EXHIBIT 4.(a)(xxii)
SETTLEMENT AGREEMENT
This Settlement Agreement is entered into on this 1st day of November 2001
between:
1. Xxxxx Networks N.V. a Dutch company with offices at Wexham Springs,
Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxx XX0 0XX for and on behalf of all its wholly
owned subsidiary companies ("Xxxxx"); and
2. Celestica Ireland Limited, an Irish company, with offices at Xxxxxxxx
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xx. Xxxxxx, Xxxxxxx ("Celestica").
RECITALS
A. By an agreement dated 23rd February 1998 (as amended per the other
agreements listed below), Xxxxx agreed to procure certain electronic
manufacturing services from Celestica Ireland BV ("Celestica BV").
B. The agreement referred to in A above has been subsequently amended by the
following agreements:-
1. Letter Agreement dated 16th March 1998 made between Xxxxx Networks NV and
Celestica BV.
2. Assignment Agreement dated 17th June 1998 made between Xxxxx Networks NV,
Celestica BV and Celestica. This agreement was assigned from Celestica BV
to Celestica.
3. Addendum to Xxxxx/Celestica Contracts dated 21st December 1999 made
between Xxxxx Networks NV and Celestica.
4. Amendment to the Assignment agreement dated 20th October, 2000 made
between Xxxxx Networks NV, Celestica BV and Celestica.
5. Interim Addendum No. 2 to the Manufacturing and Supply Agreement dated
23rd February 2001 made between Xxxxx Networks NV and Celestica.
Together all these agreements are called the "Manufacturing Agreement".
C. This agreement sets out the basis upon which the parties have agreed to
terminate the Manufacturing Agreement and the actions that the respective
parties shall undertake to facilitate that termination.
D. The parties have agreed an exit plan setting out the type and volume of
products which will be made by Celestica for Xxxxx. This is attached at
Schedule A to this Agreement (the "Exit Plan").
E. The parties have agreed to a number of minimum payments that Xxxxx will
make to Celestica, subject to the exceptions set out in this Agreement.
These payments are set out in Schedule B as attached to this Agreement
(the "Payment Plan"). The Payment Plan refers to the purchase by Xxxxx
from Celestica of certain products to be produced by Celestica under the
Exit Plan and of Components (as defined below) and of payment of existing
debt owed from Xxxxx to Celestica.
F. Based upon the information available to the parties at the Effective Date
the parties believe that the Payment Plan will mean that by March 31, 2002
Xxxxx will have purchased all Components (as defined below) from
Celestica.
IN consideration of the mutual obligations contained herein, the parties agree
as follows:-
1. DEFINITIONS AND INTERPRETATIONS
1.1 In this agreement the words and expressions set out below shall have the
meaning set out opposite unless the context otherwise requires:
"AGREEMENT" means this agreement and any schedules or appendices to this
agreement;
"EFFECTIVE DATE" means 1st November, 2001;
1.2 References in this Agreement to the singular shall include the plural and
vice versa.
1.3 Headings in this Agreement are for convenience only and shall not affect
its interpretation.
2. TERMINATION OF MANUFACTURING AGREEMENTS
2.1 Once the obligations set out in this Agreement have been completed, the
parties agree that (save for the items listed in 2.3 below) all provisions
of the Manufacturing Agreement and all rights or causes of action of any
kind howsoever arising between the parties (or their affiliates or
associated companies) from the Manufacturing Agreement shall be cancelled
and be of no further effect whatsoever. For the avoidance of doubt, the
termination of all rights, obligations and claims set out above shall
include the provisions of the Interim Addendum (No.2) to the Manufacturing
Agreement dated 23rd February 2001 and made between Xxxxx, Celestica and
Celestica BV.
2.2 Xxxxx acknowledges that the sum of US$700,000 (seven hundred thousand
dollars) has been deducted from the sums due from Xxxxx to Celestica as
part of the Payment Plan. Xxxxx acknowledges that Celestica agreed to do
this to compensate Xxxxx for the extra recovery rate that Xxxxx considers
it has paid on products delivered by Celestica since February 22, 2001 and
additional expenses incurred by Xxxxx in moving from Celestica.
Accordingly Xxxxx hereby agrees, that in consideration of this, that it
will not bring any claim in respect of any alleged overpayment of the
recovery rate by Xxxxx.
2.3 The following matters shall survive the termination of the Manufacturing
Agreement:-
2.3.1 Celestica will continue to honour its warranty obligations under the
Manufacturing Agreement, to repair or replace manufactured products
that prove defective and to reimburse Xxxxx for its costs of having
any warranty repairs carried out on the products supplied (already
or in the future) by Celestica;
2.3.2 The confidentiality provisions will survive;
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2.3.3 Any Components supplied by Celestica (as defined below) that are
defective will be Celestica's responsibility and Celestica will
liase with the relevant component supplier regarding any warranty
Celestica has with them. For the avoidance of doubt this does not
apply to any Components damaged once Xxxxx has taken delivery of
them; and
2.3.4 Provisions in the Manufacturing Agreement regarding the quality of
products to be supplied.
3 CELESTICA OBLIGATIONS
3.1 Celestica agrees that it will hold and retain the Components (as defined
in clause 4.4), solely on behalf of and for the purchase of Xxxxx, until
such time all of the parties' obligations as set out in this Agreement are
met, subject always to Xxxxx complying with its obligations under this
Agreement. For the avoidance of doubt, nothing contained in this clause 3
shall prohibit Celestica from mitigating it's losses by the sale of
Components (or otherwise) in the event of any breach by Xxxxx of its
obligations herein.
3.2 Celestica agrees that it will give Xxxxx the right of first refusal to
purchase components from them that Celestica holds that do not form part
of the Components, as defined below in clause 4.4.
3.3 Celestica shall use its reasonable endeavours to provide all reasonable
assistance to Xxxxx in order to facilitate a smooth transition of all
products currently being, and that have in the past been, manufactured by
Celestica to the third party supplier(s) nominated by Xxxxx. In addition
to this overriding obligation, Celestica agrees to undertake the following
specific actions:
3.3.1 To build product for Xxxxx in accordance with volumes set out in the
Exit Plan attached at Schedule A and to have these products ready
for Xxxxx to take delivery of in accordance with Madge's requests to
call off these products as per clause 3.3.3.
3.3.2 To make Components available to Xxxxx in the minimum amounts and in
the volumes during the months as set out in the Payment Plan.
3.3.3 Both parties agree that the precise form and constitution of Madge's
monthly requirements of the products and Components which make up
part of the minimum payments Xxxxx will make under the Payment Plan,
cannot be determined with any sufficient particularity in advance of
the month to which the relevant payment detailed in the Payment Plan
relates. However, Xxxxx shall use its best endeavours to notify
Celestica as far in advance as possible, being at least 30 days, as
to its needs and as to the exact constitution required by Xxxxx.
3.3.4 Each consignment of products and Components as per the minimum
amounts set out in the Payment Plan must be ready for collection by
Xxxxx during the applicable month and Xxxxx will pay for all such
products and Components delivered each month on or before the final
Friday of the following month. Accordingly, the Components are
bought ex-works (Incoterms 2000).
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3.3.5 If Xxxxx call off the products and/or Components as per 3.3.3 above,
Celestica will deliver the products and/or Components during the
month set out in the Payment Plan and if they do not have the
products/Components available, the value of the items that Xxxxx do
not take will be deducted from the minimum amounts Xxxxx has
committed to purchase under the Payment Plan in that month.
3.3.6 Such late delivered products/Components and any products/Components
that Xxxxx agree to take above the minimum payments set out in the
Payment Plan, will be paid for by Xxxxx 30 days after they are ready
for delivery to Xxxxx.
3.3.7 Celestica shall provide any Tooling (as defined below) required by
Xxxxx or the third party supplier(s), in order to facilitate
transferring the production of these products to a third party. The
Tooling will be provided free of charge as per clause 3.3.9 below
3.3.8 To provide, free of charge, all support deemed reasonably necessary
(in terms of personnel based in Ireland) to Xxxxx in order to
transfer the products and the Components pursuant to clause 3.3.4.
This support will be provided free of charge and will be provided
for a period starting with the date of this agreement and ending on
April 01, 2002 or such other date as is 2 months after Celestica has
completed the build of Xxxxx products, whichever is the later date.
Any support required beyond the agreed time period will be subject
to a separate commercial agreement to be concluded between the
parties.
3.3.9 Celestica will transfer, the customer specific tooling and other
equipment identified on the attached Schedule C free of charge, (the
"Tooling"). The timing of this transfer will be that after each
product to be delivered as per the Exit Plan has been completed to
Madge's satisfaction and the relevant Tooling is no longer needed by
Celestica for the build of these Xxxxx products, the Tooling will be
transferred as per Madge's request. The basic rule is that Celestica
will leave all equipment in-situ unless it is on their own site, in
which case they will discuss these items with Xxxxx. Xxxxx will
cover the cost of any Tooling being transported and reinstalled at
the new supplier(s) or other designated site. Although the risk of
the tooling passes to Xxxxx, legal title to the Tooling will not
pass to Xxxxx until the last minimum payment from Xxxxx under the
Payment Plan has been made under this Agreement.
3.3.10 Where any Tooling is not held on Celestica's site, Celestica agree
that they will notify the holders of the Tooling within 10 days of
title transferring to Xxxxx as per 3.3.9 above, that legal title to
this Tooling has been transferred to Xxxxx and that from that date
Xxxxx will be responsible for that Tooling. Celestica will fax/email
a copy of all such correspondence to Xxxxx.
3.3.11 Within 10 days of each transfer of title happening as per 3.3.9
above Celestica will notify any manufacturers or supporters of the
Tooling where there is a contract for support or warranty still in
force that Xxxxx now has title to the specific Tooling and that the
benefit of such contract has now been novated to Xxxxx. Celestica
will fax/email a copy of all such correspondence to Xxxxx. Prior to
title being transferred Celestica will assist with any support or
warranty issues with any third party contractors' who have contracts
with Celestica to support or maintain the Tooling.
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3.3.12 Celestica will not place any further purchase orders for components
to produce Xxxxx products, other than any it needs to produce the
products as per the Exit Plan, unless specifically requested by
Xxxxx in writing and agreed by Celestica in Celestica's absolute
discretion.
3.4 Once Xxxxx have paid the final amount of the Existing AP/AR balance
(fixed) and the payment due at the end of December 2001, as shown on the
Payment Plan, Celestica will pay to Xxxxx sums due under invoices raised
by Xxxxx for components supplied by Xxxxx to Celestica. Such sum will be
paid by Celestica on the last Friday in December, 2001.
4 XXXXX OBLIGATIONS
4.1 Xxxxx shall use its reasonable endeavours to ensure that all products
currently manufactured by Celestica for Xxxxx are transferred to a third
party supplier as soon as possible with the minimum of disruption to
Celestica, in line with the Payment and Exit Plans attached at Schedule A
and B.
4.2 Xxxxx shall only be entitled to withhold payments under this Agreement to
the extent and in the amount that such with holdings would relate to the
following:-
4.2.1 Celestica failing to deliver the volumes of products as per the Exit
Plan as per clause 3.3.1 above and/or
4.2.2 The Components not being as defined below in clause 4.4 and/or
4.2.3 The Components not being available for collection as per the time
periods set out in the Payment Plan, in which case such the payment
for such Components are not due until 30 days after the date that
they are ready for delivery to Xxxxx and/or
4.2.4 It is found that there are any unplanned shortages in relation to
any Components due to be delivered to Xxxxx under the terms of the
Payment Plan and that the said shortages relate to Components which
are critical to the constitution of the product and upon which that
product is dependant then Xxxxx shall have the right to refuse to
accept the consignment of Components to the extent that they form
part of the incomplete kits. In this situation Celestica shall
provide Xxxxx with all relevant and necessary information to allow
Xxxxx to identify such shortages and place orders with suppliers so
as to remedy any such shortage of Components as soon as possible. In
this event, Xxxxx will place such orders as soon as possible and
shall take delivery of all delayed Components from Celestica
immediately after receipt of the so ordered Components from third
parties. Xxxxx shall pay for all delayed Components within 30 days
of taking delivery of them and/or
4.2.5 For the avoidance of doubt, nothing within this Agreement shall in
any way permit Xxxxx to with hold payment for any amounts relating
to AP/AR Balance (Fixed) as set out in Schedule B.
4.3 Celestica will carry out a full physical inventory count of the components
it holds relating to Xxxxx products during the weekend commencing 3rd
November, 2001. Celestica will then, using the criteria listed below in
4.4 calculate the components that Celestica considers are Components as
defined below in clause 4.4. As part of this list Celestica will split out
any Components that were ordered as per Madge's May 2001 SDR forecast and
any that were not. Both lists will then be supplied to Xxxxx and the
parties will work together to agree such lists based upon the criteria set
out in clause 4.4 below, within 14 days of Xxxxx receiving them.
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After the total list is agreed Xxxxx will then have 14 days to carry out a
physical audit of the Components.
4.4 Xxxxx will purchase the components that Celestica hold to produce Xxxxx
products at the Q3 2001 agreed standard cost, provided that they form part
of the list agreed as per 4.3. i.e. that they are components that meet
each of the following criteria:-
1 Were purchased by Celestica in accordance with Madge's SDR
forecasts;
2 Are in good condition, not damaged or defective in any way;
3 That were purchased in accordance with good purchasing practice and
in appropriate minimum lot sizes;
4 Are not components that have been identified as Celestica's
responsibility under previous discussions between Celestica and
Xxxxx;
5 Are not components for products that Xxxxx has informed Celestica it
will be discontinuing or changing, where Celestica was already been
given an opportunity to sell such components to Xxxxx; and
6 Xxxxx agree fall within these requirements.
Such components are defined as "Components" and are used as such
throughout this Agreement
4.5 Xxxxx will work with the third party suppliers to try and take over the
open Purchase Orders as agreed with Celestica and as attached as Schedule
D. Madge will only take these over if the third party supplier agrees to
this. In the event that the third party supplier does not agree, Xxxxx
will indemnify and hold Celestica harmless from each of its' obligations
to that third party supplier by purchasing such components (providing that
they are Components within the definition of such term under clause 4.4
above) from Celestica 30 days after they are ready for Xxxxx to take
delivery of them.
5. MUTUAL OBLIGATIONS
5.1 The parties agree that once the Exit Plan volumes have been completed and
a product has been transferred to the third party supplier(s) Celestica
shall be under no obligation to recommence the manufacture of any such
products.
5.2 Xxxxx will arrange collection of such Components as they are required from
Celestica's site and will be responsible for all shipment, insurance and
other charges to get these Components to Madge's new supplier(s). The
Components will be packaged at Celestica's expense, except where Xxxxx
requires any special packaging, other than as per manufacturers'
specification and Xxxxx will pay for the same.
5.3 If any Components are found to be defective upon delivery to Xxxxx (other
than due to damage in transit) Xxxxx will not pay for such Components and
will return them to Celestica if they so request so that Celestica may
take this up with the supplier of these Components. For the avoidance of
doubt, the cost of shipment of any defective Components to Celestica will
be paid for by Celestica.
5.4 The parties will use all reasonable endeavours to ensure that WIP meets
quality and product revision standards through the process to covert it to
finished goods. Celestica will provide a report showing such WIP that is
left and the parties will discuss whether Xxxxx is prepared to
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purchase/compensate Celestica for a proportion of this WIP. Xxxxx is under
no obligation to agree to provide Celestica any compensation for this at
all, except in the situation where any issue preventing any WIP being
converted into finished goods are a result of design issues.
5.5 Subject to clause 5.6 below, before December 31, 2001 the parties will
settle all outstanding claims that are listed in Schedule E in one lump
settlement. The parties agree that this list shows all outstanding claims
that they are aware of as of the Effective Date and does not exclude
either party being able to bring claims against the other for issues that
arise in the future.
6. CONFIDENTIALITY
Neither party shall make any announcement, internally or externally
relating to this agreement or its subject matter other than to an employee
who has a need to know, without the prior written approval of the other
party except as required by law or by any legal or regulatory authority.
7. DURATION AND TERMINATION
7.1 This Agreement shall come into force on the Effective Date and subject as
provided below shall continue until all of the obligations set out herein
are completed, which the parties anticipate will be March 31, 2002, except
for the obligations in clause 2.3, 3.3.8 and 5.5.
7.2 Either party shall be entitled forthwith to terminate this Agreement by
written notice to the other if:-
7.2.1 an encumbrancer takes possession or a receiver is appointed over any
of the property or assets of that other party;
7.2.2 that other party makes any voluntary arrangement with his creditors
or becomes subject to an administration order;
7.2.3 that other party goes into liquidation (except for the purposes of
amalgamation or reconstruction and in such a manner that the company
resulting therefrom effectively agrees to be bound by or assume the
obligations imposed on that other party under this Agreement);
7.2.4 anything analogous to any of the foregoing under the law of any
jurisdiction occurs in relation to that other party.
8. FORCE MAJEURE
Neither Party will be liable to the other for any non-performance or
breach of any of its obligations under this Agreement caused by matters
beyond its reasonable control. Such matters include, without limitation,
Act of God, insurrection or civil disorder, war or military operations,
national or local emergency, acts of Government, industrial disputes of
any kind (whether or not involving the employees of either party), failure
or shortage of power supply, failure of any telecommunications network,
system or link, fire, lightning, explosion, flood, subsidence, inclement
weather.
9. ASSIGNMENT
Neither party may assign any of its rights or obligations under this
Agreement without the prior written consent of the other party.
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10. LEGISLATION
Each party must comply with all relevant statutes, rules, regulations and
bylaws that apply to their respective rights and obligations under this
Agreement, including (without limitation) all such statutes, rules,
regulations and bylaws relating to data protection and privacy, including
(if applicable) the Data Protection Xxx 0000.
11. THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any provision of
this Agreement except that wholly owned subsidiaries of Xxxxx are entitled
to enforce any provisions of this Agreement that relate to them.
12. WAIVER
No delay, neglect or forbearance on the part of either party in enforcing
against the other party any provision of this Agreement will either be or
be deemed to be a waiver of that or any other provision or will in any way
prejudice any right of that party under this Agreement.
13. ENTIRE AGREEMENT
This Agreement sets out the entire agreement between Xxxxx and Celestica
and supersedes any other agreements between the parties relating to the
subject matter of this Agreement and this Agreement may not be varied
unless agreed in writing by the properly authorised representatives of
both parties.
14. SEVERABILITY
In the event that any of the terms and conditions of this Agreement are or
are determined to be invalid, unlawful or unenforceable, such term or
condition will be deemed never to have been included in the Agreement and
will be severed from the remaining terms or conditions which will continue
to be valid to the fullest extent permitted by law.
15. NOTICE
15.1 All notices must be given in writing and delivered by hand, first class
prepaid post, facsimile marked for the attention of and to the address of
the relevant party specified in this Agreement.
15.2 In the absence of proof of earlier receipt, any notice or communication
will be deemed to have been given; (i) if delivered personally, when left
at the address of the recipient; (ii) if sent by first class pre-paid
letter, two days after posting; (iii) if sent by fax, on completion of
successful transmission as evidenced by the date printed on the facsimile
advice note produced by the sender's machine (provided there is no
manifest error in such date).
15.3 Either party may change its address by providing the other party with
thirty (30) days prior written notice of any such change.
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16. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in all respects in
accordance with the laws of England and each party submits to the
exclusive jurisdiction of the English courts in relation to any matter or
dispute arising out of or connected with this Agreement.
AS WITNESS the hands of the parties or their duly authorised representatives the
day and year first above written
Signed by )
For and on behalf of )
Xxxxx Networks NV ) /s/ Xxxxxx Xxxxxx
Signed by )
For and on behalf of )
Celestica Ireland Ltd ) /s/ Xxxxx Xxxxxxx
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SCHEDULE A
EXIT PLAN
SCHEDULE B
THE PAYMENT PLAN
SCHEDULE C
TOOLING
SCHEDULE D
OPEN PURCHASE ORDERS THAT XXXXX WILL TAKE OVER AS PER CLAUSE 4.5.
SCHEDULE E
CURRENT OUTSTANDING CLAIMS.
Schedules are available upon request.
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