space, (ii) the space to be
licensed in each such site, (iii) the fees to be paid under each License of
Space (which represent the Seller's costs of owning and maintaining the space to
be licensed); (iv) the term of each License of Space; and (v) any other
modifications that may be appropriate to the form of License of Space. The
Parties acknowledge that their intent is to have the cost of the Licenses of
Space determined prior to the establishment of the initial VSHA Product
Execution Copy
- 94 -
prices. Notwithstanding any general obligation of the Parties to mitigate Losses
pursuant to the terms of this Agreement or otherwise under applicable Law, the
Parties expressly acknowledge and agree that, if the Seller or its Affiliate
intends to market the Monkstown Facility either (i) for lease as a complete
facility, or (ii) for sale, then the Seller and its Affiliates shall not be
required to mitigate the Monkstown Real Property Losses through the leasing or
licensing of space at the Monkstown Facility to any third party (which for
greater certainty includes any Affiliate of the Seller or Designated Sellers.)
SECTION 5.34 ANNUAL INCENTIVE BONUS
(1) In the event that Seller decides to award SUCCESS bonuses to eligible
Employees in respect of SUCCESS Plan year 2004, such Employees whose
Employment Transfer Date occurs in calendar year 2004 will receive a
bonus payment at or about the same time in 2005 that other eligible
Seller employees receive their bonus payment. Transferred Employees'
bonus will be paid by Purchaser or Designated Purchaser in an amount
that is equal to the amount such Transferred Employee would have
received, in Seller's sole discretion, had he or she remained an
employee of Seller or Seller Affiliate through calendar year 2004, and
satisfied any and all other criteria required by Seller. Any such
payment is deemed not to be a payment under the Nortel Networks SUCCESS
Plan.
The amount of the bonus that will be paid by the Purchaser or
Designated Purchaser and the rules for determining the amount of the
bonus, shall be determined by Seller in its sole discretion. The
Purchaser or Designated Purchaser agree to make payment of the bonus to
each Transferred Employee within forty five (45) calendar days
following written notice from Seller as to the amount of the bonus with
respect to each Transferred Employee. For the avoidance of doubt, the
Purchaser or Designated Purchaser's obligation to make payment of the
bonuses shall be an Assumed Liability.
Seller shall reimburse Purchaser the Seller's pro-rata share of any
bonus amounts paid, together with any payroll taxes required to be paid
by Purchaser or the Designated Purchaser with respect to such bonus
amounts paid based on the number of months in 2004 the Transferred
Employee was employed by Seller or Designated Seller. For the avoidance
of doubt, Seller's pro-rata share of the bonus payments shall be an
Excluded Liability.
(2) In the event that Seller decides to award SUCCESS bonuses to eligible
Employees in respect of SUCCESS Plan year 2004, such Employees whose
Employment Transfer Date occurs in calendar year 2005 will receive a
2004 bonus payment at or about the same time in 2005 that other
eligible Seller
Execution Copy
- 95 -
employees receive their bonus payment. The bonus will be paid directly
by Seller to the Employees.
(3) In the event that Seller decides to award SUCCESS bonuses to eligible
Employees in respect of SUCCESS Plan year 2005, any such Employee whose
Employment Transfer Date occurs in calendar year 2005 will receive a
bonus payment at or about the same time in 2006 that other eligible
Seller employees receive their bonus payment. Transferred Employees'
bonus will be paid by Purchaser or Designated Purchaser. Any such
payment is deemed not to be a payment under the Nortel Networks SUCCESS
Plan and the payment will be equal to a pro rata portion of the bonus
that would have been payable for the full year, based on the number of
months in 2005 that the Transferred Employee was employed by Seller or
Seller Affiliate. The actual amount of the bonus that is paid by the
Purchaser or Designated Purchaser and the rules for determining the
amount of the bonus, shall be determined by Seller in its sole
discretion. The Purchaser or Designated Purchaser agrees to make the
bonus payment to each Transferred Employee within forty five (45)
calendar days following written notice from Seller as to the amount of
the bonus with respect to each Transferred Employee. For the avoidance
of doubt, the Purchaser or Designated Purchaser's obligation to make
payment of the bonuses pursuant to this subsection shall be an Assumed
Liability.
Seller shall reimburse Purchaser the bonus amounts paid by Purchaser
pursuant to this subsection together with any payroll taxes required to
be paid by Purchaser or the Designated Purchaser with respect to each
bonus amount paid. For the avoidance of doubt the bonus payments paid
by Purchaser pursuant to this subsection are an Excluded Liability.
ARTICLE 6
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
SECTION 6.1 GENERAL
Each of the Parties agrees as follows in connection with matters
relating to employment and employee benefits:
(a) The Parties agree to, and agree to cause their Affiliates to,
comply with the provisions set forth in Article 6 and Exhibit
D-1 through D-9B and the other Transaction Documents with
regard to the treatment of the Transferring Employees;
(b) Seller and Purchaser agree as to certain employment and
employee benefit matters including the allocation of
responsibility for certain associated liabilities as set forth
in Article 6 and Exhibit D-1 through D-9B;
Execution Copy
- 96 -
(c) For a period not less than eighteen (18) months following the
Effective Date, the Purchaser and the Designated Purchasers
shall not, except with the Seller's prior written consent,
solicit for employment or hire any of the employees of the
Seller or Designated Sellers who continue employment with or
voluntarily terminate employment with the Seller or Designated
Sellers or any Employees who have rejected the employment
offer of the Purchaser or Designated Purchasers or objected to
their transfer of employment to the Purchaser or Designated
Purchasers pursuant to this Agreement. Notwithstanding the
foregoing, nothing in this Section 6.1(c) shall prevent the
Purchaser or the Designated Purchasers from (i) conducting
generalized employment searches that are not focused on such
employees or former employees of the Seller or Designated
Sellers or (ii) hiring such employees or former employees of
the Seller or Designated Sellers identified through such
employment searches;
(d) For a period not less than eighteen (18) months following the
Effective Date, the Seller and the Designated Sellers shall
not, except with the Purchaser's prior written consent,
solicit for employment or hire any Transferring Employee; and
(e) Seller and Purchaser agree that there will be no transfer
(from Seller to Purchaser) of any assets or liabilities with
respect to any accrued pension benefits or other
employment-related benefits accrued as of the applicable
Closing Date, with the exception of vacation days as set out
in Schedule 4.12(9) or as otherwise required by applicable
Law.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants and agreements set forth in
this Agreement, the Local Sale Agreements, the Shared Services Agreement, the
Nortel Proprietary Software License Agreement, or in any writing or certificate
delivered at a Closing in connection with such Closing shall survive the
Closings. Notwithstanding anything to the contrary in this Agreement, the Local
Sale Agreement, the Shared Services Agreement, the Brazil Asset Purchase
Agreement or the Nortel Proprietary Software License Agreement with respect to
(i) the representations and warranties contained in any such agreement and (ii)
the covenants and agreements contained in any such agreement that by their terms
contemplate compliance or performance prior to or concurrent with the applicable
Closing, no Party will have any liability with respect thereto and no Party will
be entitled to recover any indemnification for any Losses pursuant to any such
agreement or otherwise recover in respect thereof unless written notice of a
claim for
Execution Copy
- 97 -
Losses (given in good faith and specifying, in reasonable detail, the nature
thereof) is delivered to the applicable Party pursuant to the notice provisions
of Section 9.10 before the Applicable Notice Date. For purposes of this
Agreement, the term "APPLICABLE NOTICE DATE" shall mean the date eighteen (18)
months after the last Closing Date; provided, however, that with respect to any
Loss arising from or related to:
(a) a breach of the representations and warranties of the
Purchaser set forth in Section 3.1 and Section 3.2, or a
breach of the representations and warranties of the Seller set
forth in Section 4.1, Section 4.2, Section 4.3, Section 4.16,
Section 4.18(a) and Section 4.20, or a breach of the covenants
of the Purchaser and the Seller set forth in Section 5.3, the
Applicable Notice Date shall be three (3) years following the
last Closing Date;
(b) a breach of the representations and warranties of the Seller
set forth in Section 4.11 and Section 4.12 and a breach of the
representations and warranties of the Purchaser set forth in
Section 3.6, the Applicable Notice Date shall mean the two (2)
year anniversary of the relevant Employee Transfer;
(c) a breach of the representations and warranties of the Seller
set forth in Section 4.7, a breach of the representations and
warranties of the Purchaser set forth in Section 3.3, and a
breach of the covenants of the Purchaser and the Seller set
forth in Section 5.6(2), the Applicable Notice Date shall be
no later than the expiry of the applicable statute bar date or
upon a final determination either by a Tax authority or a
court or tribunal of competent jurisdiction;
(d) a breach of the payment obligation of the Seller pursuant to
Section 5.15 and Section 5.16, the Applicable Notice Date
shall mean the two (2) year anniversary from the relevant
Closing Date; and
(e) any obligation or liability of the Seller or a Designated
Seller to Third Parties which arises out of or is related to
the Assets or the conduct of any part of the Operations by the
Seller, any Designated Seller or any of the Seller's
Affiliates prior to the relevant Effective Time and that is
not an Assumed Liability or otherwise assumed by the Purchaser
or a Designated Purchaser pursuant to this Agreement, the
Local Sale Agreements, the Shared Services Agreement, the
Brazil Asset Purchase Agreement and the Nortel Proprietary
Software License Agreement the Applicable Notice Date shall be
the expiry of the applicable statute bar date;
Execution Copy
- 98 -
(f) any obligation or liability of the Purchaser or a Designated
Purchaser to Third Parties which arises out of or is related
to the Assets, the Assumed Liabilities, or the conduct of any
part of the Operations by the Purchaser, any Designated
Purchaser or any of Seller's Affiliates from and after the
relevant Effective Time except to the extent such liability or
obligation is a liability or obligation of the Seller or any
Designated Seller pursuant to this Agreement, the Local Sale
Agreements, Shared Services Agreement, the Brazil Asset
Purchase Agreement and the Nortel Proprietary Software License
Agreement the Applicable Notice Date shall be the expiry of
the applicable statute bar date; and
(g) any intentional misrepresentation or fraud, the Applicable
Notice Date shall be the expiry of the applicable statute bar
date.
For greater certainty, the provisions of this Article 7 shall not
apply, without limitation, to the PRBA, the Amended and Restated Master
Contract Manufacturing Services Agreement, each Real Property Lease,
the Confidentiality Agreement, the Repair Services Agreement, and the
Logistics Services Agreement.
SECTION 7.2 INDEMNIFICATION OBLIGATIONS OF THE SELLER
(1) Subject to the other provisions of this Article 7, the Seller shall
indemnify and hold harmless the Purchaser and its Affiliates and, to
the extent named in any Third Party Action, any of the Purchaser's or
its Affiliates' employees (other than Transferring Employees themselves
with respect to their actions or inactions on or prior to their
Employment Transfer Date), officers or directors (collectively, the
"PURCHASER INDEMNITEES") from and against any Losses that any Purchaser
Indemnitee may suffer, sustain or become subject to, as a result of:
(a) the breach by the Seller or any of its Affiliates of any
representation or warranty made by the Seller or any of its
Affiliates in this Agreement, each Local Sale Agreement, the
Shared Services Agreement, the Brazil Asset Purchase Agreement
and the Nortel Proprietary Software License Agreement as
applicable, or any certificate delivered at a Closing pursuant
to any such agreement;
(b) the breach prior to or concurrent with an applicable Closing
by the Seller or any of its Affiliates of any covenant or
agreement made by the Seller or any of its Affiliates in this
Agreement, any of the Local Sale Agreements, the Shared
Services Agreement, the Brazil Asset Purchase Agreement, the
Nortel Proprietary Software License Agreement or any
certificate delivered at such Closing pursuant to any such
agreement
Execution Copy
- 99 -
that, in any such case, by its terms contemplates compliance
or performance at or prior to such relevant Closing;
(c) any obligation or liability of Seller or a Designated Seller
to Third Parties which arises out of or is related to the
Assets or the conduct of any part of the Operations by the
Seller, any Designated Seller or any of Seller's Affiliates,
prior to the relevant Effective Time except to the extent such
liability or obligation is an Assumed Liability or otherwise
assumed by the Purchaser or any Designated Purchaser pursuant
to this Agreement, the Local Sale Agreements, the Shared
Services Agreement, the Brazil Asset Purchase Agreement or the
Nortel Proprietary Software License Agreement;
(d) the breach after a relevant Closing by the Seller or any of
its Affiliates of any covenant or agreement made by the Seller
or any of its Affiliates in this Agreement, any of the Local
Sale Agreements, the Shared Services Agreement, the Brazil
Asset Purchase Agreement or the Nortel Proprietary Software
License Agreement; and
(e) or any certificate delivered at such Closing pursuant to any
such agreement that, in any such case, by its terms
contemplates compliance or performance after such relevant
Closing.
(2) The Seller and the Designated Sellers shall discharge all of their
respective obligations in respect of the Transferring Employees for
their own account prior to the applicable Effective Time, and shall
indemnify the Purchaser Indemnitees and keep the Purchaser Indemnitees
indemnified against all Losses that the Purchaser or Designated
Purchaser, as the case may be, suffer in connection with the employment
by the Seller, or the Designated Seller, as the case may be, of any
Transferring Employees arising before the applicable Effective Time,
including any act, fault or omission by the Seller or the Designated
Sellers, as the case may be, in relation to a failure to discharge such
obligations in respect of the Transferring Employees arising before the
applicable Effective Date.
SECTION 7.3 INDEMNIFICATION OBLIGATIONS OF THE PURCHASER
(1) Subject to the other provisions of this Article 7, the Purchaser shall
indemnify and hold harmless the Seller and its Affiliates and, to the
extent named in any Third Party Action, any of the Seller's or its
Affiliates' employees, officers or directors (collectively, the "SELLER
INDEMNITEES"), from and against any Losses that any Seller Indemnitee
may suffer, sustain or become subject to, as a result of:
Execution Copy
- 100 -
(a) a breach by the Purchaser or any of its Affiliates of any
representation or warranty made by the Purchaser or any of its
Affiliates, as the case may be, in this Agreement, any Local
Sale Agreement, the Shared Services Agreement, the Brazil
Asset Purchase Agreement, the Nortel Proprietary Software
License Agreement, or any certificate delivered at a Closing
pursuant to any such agreement;
(b) a breach prior to or concurrent with an applicable Closing by
the Purchaser or any of its Affiliates of any covenant or
agreement made by the Purchaser or any of its Affiliates in
this Agreement, any Local Sale Agreement, the Shared Services
Agreement, the Brazil Asset Purchase Agreement or the Nortel
Proprietary Software License Agreement, as applicable, or any
certificate delivered at such Closing pursuant to any such
agreement that, in any such case, by its terms contemplates
compliance or performance at or prior to such relevant
Closing;
(c) the breach after a relevant Closing by the Purchaser or any of
its Affiliates of any covenant or agreement made by the
Purchaser or any of its Affiliates in this Agreement, any
Local Sale Agreement, the Shared Services Agreement, the
Brazil Asset Purchase Agreement, or the Nortel Proprietary
Software License Agreement, as applicable, or any certificate
delivered at such Closing pursuant to any such agreement that,
in any such case, by its terms contemplates compliance or
performance after such relevant Closing;
(d) the failure of the Purchaser or the relevant Designated
Purchaser or any of the Purchaser's other Affiliates to
discharge the Assumed Liabilities in accordance with their
terms; and
(e) any liability or obligation to Third Parties arising out of or
related to the conduct of any part of the Operations by the
Purchaser, any Designated Purchaser or any of Purchaser's
other Affiliates after the relevant Effective Time of its
acquisition of the Assets, except to the extent such liability
or obligation is a liability or obligation of the Seller or
any Designated Seller pursuant to any Local Sale Agreement,
the Shared Services Agreement, the Brazil Asset Purchase
Agreement, or the Nortel Proprietary Software License
Agreement.
(2) The Purchaser agrees to indemnify the Seller or the Designated Sellers,
as the case may be, pursuant to this Section 7.3 against all Losses
that the Seller and the Designated Sellers, as the case may be, suffer
in connection with (a) the employment, or the continuation of
employment, or termination of employment by the Purchaser, or the
Designated Purchaser, as the case may
Execution Copy
- 101 -
be, of any Transferring Employees after the applicable Effective Time,
including any act, fault or omission by the Purchaser or the Designated
Purchasers, as the case may be, in relation to same; and (b) any claim
by a Transferring Employee related to any change or proposed change by
the Purchaser or the Designated Purchasers, as the case may be, to the
remuneration, benefits (including to any pensions benefits), terms and
conditions of employment, or the working conditions of any such
Transferring Employee following the applicable Effective Time.
(3) The Purchaser agrees to indemnify the Seller and its Affiliates against
all Losses (the "MONKSTOWN REAL PROPERTY LOSSES") that the Seller and
its Affiliates, as the case may be, incur in connection with the Real
Property Lease and the License of Space for the Monkstown Facility
(collectively, the "MONKSTOWN AGREEMENTS") for any period when the
Purchaser, its Affiliate or permitted assignee under the Monkstown
Agreements (or either of them) (a "MONKSTOWN PERMITTED ASSIGNEE")
continues to occupy space at the Monkstown Facility beyond the Term in
the Monkstown Agreements (the "MONKSTOWN TERMINATION DATE") and that
are (a) those costs and other amounts included in the calculation of
Gross Rent and the License Fee under the Monkstown Agreements, in
respect of the space at the Monkstown Facility occupied by the
Purchaser or its Affiliate at the commencement of the respective terms
of the Monkstown Agreements but which is not then occupied by the
Purchaser, its Affiliates or Monkstown Permitted Assignees, the Seller,
its Affiliates or any other party let space at the Monkstown Facility
by the Seller or its Affiliate; and/ or (b) Losses directly relating to
the holding over at the Monkstown Facility by any of the Purchaser, its
Affiliate or a Monkstown Permitted Assignee beyond the Monkstown
Termination Date, including but not limited to payments required under
applicable legislation in relation to the termination of a tenancy or
right of occupation. The parties acknowledge and agree that the
Monkstown Real Property Losses shall not be included in the calculation
of any pricing for any of the Products sold by the Purchaser or its
Affiliates to the Seller or its Affiliates pursuant to the Amended and
Restated Master Contract Manufacturing Services Agreement,
notwithstanding that Gross Rent and the License Fee under the Monkstown
Agreements for space occupied by the Purchaser or its Affiliates may be
included in such calculations. The parties acknowledge and agree that
the Monkstown Real Property Losses shall not be deemed to be special,
incidental or consequential damages of Seller or any of its Affiliates.
SECTION 7.4 LIMITATIONS ON INDEMNIFICATION
(1) The Seller shall not have any liability under Section 7.2 unless and
until the aggregate amount of all Losses arising thereunder exceeds one
half of one percent (0.50%) the aggregate of the Facility Purchase
Prices received by
Execution Copy
- 102 -
Seller and the Designated Sellers at the time of written notice of
claim of Loss by the Purchaser (the "SELLER THRESHOLD"); at which point
the Seller shall be liable for all Losses above one quarter of one
percent (0.25%) of the aggregate of the Facility Purchase Prices (the
"SELLER ONE-TIME DEDUCTIBLE"). Notwithstanding the foregoing, the
maximum liability of the Seller for Losses pursuant to Section 7.2
shall not exceed one hundred and fifty million dollars ($150,000,000)
(the "SELLER CAP").
(2) Notwithstanding the provisions of Section 7.4(1), neither the Seller
Threshold, the Seller One-Time Deductible nor the Seller Cap will apply
to any Losses incurred by the Purchaser or its Affiliates as a result
of (a) any obligations of the Seller or Designated Seller in relation
to the Operations or any of the Assets that are not expressly assumed
by the Purchaser or Designated Purchasers pursuant to this Agreement,
(b) a breach by Seller of any of its obligations pursuant to: any of
the provisions of Article 2 hereof ; Section 4.3: Financial
Information; Section 4.15; any covenants of the Seller or Designated
Sellers pursuant to Article 5 or Article 6 that by their terms
contemplate compliance or performance by the Seller or Designated
Sellers on or after the applicable Closing (except that in the case of
the Inventory Put Purchase Price and the Equipment Put Purchase Price
the Seller's total indemnification obligations thereunder shall be
limited to such amounts); Article 6: Employment and Employee Benefit
Matters; Section 9.11: Bulk Sales Waiver; Section 9.21: Brokerage;
Exhibits D-1 to D-3(b), inclusive and Exhibits D-5 to D-9(b),
inclusive; Section 5.9(d) as it relates to payments for obtaining
consents to assignment of license agreements for the Transferred
Business Applications; and Section 1.5.5(ii) (second paragraph) of the
Shared Services Agreement.
(3) The Purchaser shall have no liability under Section 7.3 unless and
until the aggregate amount of all Losses relating thereto exceeds one
half of one percent (0.50%) of the aggregate of the aggregate of the
Facility Purchase Prices received by the Seller at the time of written
notice of claim of Loss by the Seller (the "PURCHASER THRESHOLD"); at
which point the Purchaser shall be liable for all Losses above one
quarter of one percent (0.25%) of the aggregate of the Facility
Purchase Prices (the "PURCHASER ONE-TIME DEDUCTIBLE). Notwithstanding
the foregoing, the maximum liability of the Purchaser for Losses
pursuant to this Section 7.3 shall not exceed one hundred and fifty
million dollars ($150,000,000) (the "PURCHASER CAP").
(4) Notwithstanding the provisions of Section 7.4(3), neither the Purchaser
One-Time Deductible, the Purchaser Threshold nor the Purchaser Cap
will apply to any breach by Purchaser or Designated Purchasers of any
of its obligations in relation to the Operations or any of the Assets
assumed by the Purchaser or Designated Purchasers pursuant to this
Agreement; any of the provisions of
Execution Copy
- 103 -
Article 2 hereof; any covenants of the Purchaser or Designated
Purchaser pursuant to Article 5 that by their terms contemplate
compliance or performance by the Purchaser or Designated Purchaser on
or after the applicable Closing; Article 6: Employees and Exhibits D-1
- D-3(b), inclusive and Exhibits D-5 - D-9(b), inclusive; and Section
5.9 as it relates to payments for obtaining consents to assignment of
license agreements for the Transferred Business Applications; and
Section 1.5.5(ii) (second paragraph) of the Shared Services Agreement.
(5) Subject to the provisions of Section 7.4(6) below, the right of a Party
to indemnification hereunder with respect to the accuracy or inaccuracy
of, any representation or warranty or the compliance or failure to
comply with any covenant or obligation shall not be affected by any
investigation conducted by such Party or any knowledge acquired, or
capable of being acquired by such Party at any time, whether before or
after the execution and delivery of this Agreement or the relevant
Closing Date; provided, however, that, notwithstanding the foregoing,
if a Party (i) has Knowledge of a Loss, (ii) delays notifying the other
Party of such Loss, or fails to take commercially reasonable actions to
mitigate such Loss, and (iii) as a direct result of such delay or
failure the rights of the Indemnifying Party are adversely affected or
additional costs or obligations are imposed upon the Indemnifying
Party, then the indemnification obligations of Indemnifying Party shall
be reduced commensurate to such adverse affect and/or additional costs
or other obligations.
(6) Notwithstanding any other provision in this Agreement, if on or before
the applicable Closing Date, either Primary Party (the "FIRST PARTY")
has advised the other Party (the "SECOND PARTY") in writing of (i)
the inaccuracy of one or more of the representations and warranties
made by the First Party in this Agreement as of the date made or as of
the applicable Closing Date, or (ii) the breach of any covenant or
agreement made by the First Party in Section 5.2 of this Agreement
that, in any such case, by its terms contemplates compliance or
performance at or prior to the relevant Closing, and if the Second
Party enters into a written agreement to accept such disclosure and
nonetheless effect the relevant Closing, then unless the Parties have
expressly otherwise agreed in writing, the representations and
warranties of the First Party set forth in this Agreement, and the
covenants set forth in Section 5.2, shall be deemed qualified by, and
subject to, such disclosure for purposes of this Article 7.
SECTION 7.5 DEFENCE OF THIRD PARTY ACTIONS
(1) Promptly upon receipt by a Party of notice of any Action or threatened
in writing Action by a Third Party against an Indemnified Party that
could
Execution Copy
- 104 -
reasonable give use to a right to indemnification pursuant to Section
7.2 or Section 7.3 ("THIRD PARTY ACTION"), such Party shall promptly
give written notice describing the Third Party Action in reasonable
detail to the Party who may become obligated to provide indemnification
pursuant to Section 7.2 or Section 7.3 (the "INDEMNIFYING PARTY").
Failure to provide such notice by a Party pursuant to this Section
7.5(1), however, shall not relieve the Indemnifying Party of its
indemnification obligations pursuant to this Agreement, except to the
extent that the Indemnifying Party is actually prejudiced as a result
of such failure.
(2) In connection with any Third Party Action, the Indemnifying Party shall
have the right, at its option, to assume the defence of such Third
Party Action at any time upon delivery of written notice to the Party
seeking indemnity (the "INDEMNIFIED PARTY") in respect thereof. If the
Indemnifying Party assumes the defence of any such Third Party Action,
the Indemnifying Party shall be deemed to have irrevocably waived any
right to assert it is not required to indemnify the Indemnified Party
for Losses arising with respect to such Third Party Action (subject to
the deductible thresholds and caps set forth in Section 7.4) (unless
the Indemnifying Party and the Indemnified Party expressly agree, in
writing, at such time to a different resolution of such matter). The
Indemnifying Party shall select counsel reasonably acceptable to the
Indemnified Party to conduct the defence of such Third Party Action,
shall take all steps reasonably necessary in the defence or settlement
thereof and shall at all times diligently and promptly pursue the
resolution thereof.
(3) If the Indemnifying Party shall assume the control of the defence of
any Third Party Action in accordance with the provisions of this
Section 7.5, (i) the Indemnifying Party shall obtain the prior written
consent of the Indemnified Party (which shall not be unreasonably
withheld) before entering into any settlement of such Third Party
Action, if the settlement does not unconditionally release the
Indemnified Party from all liabilities and obligations with respect to
such Third Party Action or the settlement imposes injunctive or other
equitable relief against the Indemnified Party or the settlement would
establish future obligations under which the Indemnified Party or any
of its Affiliates would be required to operate, (ii) the Indemnified
Party shall be entitled to participate with counsel in the defence of
such Third Party Action and to employ separate counsel of its choice
for such purpose, (iii) the Indemnifying Party shall consult with the
Indemnified Party with respect to any reasonable settlement offer
received by the Indemnifying Party with respect to such Third Party
Action and (iv) the Indemnifying Party shall use its reasonable efforts
to otherwise consult regularly with the Indemnified Party during the
pendency of any Third Party Action. The fees and expenses of such
separate counsel to the Indemnified Party shall be paid by the
Execution Copy
- 105 -
Indemnified Party; provided, however, that such separate counsel fees
shall be payable by the Indemnifying Party pursuant to the provisions
of Section 5.6(2). Notwithstanding that the Indemnified Party so
participates in any such defence of a Third Party Action, the
Indemnifying Party shall have full authority to determine all actions
to be taken with respect thereto.
(4) Each Primary Party shall cooperate, and cause its respective Affiliates
to cooperate, in the defence of any Third Party Action and shall
furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested in
connection therewith. All costs and expenses incurred in connection
with such cooperation shall be borne by the Indemnifying Party. Under
no circumstances shall the Indemnified Party compromise any such Third
Party Action without the written consent of the Indemnifying Party.
SECTION 7.6 SOLE REMEDY
From and after the applicable Closing Date, except for claims by any
Primary Party resulting from Section 9.11, and Section 5.7, or as a consequence
of intentional misrepresentation, wilful breach or fraud on the part of the
other Primary Party or its Affiliates, the sole and exclusive remedy for money
damages of the Primary Parties hereto in connection with the purchase and sale
of the Assets, the assumption of the Assumed Liabilities and the other
transactions contemplated by this Agreement, the Local Sale Agreements, the
Shared Services Agreement, the Brazil Asset Purchase Agreement and the Nortel
Proprietary Software License Agreement, shall be pursuant to the indemnification
provisions set forth in this , and no Primary Party or its Affiliates shall have
the right to bring any proceeding against any other Primary Party or its
Affiliates for a breach of any representation, warranty, covenant or agreement
contained in any such agreement, whether in contract, tort or otherwise, except
pursuant to this Article 7; provided, however, that this Section 7.6 shall not
limit the right of any Party under applicable Law to seek an injunction or other
equitable relief for a breach of any covenant or agreement.
SECTION 7.7 INDEMNIFICATION AFTER INSURANCE AND OTHER RECOVERIES
The amount of indemnification payable in respect of Losses under
Article 7 by the Indemnifying Party shall be net of (i) any amounts recovered or
recoverable without material cost or increase in premiums by the Indemnified
Party under applicable insurance policies and (ii) any Tax Benefit allowable to
the Indemnified Party arising from the incurrence or payment of any such Losses,
multiplied by the marginal tax rate then in effect applicable to the Indemnified
Party or, in the case of a credit, by one hundred percent; provided that any
such Tax Benefit shall be netted against any Losses (or paid to the Indemnifying
Party, as applicable) only when received or realized by the Indemnified Party;
and provided further that the
Execution Copy
- 106 -
Indemnified Party shall use its commercially reasonable efforts to realize or
obtain such Tax Benefit as promptly as possible and pay the amount of such Tax
Benefit to the Indemnifying Party, if applicable, promptly upon receipt if such
Tax Benefit would reduce the amount already paid by the Indemnifying Party
pursuant to this Article 7.
SECTION 7.8 TERMINATION OF INDEMNIFICATION
(1) Save and except for covenants performed after the applicable Closing
Date and subject to the provisions of Section 7.8(2), the obligations
to indemnify and hold harmless an Indemnified Party shall terminate on
the corresponding Applicable Notice Date;
(2) If notice in good faith of the inaccuracy or breach of the applicable
representation or warranty or the breach of the applicable covenant or
agreement, as the case may be, giving rise to such right of indemnity
and specifying, in reasonable detail, the nature thereof, shall have
been given to the Party against whom such indemnity may be sought prior
to the Applicable Notice Date then, notwithstanding the provisions of
Section 7.8(1) above, the right to enforce the claim for such Losses in
court proceedings shall survive the time at which it would otherwise
terminate until the applicable limitation period(s) relating to such
claim as are imposed by Law.
SECTION 7.9 LIMITATIONS ON LOSSES
Except by way of indemnification arising out of any Third Party Action
and notwithstanding anything in this Agreement or other agreement entered into
pursuant to the Closings to the contrary, under no circumstances shall any Party
be liable to any Indemnified Party under this Article 7 or any other provision
of this Agreement, any Local Sale Agreement, the Shared Services Agreement, the
Brazil Asset Purchase Agreement or the Nortel Proprietary Software License
Agreement, for punitive damages or indirect, special, incidental or
consequential damages or for any loss of profits, revenues or sales or damage to
reputation, arising out of or in connection with any such agreement or the
transactions contemplated thereby or any breach or alleged breach of any of the
terms thereof, including damages alleged as a result of tortious conduct.
Without limiting the foregoing, neither the Purchaser nor the Seller shall be
liable under Article 7 for any Losses relating to any matter (A) to the extent
there is included in the Closing Statement of Assets and Liabilities a liability
relating to such Loss which reduces the Purchase Price or (B) to extent the
Purchaser or the other Indemnified Parties had otherwise been compensated
pursuant to the Purchase Price adjustment provisions under Section 2.4.
Execution Copy
- 107 -
SECTION 7.10 CHARACTERIZATION OF INDEMNITY PAYMENTS
All amounts paid by the Seller or the Purchaser, as applicable, under
this Article 7, including Third Party payments, shall be treated as adjustments
to the Purchase Price for all Tax purposes.
SECTION 7.11 ASSIGNMENT OF CLAIMS
If the Indemnified Party receives any payment from an Indemnifying
Party in respect of any Losses pursuant to Article 7 and the Indemnified Party
could have recovered all or a part of such Losses from a Third Party (a
"POTENTIAL CONTRIBUTOR") based on the underlying claim for indemnification
asserted against the Indemnifying Party, the Indemnified Party shall assign, on
a non-recourse basis and without any representation or warranty, such of its
rights to proceed against the Potential Contributor as are necessary to permit
the Indemnifying Party to recover from the Potential Contributor the amount paid
by it as indemnification to the Indemnified Party. Any payment subsequently
received by the Indemnifying Party from a Potential Contributor in relation to
the payment to the Indemnified Party shall be distributed, (i) first to the
Indemnified Party in the amount of any insurance deductible or similar payment
required to be paid by the Indemnified Party prior to the Indemnifying Party
being required to make any payment to the Indemnified Party, (ii) second to the
Indemnifying Party in an amount equal to the payments made to the Indemnified
Party, plus reasonable costs and expenses incurred in investigating, defending
or otherwise incurred in connection with addressing such claim, and (iii) the
balance, if any, to the Indemnified Party.
ARTICLE 8
CONDITIONS TO THE CLOSING
SECTION 8.1 CONDITIONS OF THE PURCHASER'S OBLIGATION FOR EACH CLOSING
The Purchaser's obligation to effect, or to cause the Designated
Purchasers to effect, a Closing with respect to a Facility or the Design
Operations is subject to the satisfaction as of the relevant Closing Date of the
following conditions precedent:
(1) Representations and Warranties; Covenants. (i) Subject to Section
5.1(3), each representation and warranty set forth in Article 4 or in
the relevant Local Sale Agreement relating to such Closing or to the
part of the Operations or the Assets being conveyed to the Purchaser or
the Designated Purchaser at such Closing shall be true and correct in
all material respects at and as of the date of such Closing as though
then made (except to the extent such representations and warranties
relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all material
respects as of such earlier date); (ii) the Seller shall have performed
or caused the performance of and observed in all material respects each
covenant or other obligation required to be performed or observed by
the
Execution Copy
- 108 -
Seller or the Designated Sellers pursuant to this Agreement or the
other Transaction Documents prior to or at the applicable Closing; and
(iii) the Purchaser shall have received a certificate executed by an
officer of the Seller to such effect.
(2) Proceedings. No provision of any applicable Law and no judgment,
injunction, order or decree shall prohibit the consummation of such
Closing.
(3) Seller Closing Documents. The Seller shall have delivered the following
documents, each properly executed by the Seller or the relevant
Designated Seller, as required:
(a) if such Closing is the first Closing, the Amended and Restated
Master Contract Manufacturing Services Agreement;
(b) if such Closing is the first Closing, the Shared Services
Agreement;
(c) the applicable Local Sale Agreements;
(d) if such Closing is the first Closing, the Loaned Employee
Agreement, if any;
(e) the Licenses of Space, if any;
(f) the Real Property Leases, if any;
(g) if such Closing is the first Closing, the Nortel Propriety
Software License Agreement;
(h) if such Closing in the first Closing, the Repair Services
Agreement;
(i) if such Closing in the first Closing, the Logistics Services
Agreement;
(j) the documents contemplated in Section 2.5(2) relating to such
Closing; and
(k) the Inventory forecast (Schedule 4.15(1) as contemplated in
Section 4.15).
(4) Government Approvals.
(a) The Purchaser and the Seller shall each have filed all notices
and information required to be filed under Part IX of the
Competition Act (Canada), except if such requirement shall
have been waived pursuant to paragraph 113(b) or 113(c) of the
Competition Act (Canada), and any information the Purchaser or
the Seller elects to file with the Canadian
Execution Copy
- 109 -
Competition commissioner in its sole discretion under the
Competition Act (Canada), including, without limiting the
foregoing, a competitive impact statement and (i) the Canadian
Competition Commissioner shall have issued an Advance Ruling
Certificate in accordance with Section 102 of the Competition
Act (Canada) in connection with the transactions contemplated
by this Agreement, or (ii) the Canadian Competition
Commissioner shall have confirmed, in writing, that she has no
intention to file an application under Part VIII of the
Competition Act (Canada) in connection with the transactions
contemplated by this Agreement.
(b) Insofar as the transactions to be consummated at such Closing
constitute a concentration with a Community dimension within
the scope of Council Regulation (EC) No. 139/ 2004 (January
20, 2004) (as amended) (the "REGULATION"), in relation to
such transactions either:
(i) the European Commission shall have issued a decision
declaring the concentration compatible with the
Common Market under Article 6(1)(b) of the
Regulation; or
(ii) following the initiation of proceedings under Article
6(1)(c) of the Regulation, the European Commission
shall have issued a decision pursuant to Article 8(2)
of the Regulation declaring the concentration
compatible with the Common Market; or
(iii) such transactions shall have been deemed compatible
with the Common Market in accordance with Article
10(6) of the Regulation.
(c) Insofar as the transaction to be consummated at such Closing
constitutes the acquisition of a "CANADIAN BUSINESS" as
contemplated in the Investment Canada Act and an application
for review is required under the Investment Canada Act in
relation to such transactions the Purchaser shall have filed
an Application for Review and received a determination from
the Minister responsible for the administration of the
Investment Canada Act that the transactions contemplated
herein are of net benefit to Canada pursuant to the Investment
Canada Act, on terms satisfactory to the Purchaser in its
reasonable commercial discretion;
(5) Consents and Approvals. Subject to the provisions of Section 2.1(3),
the Purchaser shall have received from the Seller executed counterparts
of all consents required for the consummation of the transactions to be
consummated at such Closing, including all consents of Third Parties
relating
Execution Copy
- 110 -
to the Facility/ Design Assets or the Facility/ Design Assumed
Liabilities and all consents or approvals that may be necessary under
the competition laws or foreign investment review laws of any
jurisdiction where a filing or notification to the appropriate
Government Entity may be necessary in order to complete the
transactions contemplated by this Agreement. All consents required
pursuant to this Section 8.1(5) shall be in a form and substance
reasonably satisfactory to the Purchaser and its counsel.
(6) Employee Consultation.
(a) The Seller shall have delivered to the Purchaser as applicable
to the relevant Facility/ Design Closing:
(i) a certificate confirming that the information and
consultation process with the representatives of the
UK Employees required by applicable Law shall have
taken place, in accordance with Section D-1.3 of
Exhibit D-1; and
(ii) a document stating the opinion of the representatives
of the France Employees provided following the
completion of the information and consultation
process with the representatives of the France
Employees, in accordance with Section D-2.3 of
Exhibit D-2;
(7) Systems Readiness. The Purchaser shall have satisfied itself, in its
reasonable discretion, that at the relevant Closing Date the
information technology systems and other business processes necessary
or appropriate to transact business with Seller, any Designated Seller
or any of Seller's Affiliates from and after the relevant Closing Date
pursuant to the Amended and Restated Master Contract Manufacturing
Services Agreement, the Repair Services Agreement and the Logistics
Agreement, are implemented and functioning sufficiently for their
intended purposes.
(8) No Material Adverse Change in the Operations. There shall not have been
any event or occurrence or any change that, individually or in the
aggregate with any other such events or occurrences, has had or could
reasonably be expected to have a materially adverse effect on the
aggregate demand for the Products; provided, however, that no material
adverse effect shall be deemed to have occurred for the purpose of this
condition if resulting from (i) any change in Law, Environmental Law,
GAAP or interpretations thereof that apply to the Operations; (ii) any
change in general economic, business or financial market conditions or
any change in the telecommunications or data networking industries that
does not affect the Operations disproportionately to the other
participants in such industries; or (iii) discussions, or
Execution Copy
- 111 -
consultations with workers' councils, Employees' representatives and
collective bargaining agents or the Employees shall not be, or be
deemed to be, a materially adverse event, occurrence or change for the
purpose of this condition.
(9) With respect to the portion of the Operations in France at the
Chateaudun Facility only, an operating permit ("ARRETE D'AUTORISATION
D'EXPLOITER") shall have been issued by the Prefecture, as well as any
required complementary operating permits ("ARRETES COMPLEMENTAIRES").
(10) Montreal Matters. With respect to any Closing involving Quebec
Employees who are subject to a Collective Labour Agreement with the
CUCW, there shall be no lock out of, or strike by the CUCW which is
material to the Operations at the BAN 1 Facility, BAN 3 Facility and
OPTO 1 Facility; provided, however, that if there is such a lock out or
strike, the Parties agree that this condition (i) shall only apply to
the Assets or Operations at the BAN 1 Facility, BAN 3 Facility and the
OPTO 1 Facility and not to any other Assets or Operations which may
also be scheduled to Close at such time, and (ii) shall only delay the
Closing relating to the BAN 1 Facility, BAN 3 Facility and OPTO 1
Facility until the conclusion of such strike or lock out.
(11) VSHA Pricing. All VSHA Product prices shall have been finalized.
(12) Sufficient Number of Employees. There shall be a sufficient number of
Employees who, upon the applicable Closing, shall become Transferring
Employees. Immediately prior to the Closing Date (i) Purchaser shall
advise Seller of the number of Employees employed (a) in jurisdictions
other than the U.K. and France and (b) in the province of Quebec who
are not subject to a Collective Labour Agreement, who have indicated
their intention to accept the offers of employment, and (ii) Seller
shall advise Purchaser of the number of Employees employed (a) in the
U.K. and France and (b) in the province of Quebec who are subject to a
Collective Labour Agreement, whose employment at Closing shall transfer
by operation of Law. If the total number of Employees in (i) and (ii)
above are, in the judgment of Seller, acting reasonably, sufficient to
conduct the Operations immediately post-Closing in substantially the
same manner as such Operations are then currently being conducted, then
this condition shall be deemed to have been satisfied.
(13) If Seller shall have delivered any updated Schedules pursuant to
Section 5.1(3)(b), Purchaser shall either (i) not have notified Seller
in writing that such updated Schedules are not acceptable to the
Purchaser, or (ii) if Purchaser has provided such notice, subsequently
withdrawn such written objection to such updated Schedules.
Execution Copy
- 112 -
(14) Delivery by Seller of Phase II environmental report for the Chateaudun
Facility.
Any condition set forth in this Section 8.1 may be waived only in a writing
executed by the Purchaser.
SECTION 8.2 CONDITIONS OF THE SELLER'S OBLIGATION FOR EACH CLOSING
The Seller's obligation to effect each Closing is subject to the
satisfaction as of the Closing Date of the following conditions precedent:
(1) Representations and Warranties; Covenants. (i) Each representation and
warranty set forth in Article 3 or in the relevant Local Sale Agreement
relating to such Closing, shall be true and correct in all material
respects at and as of the date of such Closing as though then made
(except to the extent such representations and warranties relate solely
to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects as of such
earlier date); (ii) the Purchaser shall have performed or caused the
performance of and observed in all material respects each covenant or
other obligation required to be performed or observed by the Purchaser
and the Designated Purchasers pursuant to this Agreement or the other
Transaction Documents prior to or at the applicable Closing; and (iii)
the Seller shall have received a certificate executed by an officer of
the Purchaser to such effect.
(2) Proceedings. No provision of any applicable Law and no judgment,
injunction, order or decree shall prohibit the consummation of the
Closing.
(3) Purchaser Closing Documents. The Purchaser will have delivered the
following documents, each properly executed by the Purchaser or the
relevant Designated Purchaser, as required:
(a) if such Closing is the first Closing, the Amended and Restated
Master Contract Manufacturing Services Agreement;
(b) if such Closing is the first Closing, the Shared Services
Agreement;
(c) if such Closing is the first Closing, the Promissory Notes;
(d) if such Closing is the first Closing, the Security
Documentation;
(e) if such Closing is the first Closing, the Share Transaction
Documentation;
(f) the applicable Local Sale Agreement;
Execution Copy
- 113 -
(g) if such Closing is the first Closing, the Loaned Employee Agreement,
if any;
(h) the Licenses of Space, if any;
(i) the Real Property Lease, if any;
(j) if such Closing is the first Closing, the Nortel Propriety Software
License Agreement;
(k) if such Closing in the first Closing, the Repair Services Agreement;
(l) if such Closing in the first Closing, the Logistics Services
Agreement; and
(m) the documents contemplated in Section 2.5(2) relating to such
Closing.
(4) Government Approvals.
(a) The Purchaser and the Seller shall each have filed all notices and
information required to be filed under Part IX of the Competition
Act (Canada), except if such requirement shall have been waived
pursuant to paragraph 113(b) or 113(c) of the Competition Act
(Canada), and any information the Purchaser or the Seller elects to
file with the Canadian Competition commissioner in its sole
discretion under the Competition Act (Canada), including, without
limiting the foregoing, a competitive impact statement and (i) the
Canadian Competition Commissioner shall have issued an Advance
Ruling Certificate in accordance with Section 102 of the Competition
Act (Canada) in connection with the transactions contemplated by
this Agreement, or (ii) the Canadian Competition Commissioner shall
have confirmed, in writing, that she has no intention to file an
application under Part VIII of the Competition Act (Canada) in
connection with the transactions contemplated by this Agreement.
(b) Insofar as the transactions to be consummated at such Closing
constitute a concentration with a Community dimension within the
scope of Council Regulation (EC) No. 139/ 2004 (January 20, 2004)
(as amended) (the "REGULATION" ), in relation to such transactions
either:
(i) the European Commission shall have issued a decision declaring
the concentration compatible with the Common Market under
Article 6(1)(b) of the Regulation; or
Execution Copy
- 114 -
(ii) following the initiation of proceedings under Article 6(1)(c)
of the Regulation, the European Commission shall have issued a
decision pursuant to Article 8(2) of the Regulation declaring
the concentration compatible with the Common Market; or
(iii) such transactions shall have been deemed compatible with the
Common Market in accordance with Article 10(6) of the
Regulation.
(5) Consents and Approvals. Subject to the provisions of Section 2.1(3), the
Seller shall have received all consents required for the consummation of
the transactions to be consummated at such Closing, including all consents
of Third Parties relating to the Facility/Design Assets or the Facility/
Design Assumed Liabilities and all consents or approvals that may be
necessary under the competition laws or foreign investment review laws of
any jurisdiction where a filing or notification to the appropriate
Government Entity may be necessary in order to complete the transactions
contemplated by this Agreement. All consents required pursuant to this
Section 8.2(5) shall be in a form and substance reasonably satisfactory to
the Seller and its counsel.
(6) Employee Consultation. The Seller shall be satisfied that a reasonable
information and consultation process has taken place as required by
applicable Law:
(a) with UK Employees or the representatives of the UK Employees, in
accordance with Section D-1.3 of Exhibit D-1 ; and
(b) with the representatives of the France Employees, in accordance with
Section D-2.3 of Exhibit D-2.
(7) Purchaser's Employee Plans. The Purchaser shall have supplied
documentation and evidence reasonably satisfactory to the Seller
concerning employee benefit plans prescribed by Exhibit D-1 et seq.
(8) VSHA Pricing Completed. All VHSA Product prices shall have been finalized.
(9) Systems Readiness. The Seller shall have satisfied itself, in its
reasonable discretion, that at the relevant Closing Date the information
technology systems and other business processes necessary or appropriate
to transact business with Purchaser, any Designated Purchaser or any of
Purchaser's Affiliates from and after the relevant Closing Date pursuant
to the Amended and Restated Master Contract Manufacturing Services
Agreement, the Repair
Execution Copy
- 115 -
Services Agreement and the Logistics Agreement, are implemented and
functioning sufficiently for their intended purposes.
(10) Purchaser's Ability to Perform Pursuant to the Amended and Restated Master
Contract Manufacturing Services Agreement. There shall not have been any
event or occurrence or any change in the business, operations, assets,
financial condition or results of operations of the Purchaser or any
Designated Purchaser, taken as a whole, that, individually or in the
aggregate with any such other event or occurrences, has had or could
reasonably be expected to have a materially adverse effect on or change in
the Purchaser's or any Designated Purchasers' ability to perform its
obligations pursuant to the terms of the Amended and Restated Master
Contract Manufacturing Services Agreement, provided, however, that no
material adverse effect shall be deemed to have occurred for the purpose
of this condition if resulting from (i) any change in Law, Environmental
Law, GAAP or interpretations thereof that apply to the Operations; (ii)
any change in general economic, business or financial market conditions;
or any change in the telecommunications or data networking industries that
does not affect the Operations disproportionately to the other
participants in such industries; or (iii) discussions, or consultations
with workers' councils, Employees' representatives and collective
bargaining agents or the Employees shall not be, or be deemed to be, a
materially adverse event, occurrence or change for the purpose of this
condition.
(11) If Seller shall have delivered any updated Schedules pursuant to Section
5.1(3)(b) and, Purchaser shall either (i) not have notified Seller in
writing that such updated Schedules are not acceptable to the Purchaser,
or (ii) if Purchaser has provided such notice and then, subsequently
withdrawn such written objection to such updated Schedules.
(12) Prior to the applicable Closing Date, Flextronics Mauritius shall be
registered for VAT in the United Kingdom and France and shall be
registered for purposes of the GST legislation, the Retail Sales Tax Act
(Ontario), the Act respecting the Quebec Sales Tax and regulations
thereunder, and under any other similar legislation (including value added
legislation) in any other jurisdiction of Canada where the Assets that it
is purchasing are located, and all related registration numbers shall have
been provided to the Seller.
Any condition set forth in this Section 8.2 may be waived only in a writing
executed by the Seller.
Execution Copy
- 116 -
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 EFFECTIVENESS OF AGREEMENT
(1) Notwithstanding the execution of this Agreement on the date hereof, but
only to the extent required by Law, the provisions of this Agreement
relating directly or indirectly to (i) the sale, conveyance or assignment,
transfer or delivery of the right, title and interest of NNUK and NNSA, in
the Assets and the shares of French Newco, (ii) the granting of rights
under the Transaction Documents by NNUK and NNSA with respect to property
or assets located in France or the United Kingdom, or (iii) the transfer
of the UK Employees or France Employees employed by NNUK and NNSA shall
not be binding or effective against the Designated Sellers or such France
Employees or UK Employees until and unless the representatives of such
France Employees and UK Employees, as applicable, are provided with the
information required to be provided, and consulted by Seller or the
Designated Sellers, as applicable, pursuant to and in compliance with the
Law in France and the United Kingdom and, instead, with respect to such
Designated Sellers and such France Employees and UK Employees, this
Agreement shall constitute only an irrevocable binding offer by Purchaser
to effect the transactions contemplated hereby, which offer shall be
deemed accepted, automatically and without further action on the part of
any Person, upon due completion of such consultation process.
(2) For such purposes, and solely for the benefit of the France Employees and
UK Employees located in the United Kingdom and France, respectively, the
Seller shall cause the applicable Designated Seller or Designated Sellers
to initiate such information and consultation procedure with the
applicable employee representatives as soon as practicable. Purchaser
shall reasonably cooperate with Seller and the Designated Sellers in
respect of such consultations and shall provide all information reasonably
requested by Seller or the applicable works councils or employee
representatives in connection with such consultations. Upon completion of
such consultation process in each of such jurisdictions, Seller shall
deliver to Purchaser a certificate/ document to that effect, and, upon
delivery of such certificate/ document, this Agreement shall become
binding and effective against the Designated Sellers and the France
Employees and UK Employees, respectively, located in the United Kingdom
and France, and, subject to the other applicable terms of this Agreement,
the transactions contemplated by this Agreement may occur.
SECTION 9.2 TERMINATION
This Agreement may be terminated:
Execution Copy
- 117 -
(1) by mutual written consent of the Seller and the Purchaser;
(2) by either Primary Party upon written notice to the other at any time if a
condition for the benefit of such Primary Party set forth in Article 8 is
not satisfied by the applicable Closing so long as such Primary Party has
not principally caused such failure;
(3) in whole, by either the Seller or the Purchaser upon written notice to the
other if the first Closing does not occur on or prior to May 1, 2005;
(4) in part, with regard to any Closings that do not occur on or prior to
September 1, 2005, by either the Seller or the Purchaser upon written
notice to the other;
provided, however, that the right to terminate this Agreement in whole pursuant
to Section 9.2(3) and the right to terminate this Agreement in part pursuant to
Section 9.2(4) shall not be available to any Party whose action or failure to
act has been a principal cause of or resulted in the failure of the first
Closing or the applicable Closing, respectively, to occur on or before the
applicable dates set forth in Section 9.2(3) and Section 9.2(4), and such action
or failure to act constitutes a material breach of this Agreement or any of the
other Transaction Documents.
SECTION 9.3 RIGHTS ON TERMINATION
If this Agreement and the other Transaction Documents are terminated in
full pursuant to Section 9.2, all further obligations of the Parties under or
pursuant to this Agreement shall terminate without further liability of any
party to the other except for the provisions of (i) Section 5.7 relating to the
obligation of the Purchaser to keep confidential certain information and data
obtained by it, (ii) Section 5.1(4) relating to public announcements, (iii)
Section 5.3 relating to indemnification in connection with the matters
contemplated thereby and to Purchaser's obligations with respect to Employee
data set out in Schedule 4.12(1), (iv) Section 5.6(1) relating to certain
expenses, (v) Article 9 and (vi) the Confidentiality Agreement; provided, that
nothing herein shall relieve any party hereto from liability for any breach of
this Agreement or any of the other Transaction Documents occurring before the
termination hereof and thereof. If this Agreement and the other Transaction
Documents are terminated in part pursuant to Section 9.2(4), this Agreement and
the other Transaction Documents shall be deemed to be automatically amended to
remove from the scope of the transaction the transfer of those parts of the
Operations and the related Facility/ Design Assets contemplated to be
transferred at such Closings as do not occur on or prior to such termination of
this Agreement, including (x) reduction of the Purchase Price by the applicable
Facility/ Design Purchase Price, (y) the retention by the applicable Designated
Seller of the Facility/ Design Assets and the Facility/ Design Assumed
Liabilities, and (z) the
Execution Copy
- 118 -
continued employment by Seller or the applicable Designated Seller of the
Employees employed in such part of the Operations so retained
SECTION 9.4 SET OFF
The Parties agree that the Seller and any Affiliate of the Seller which is
at any time owed any obligation (whether or not then due and payable) by the
Purchaser or any Affiliate of the Purchaser, which obligation is related to this
Agreement or any of the transactions contemplated hereby or connected hereto,
shall be entitled to set-off (or the equivalent in each relevant jurisdiction)
such obligation against any obligation then owed (whether or not then due and
payable) by the Seller or any Affiliate of the Seller to the Purchaser or any
Affiliate of the Purchaser, which obligation is related to this Agreement or any
of the transactions contemplated hereby or connected hereto. To that end, the
Seller shall, and shall cause each Affiliate which at any time owes or is owed
any such obligations, and the Purchaser shall, and shall cause each Affiliate
which at any time owes or is owed any such obligation, to enter into an
agreement on or before the first applicable Closing (or at the time such
Affiliate owes or is owed such an obligation) effectively providing for such
right of set-off (and the equivalent in each relevant jurisdictions) and the
parties acknowledge and agree that such agreement may include provisions
creating joint and several liabilities among the Purchaser and its Affiliates,
on the one hand, and the Seller, and its Affiliates, on the other. Such
agreement shall not affect the flow of funds between the parties primarily
liable therefor and entitled thereto in the ordinary course of business. The
parties agree to use commercially reasonable efforts to agree to the terms of
such an agreement.
SECTION 9.5 REMEDIES
Except as specifically provided in Section 7.1 and Section 7.5(1), no
failure to exercise, and no delay in exercising, any right, remedy, power or
privilege under this Agreement by any Party will operate as a waiver of such
right, remedy, power or privilege, nor will any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise of such right, remedy, power or privilege or the exercise of
any other right, remedy, power or privilege; provided, however, that all of the
foregoing is subject to the express limitations referenced in Section 7.6.
SECTION 9.6 CONSENT TO AMENDMENTS; WAIVERS
No Party to this Agreement shall be deemed or taken to have waived any
provision of this Agreement or any of the other Transaction Documents unless
such waiver is in writing, and then such waiver shall be limited to the
circumstances set forth in such written waiver. This Agreement and the other
Transaction Documents shall not be amended, altered or qualified except by an
instrument in writing signed by all the Parties hereto or thereto, as the case
may be.
Execution Copy
- 119 -
SECTION 9.7 SUCCESSORS AND ASSIGNS
Except as otherwise expressly provided in this Agreement, all
representations, warranties, covenants and agreements set forth in this
Agreement by or on behalf of the Parties hereto will be binding upon and inure
to the benefit of the Parties and their respective successors and permitted
assigns, whether so expressed or not. None of this Agreement, or any of the
rights, interests or obligations hereunder may be assigned by any Party hereto
or thereto without the prior written consent of the other Party hereto, which
consent may be withheld in such Party's sole discretion; provided that the
Designated Purchasers shall be entitled to assign their rights hereunder to one
or more other Affiliates of Purchaser, provided that such assignment does not
adversely affect the rights of, or impose any additional costs, including Taxes
or obligations on, Seller or any Designated Seller.
SECTION 9.8 GOVERNING LAW; SUBMISSION TO JURISDICTION
THIS AGREEMENT ARE CONTRACTS MADE UNDER THE LAWS OF THE PROVINCE OF
ALBERTA AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
PROVINCE OF ALBERTA AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OF LAW). EACH OF THE PARTIES HERETO AGREES THAT
ALL DISPUTES AND CLAIMS, WHETHER FOR DAMAGES, SPECIFIC PERFORMANCE, INJUNCTION
OR OTHERWISE, BOTH AT LAW AND EQUITY, ARISING OUT OF OR IN ANY CONNECTION WITH
THIS AGREEMENT SHALL BE BROUGHT IN THE COURTS OF THE PROVINCE OF ALBERTA LOCATED
IN THE CITY OF CALGARY AND HEREBY ATTORNS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY
MAIL AT THE ADDRESS SPECIFIED IN SECTION 9.10 OR IN THE RELEVANT LOCAL SALE
AGREEMENT. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT
SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
SECTION 9.9 WAIVER OF JURY TRIAL; LIMITATION ON DAMAGES
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE PARTIES HERETO
HEREBY WAIVES ANY RIGHT IT MAY HAVE PURSUANT TO THIS AGREEMENT TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR
Execution Copy
- 120 -
CONSEQUENTIAL DAMAGES OR ANY DAMAGES THAT ARE IN EXCESS OF ONE TIMES THE LOSSES
INCURRED.
SECTION 9.10 NOTICES
All demands, notices, communications and reports provided for in this
Agreement shall be in writing and shall be either sent by facsimile transmission
with confirmation to the number specified below or personally delivered or sent
by reputable overnight courier service (delivery charges prepaid) to any Party
at the address specified below, or at such address, to the attention of such
other Person, and with such other copy, as the recipient party has specified by
prior written notice to the sending party pursuant to the provisions of this
Section 9.10.
If to the Purchaser to:
Flextronics Telecom Systems Ltd.
802 St. James Court,
St. Denis Street
Port Louis, Mauritius
Facsimile: 230-212-7600
Fax: 230-210-9168
Attention: President
with a copy, that does not constitute notice, to:
Flextronics International Inc.
Room 908, Dominion Centre
43 - 59 Queen's Road East
Wanchai, Hong Kong
Facsimile: 852-2276-1804
Attention: President
- and
Flextronics International Ltd.
6328 Monarch Park Place
Niwot, CO 80503
Facsimile: 303-652-4716
Attention: General Counsel
- and -
Execution Copy
- 121 -
Fenwick & West
Embarcadero Center West
275 Battery Street
San Francisco, CA 94111
U.S.A.
Facsimile: (415) 281-1350
Attention: David Michaels
If to the Seller, to:
Nortel Networks Limited
8200 Dixie Road
Suite 100
Brampton, Ontario
Canada
L6T 5P6
Facsimile: (905) 863-8386
Attention: Corporate Secretary
with copies, that do not constitute notice, to:
Nortel Networks Inc.
5404 Windward Parkway,
Alpharetta, Georgia 30004
Facsimile: (770) 708-4850
Attention: Peter Murphy
and: Nortel Networks Inc.
220 Athens Way, Suite 300
Nashville, Tennessee
USA 37228
Facsimile: (615) 432-4067
Attention: Law Department
Any such demand, notice, communication or report shall be deemed to have been
given pursuant to this Agreement when delivered personally, when confirmed if by
facsimile transmission, or on the Business Day after deposit with a reputable
overnight courier service, as applicable.
Execution Copy
- 122 -
SECTION 9.11 BULK SALES WAIVER
Each of the Purchaser and the Designated Purchasers hereby waives
compliance with the provisions of any applicable Laws, including the Bulk Sales
Act (Ontario), Section 6 of the Retail Sales Tax Act (Ontario) and any similar
tax related bulk sales rules, relating to the sale of property in bulk in
connection with the transfer of the Assets to the Purchaser. The Seller hereby
covenants and agrees to indemnify and hold the Purchaser harmless from and
against any and all Losses, which any of the Purchaser or the Designated
Purchasers may incur as a result of any failure to comply with any applicable
Laws relating to such bulk transfers.
SECTION 9.12 SCHEDULES AND EXHIBITS
The Schedules and Exhibits constitute a part of this Agreement and are
incorporated into this Agreement for all purposes as if fully set forth herein.
Any disclosure made in any Schedule to this Agreement that may be applicable to
another Schedule to this Agreement shall be deemed to be made with respect to
such other Schedule to the extent that it is reasonably apparent from a reading
of such Schedule it would also qualify or apply to other such Schedule.
SECTION 9.13 COUNTERPARTS
The Parties may execute this Agreement in two or more counterparts (no one
of which need contain the signatures of all Parties), each of which will be an
original and all of which together will constitute one and the same instrument.
SECTION 9.14 CONSTRUCTION
Unless the context requires otherwise, all words used in this Agreement in
the singular number shall extend to and include the plural, all words in the
plural number shall extend to and include the singular, and all words in any
gender shall extend to and include all genders. All references to domestic,
foreign, federal, state or provincial statutes herein are references to such
statutes as amended and in effect at the applicable time.
SECTION 9.15 SEVERABILITY
If any provision, clause, or part of this Agreement or any of the other
Transaction Documents, or the application thereof under certain circumstances,
is held invalid, the remainder of this Agreement or such other Transaction
Document, or the application of such provision, clause or part under other
circumstances, shall not be affected thereby unless such invalidity materially
impairs the ability of the Parties to consummate the transactions contemplated
by this Agreement and the other Transaction Documents.
SECTION 9.16 NO THIRD-PARTY BENEFICIARIES
Except as specifically contemplated by Section 7.2 and Section 7.3 no
Person that is not a Party to this Agreement or any one or more of the other
Transaction
Execution Copy
- 123 -
Documents shall have any rights or obligations pursuant to this Agreement or any
of the other Transaction Documents.
SECTION 9.17 CURRENCY
Unless otherwise specifically stated to the contrary, all currency amounts
expressed herein or in any other Transaction Document or in any exhibit or
schedule attached hereto or thereto (whether or not preceded by US$) are in the
currency of the United States of America.
SECTION 9.18 HEADINGS
The headings used in this Agreement are for the purpose of reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
SECTION 9.19 ENTIRE AGREEMENT
The Transaction Documents and the Confidentiality Agreement set forth the
entire understanding of the Parties relating to the subject matter thereof, and
all prior or contemporaneous understandings, agreements, representations and
warranties, whether written or oral, are superseded by the Transaction Documents
and the Confidentiality Agreement, and all such prior or contemporaneous
understandings, agreements, representations and warranties are hereby
terminated. In the event of any irreconcilable conflict between this Agreement
and any of the other Transaction Documents (other than the Amended and Restated
Master Contract Manufacturing Services Agreement) or the Confidentiality
Agreement, the provisions of this Agreement shall prevail, regardless of the
fact that certain Transaction Documents, such as the Local Sale Agreement, may
be executed after the date of this Agreement, by different Parties and subject
to different governing laws.
SECTION 9.20 SELLER REFERENCES
Except as may be permitted by the Amended and Restated Master Contract
Manufacturing Services Agreement, no written or printed sales, promotional or
selling materials, including any catalogue or brochure, and no other tangible
asset acquired by the Purchaser or the Designated Purchasers from the Seller or
the Designated Sellers pursuant to this Agreement that contains the name of or
references to the Seller, any Affiliate of the Seller or the Operations shall be
used publicly or distributed by the Purchaser or its Affiliates until such names
or references are deleted or covered by a sticker reasonably acceptable to the
Seller. The Purchaser shall not permit the name of the Seller or any Affiliate
of the Seller (or any variance thereof) to be used in any electronic addresses
or sites, including addresses, and internet urls.
Execution Copy
- 124 -
SECTION 9.21 BROKERAGE
(1) Neither the Purchaser nor any of its Affiliates has used or retained a
broker or finder or other similar advisor in connection with the
transactions contemplated by this Agreement or the other Transaction
Documents, and there are no claims for or liabilities owed for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement or the other Transaction
Documents based on any arrangement or agreement by or on behalf of the
Purchaser or any of its Affiliates. Notwithstanding the provisions of
Section 7.4, the Purchaser shall indemnify and hold the Seller harmless
from any breach of its representation in this Section 9.21, without regard
to the Purchaser One-Time Deductible and Purchaser Cap in Section 7.4(3).
(2) Neither Seller nor any of its Affiliates has used or retained any broker
or finder or other similar advisor in connection with the transactions
contemplated by this Agreement or the other Transaction Documents and
there are no claims for or liabilities owed for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement or the other Transaction Documents based on
any arrangement or agreement by or on behalf of the Purchaser or any of
its Affiliates. Notwithstanding the provisions of Section 7.4, the Seller
shall indemnify and hold the Purchaser harmless for any breach of its
representation in this Section 9.21, without regard to the Seller One-Time
Deductible and Seller Cap in Section 7.4(1).
SECTION 9.22 TIME OF ESSENCE
Time shall be of the essence of this Agreement.
SECTION 9.23 JUDGMENT CURRENCY
If for the purpose of obtaining judgment against a Party hereto in any
court in any jurisdiction with respect to this Agreement or any of the other
Transaction Documents, it becomes necessary to convert into the currency of such
jurisdiction (in this Section referred to as the " JUDGMENT CURRENCY" ) any
amount due hereunder in any currency other than the Judgment Currency (in this
Section referred to as the " CURRENCY OF THE AGREEMENT" ), then conversion shall
be made at the rate of exchange prevailing on the Business Day preceding (i) the
date of actual payment of the amount due, in the case of proceedings in the
courts of any jurisdiction that will give effect to such conversion being made
on such day, or (ii) the day on which the judgment is given, in the case of
proceedings in the courts of the Province of Alberta or of any other
jurisdiction (the applicable date as of which such conversion is made pursuant
to this Section being referred to as the " JUDGMENT CONVERSION DATE" ). For this
purpose, " RATE OF EXCHANGE" means the rate at which the Canadian Imperial Bank
of Commerce (or its successor) would be prepared at 12:00 noon (or as close as
Execution Copy
- 125 -
possible to such time) on the relevant date, to sell the Currency of the
Agreement in the amount in question to obtain the Judgment Currency. In the
event that there is a change in the rate of exchange prevailing between the
Judgment Conversion Date and the date of payment of the amount due, the Party
against which judgment is rendered shall, on the date of payment, pay such
additional amounts (if any) as may be necessary to ensure that the amount paid
on such date is the amount in the Judgment Currency which, when converted at the
rate of exchange prevailing on the date of payment, is the amount then due under
this Agreement in the Currency of the Agreement. Any additional amount due under
this Section 9.23 will be due as a separate debt and shall not be affected by
judgment being obtained for any other sums due or in respect of this Agreement
or any of the other Transaction Documents.
SECTION 9.24 FURTHER ASSURANCES
From time to time after a Closing, each of the Parties will, without
further consideration, execute and deliver such other instruments of conveyance
and transfer, and take such other actions as the other Party may reasonably
request to give effect to the transactions contemplated by this Agreement or any
of the other Transaction Documents.
SECTION 9.25 ENGLISH LANGUAGE
The Primary Parties declare that they have required that this Agreement
and each of the other Transaction Documents and any documents relating thereto
be drawn up in the English language. Les parties aux presentes declarent
qu'elles ont exige que cette entente et tous les documents y afferent soient
rediges en langue anglaise.
SECTION 9.26 CONTRA PROFERENTUM
This Agreement is the result of mutual negotiations between the Primary
Parties, and each Primary Party agrees that no part of this Agreement shall be
interpreted against the other Primary Party (or its Affiliates) on the grounds
that particular language was drafted by such Party.
SECTION 9.27 EXPENSES FOR DISPUTE RESOLUTION
Each party shall pay their own expenses in connection with the resolution
of disagreements pursuant to this Agreement, including Section 2.4, Section 5.14
and Section 5.15, including attorneys' fees. Notwithstanding the foregoing: (1)
the fees and expenses of any Independent Accountant shall be (A) borne by Seller
and Purchaser in inverse proportion to the amount that the Independent
Accountant's determination in favor of Seller and/ or Purchaser bears to the
total amount of the items in dispute (for illustration purposes for this Section
9.27 only, (X) if the total amount of items in dispute is $1,000,000.00, and
Seller prevails on $500,000.00 as determined by the Independent Accountant,
Seller and Purchaser shall bear the
Execution Copy
- 126 -
Independent Accountant's fees and expenses equally, or (Y) if the total amount
of items in dispute is $1,000,000.00, and Seller prevails on $250,000.00 as
determined by the Independent Accountant, Seller shall bear 75% and Purchaser
shall bear 25% of the fees and expenses of the Independent Accountant; and (2)
the fees and expenses incurred by the prevailing party to enforce this Section
9.27 or the enforcement of any award shall be paid by the other party.
SECTION 9.28 GUARANTEE OF PERFORMANCE
The Guarantor, as principal obligor and not as surety, unconditionally and
irrevocably covenants with the Seller:
(a) to cause the Purchaser to effect prompt and complete performance of
all the terms, covenants, conditions and provisions of the
Transaction Documents that are to be kept, observed and performed by
the Purchaser;
(b) that, if for any reason whatsoever, including the insolvency or
bankruptcy of the Purchaser, or if the Purchaser shall at any time
or from time to time fail to keep, perform or observe any term,
covenant, condition or provision of any of the Transaction Documents
that is to be kept, observed or performed by the Purchaser, then the
Guarantor shall forthwith on demand of the Seller, perform or
observe, as the case may be, such term, covenant, condition or
provision in accordance with the relevant provisions of the
Transaction Documents; and
(c) that the Guarantor is jointly and severally bound with the Purchaser
to perform the terms, covenants, obligations (including
indemnification), conditions and provisions of the Transaction
Documents that are to be kept, observed and performed by the
Purchaser and, in the enforcement of its rights pursuant to this
Section 9.28 the Seller may proceed against the Guarantor as if the
Guarantor was a principal party under this Agreement with respect to
such terms, covenants, conditions and provisions applicable to the
Purchaser.
In the event of a default by the Purchaser under any of the Transaction
Documents, the Guarantor waives notice, presentment and any right to require the
Seller to:
(d) proceed against the Purchaser or pursue any rights or remedies with
respect to the Transaction Documents against the Purchaser, or
(e) pursue any other remedy whatsoever in the power of the Seller prior
to the Seller pursuing any rights it may have under the Transaction
Documents against the Guarantor.
Execution Copy
- 127 -
Without limiting the generality of the foregoing, the liability of the
Guarantor shall not be deemed to have been waived, released, discharged,
impaired or affected by reason of the release or discharge of the Purchaser in
any receivership, bankruptcy, winding-up or other creditors' proceedings or the
rejection, disaffirmance or disclaimer of any of the Transaction Documents in
any proceeding or any other matter, and shall continue with respect to the
periods prior thereto and thereafter, for and with respect to the Transaction
Documents.
This guarantee shall continue notwithstanding any assignment of this
Agreement by the Purchaser to an Affiliate or otherwise pursuant to Section 9.28
and shall apply, mutatis, mutandis, in respect of any Affiliate of the Purchaser
in the event any such Affiliate is a party to any Transaction Document in lieu
of the Purchaser.
IN WITNESS WHEREOF, the Parties have duly executed this Asset Purchase
Agreement as of the date first written above.
FLEXTRONICS TELECOM SYSTEMS, LTD.
By: /s/ Manny Marimuthu
-----------------------------------
Name: Manny Marimuthu
Title: Director
By:____________________________________
Name:
Title:
NORTEL NETWORKS LIMITED
By: /s/ Chahram Bolouri
-----------------------------------
Name: Chahram Bolouri
Title: President, Global Operations
By:____________________________________
Name:
Title:
FLEXTRONICS INTERNATIONAL LTD,
acting through its Hong Kong branch
By: /s/ Manny Marimuthu
-----------------------------------
Title: Authorized Signatory
By:____________________________________
Name:
Title:
Execution Copy