EXHIBIT 10
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November
15, 2000, is made and entered into by and between PEMSTAR INC. ("PEMSTAR"), a
corporation organized under the laws of the State of Minnesota with its
principal offices at 0000 Xxxxxxxxxx Xxxxx, XX, Xxxxxxxxx, Xxxxxxxxx 00000,
X.X.X. and HONGGUAN TECHNOLOGIES (S) PTE LTD. ("HongGuan"), a company
incorporated under the laws of Singapore with its registered office at 00 Xxx
Xxxx Xxxxxx, Xxxxxxxxx 000000.
WHEREAS, HongGuan owns 490,000 ordinary shares, par value S$1.00 per
share, of Pemstar-HongGuan Pte. Ltd., a private limited company incorporated
under the laws of Singapore (the "Company"), constituting 49% of the issued and
outstanding shares of capital stock of the Company (such shares being referred
to herein as the "Shares"); and
WHEREAS, HongGuan desires to sell, and PEMSTAR desires to purchase the
Shares on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I.
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale. HongGuan agrees to sell to PEMSTAR, and
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PEMSTAR agrees to purchase from HongGuan, all of the right, title and interest
of HongGuan in and to the Shares at the Closing (as defined in Section 1.03) on
the terms and subject to the conditions set forth in this Agreement.
1.02 Purchase Price. The aggregate purchase price for the Shares is
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Xxx Xxxxxxx Xxxxxxxxx Dollars (S$1,000,000) (the "Purchase Price"), payable in
the manner provided in Section 1.03.
1.03 The Closing
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(a) The closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of Xxx & Xxx, November 15, 2000
(the "Closing Date"), or at such other place and on such other date as is
mutually agreeable to PEMSTAR and HongGuan. The Closing will be effective as of
the close of business on the Closing Date.
(b) The parties agree to consummate the following "Closing
Transactions" on the Closing Date:
(i) HongGuan will assign and transfer to PEMSTAR good and valid
title in and to the Shares, free and clear of all liens, by delivering to
PEMSTAR a
stock certificate or certificates representing the Shares, and accompanied by a
duly executed share transfer form in respect of the Shares in favor of PEMSTAR;
(ii) PEMSTAR shall deliver to HongGuan the Purchase Price by
cashier's order drawn on a licensed bank in Singapore and made out in favour of
HongGuan; and
(iii) Each of the parties shall deliver to the other the documents
required to be delivered pursuant to Article IV hereof.
(c) HongGuan shall:
(i) Cause its nominees on the Company's Board of Directors to
approve the registration of the transfer mentioned in Section 1.03(b)(i)
(subject to stamping);
(ii) Cause its nominees on the Company's Board of Directors to
approve the appointment of Xx. Xxx Xxxx Xxxxx as an additional director of the
Company with effect from the Closing Date and upon such appointment shall
forthwith cause its nominees on the Board of Directors, namely, Messrs. Teo Xxxx
Xxxxxx and Choo Xxxxx Xxx, to deliver to PEMSTAR their letters of resignation
from their offices and employment with the Company with effect from the Closing
Date executed under seal and acknowledging that they have no claim outstanding
for compensation for loss of office or otherwise howsoever;
(iii) Cause its nominees on the Company's Board of Directors to
approve the amendment of existing bank authorities or mandates so that all bank
accounts shall be operated by representatives of PEMSTAR in substitution for
those of HongGuan; and
(iv) Vote in favour of the adoption of a new set of Articles of
Association of the Company (in the form attached hereto as Exhibit C) in
substitution for, and to the exclusion of, the existing Articles of Association,
at an Extraordinary General Meeting of the Company to be held on the Closing
Date.
(d) The parties hereto shall do all acts and things and execute all
documents as shall be necessary or expedient to give effect to the sale and
transfer of the Shares upon the terms and conditions specified herein.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF HONGGUAN
HongGuan hereby represents and warrants to PEMSTAR that:
2.01 Incorporation and Corporate Power. HongGuan is a company
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incorporated under the laws of Singapore, and has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
2.02 Execution, Delivery; Valid and Binding Agreements. The
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execution, delivery and performance of this Agreement by HongGuan and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other corporate proceedings
on its part are necessary to authorize the execution, delivery and performance
of this Agreement.
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This Agreement has been duly executed and delivered by HongGuan and constitutes
the valid and binding obligation of HongGuan, enforceable in accordance with its
terms.
2.03 No Breach. The execution, delivery and performance of this
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Agreement by HongGuan and the consummation by HongGuan of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration of any lien, security
interest, charge or encumbrance upon any of the Shares or, to the knowledge of
HongGuan, any assets of the Company, or require any authorization, consent,
approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Memorandum and Articles of
Association of HongGuan or, to the knowledge of HongGuan, the Company or any
indenture, mortgage, lease, loan agreement or other agreement or instrument by
which HongGuan or, to the knowledge of HongGuan, the Company is bound or
affected, or any law, statute, rule or regulation or order, judgment or decree
to which HongGuan or, to the knowledge of HongGuan, the Company is subject.
2.04 Governmental Authorities; Consents. No approval, authorization,
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consent or other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution and
delivery by HongGuan of this Agreement or its consummation of the transactions
contemplated hereby or thereby. No consent, approval or authorization of any
other party or person is required to be obtained by HongGuan or, to the
knowledge of HongGuan, by the Company in connection with its execution, delivery
and performance of this Agreement or the transactions contemplated hereby.
2.05 Ownership of Capital Stock. HongGuan owns, beneficially and of
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record, all right, title and interest in and to the Shares free and clear of any
security interests, claims, liens, pledges, options, encumbrances, charges,
agreements, voting trusts, proxies or other arrangements, restrictions or
limitations of any kind, and, on the Closing Date, the delivery by HongGuan of a
certificate or certificates and the share transfer form in the manner set forth
in Section 1.03(b)(i) hereof and the registration of PEMSTAR as the holder of
the Shares in the Company's Register of Members will transfer good and valid
title to the Shares to PEMSTAR, free and clear of any security interests,
claims, liens, pledges, options, encumbrances, charges, agreements, voting
trusts, proxies or other arrangements, restrictions or other legal or equitable
limitations of any kind.
2.06 Financial Statements. The Company has delivered to PEMSTAR
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copies of (a) the unaudited balance sheet, as of October 31, 2000, of the
Company (the "Latest Balance Sheet") and the unaudited statements of earnings,
shareholders' equity and cash flows of the Company for the seven-month period
ended October 31, 2000 (such statements and the Latest Balance Sheet being
herein referred to as the "Latest Financial Statements") and (b) the audited
balance sheets, as of March 31, 1999 and 2000, of the Company and the audited
statements of earnings, shareholders' equity and cash flows of the Company for
each of the financial years ended March 31, 1999 and 2000 (collectively, the
"Annual Financial Statements"). To the knowledge of HongGuan, the Latest
Financial Statements and the Annual Financial Statements are prepared according
to the Services Agreement dated October 7, 1998 between Pemstar, HongGuan
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and the Company and are based upon the information contained in the books and
records of the Company as provided to HongGuan (and without HongGuan making any
independent investigation or verification of the completeness, authenticity,
truth and accuracy of such information) and, to the knowledge of HongGuan,
fairly present a true and fair view of the financial condition and state of
affairs of the Company as of the dates thereof and results of operations for the
periods referred to therein. To the knowledge of HongGuan, the Latest Financial
Statements have been prepared in accordance with generally accepted accounting
principles and practices applicable to unaudited interim financial statements
(and thus may not contain all notes and may not contain prior period comparative
data which are required to be prepared in accordance with generally accepted
accounting principles) consistently with the Annual Financial Statements and
reflect all adjustments necessary to present a fair statement of the results for
the interim period(s) presented.
2.07 Absence of Undisclosed Liabilities. Except as reflected in the
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Latest Balance Sheet, to the knowledge of HongGuan, the Company has no
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted) arising out of transactions or events heretofore entered into, or any
action or inaction, or any state of facts existing, with respect to or based
upon transactions or events heretofore occurring, except liabilities which have
arisen after the date of the Latest Balance Sheet in the ordinary course of
business (none of which is a material uninsured liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit).
2.08 No Material Adverse Changes. Since the date of the Latest
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Balance Sheet (the "Balance Sheet Date"), to the knowledge of HongGuan, there
has been no material adverse change, in the assets, financial condition,
operating results, customer, employee or supplier relations, business condition
or prospects of the Company.
2.09 Tax Matters.
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(a) To the knowledge of HongGuan, the Company has: (i) timely filed (or
has had timely filed on its behalf) all returns, declarations, reports,
estimates, information returns, and statements ("Returns") required to be filed
or sent by it in respect of any "Taxes" (as defined in subsection (b) below) or
required to be filed or sent by it by any taxing authority having jurisdiction;
(ii) timely and properly paid (or has had paid on its behalf) all Taxes shown to
be due and payable on such Returns; (iii) established on its Latest Balance
Sheet, in accordance with generally accepted accounting principles, reserves
that are adequate for the payment of any Taxes not yet due and payable; (iv)
complied with all applicable laws, rules, and regulations relating to the
withholding of Taxes and the payment thereof, and timely and properly withheld
from individual employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable laws. To the knowledge of HongGuan, there are no liens for Taxes upon
any assets of the Company, except liens for Taxes not yet due. To the knowledge
of HongGuan, no deficiency for any Taxes has been proposed, asserted or assessed
against the Company that has not been resolved and paid in full, and no waiver,
extension or comparable consent given by the Company regarding the application
of the statute of limitations with respect to any Taxes or Returns
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is outstanding, nor is any request for any such waiver or consent pending. To
the knowledge of HongGuan, there has been no Tax audit or other administrative
proceeding or court proceeding with regard to any Taxes or Returns, nor is any
such Tax audit or other proceeding pending, nor has there been any notice to the
Company by any Taxing authority regarding any such Tax, audit or other
proceeding, or, to knowledge of HongGuan, is any such Tax audit or other
proceeding threatened with regard to any Taxes or Returns. To the knowledge of
HongGuan, and save as disclosed in the disclosure letter dated the Closing Date
from HongGuan to PEMSTAR (the "Disclosure Letter"), the Company does not expect
the assessment of any additional Taxes of the Company and is not aware of any
unresolved questions, claims or disputes concerning the liability for Taxes of
the Company which would exceed the estimated reserves established on its books
and records.
(b) For purposes of this Agreement, the term "Taxes" means all taxes,
charges, fees, levies, or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, capital, goods
and services, value added, transfer, franchise, profits, license, withholding,
payroll, employment, social security, unemployment, excise, estimated,
severance, stamp, occupation, property, or other taxes, customs duties, fees,
imports levies, rates, assessments, or charges of any kind whatsoever,
including, without limitation, all interest and penalties thereon, and additions
to tax or additional amounts imposed by any taxing authority, domestic or
foreign, upon the Company.
(c) Without prejudice to the generality of the foregoing but subject
to the limitations set out in Section 6.01(b), HongGuan hereby covenants and
undertakes with PEMSTAR to pay PEMSTAR an amount equal to 49% of any depletion
in or reduction in value of the Company's assets or increase in the Company's
liabilities as a result or in consequence of any claim for Taxes which has been
made or may hereafter be made in respect of or arising from any transaction,
act, event or omission of whatever nature effected or deemed to have been
effected by the Company on or before Closing. Any such payment made (including
payments made by HongGuan under Section 6.01 of this Agreement) shall be deemed
to be a reduction in the Purchase Price for the purposes of this Agreement. For
the avoidance of doubt, it is hereby agreed that the amount of the payment in
this Section 2.09(c) and the amount of any and all claims by PEMSTAR against
HongGuan under Article VI shall not exceed the aggregate amount of S$200,000,
and any demand for payment under this Section 2.09(c) shall be made by PEMSTAR
in writing and given to HongGuan with the relevant supporting documents prior to
the first anniversary of the Closing Date.
(d) The indemnity in Section 2.09(c) shall include all reasonable
costs and expenses (including, without limitation, legal fees, experts' fees and
consultants' fees on a full indemnity basis) properly payable in connection with
any claim or liability referred to herein.
(e) Notwithstanding any provision in this Agreement, HongGuan hereby
covenants and undertakes with PEMSTAR to pay all and any stamp and other
documentary taxes or duties in Singapore, including any penalties resulting from
any delay or omission on the part of the Company, payable on or in connection
with the sub-
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lease of the premises known as 00 Xxx Xxxx Xxxxxx, Xxxxxxxxx 000000 comprised in
Xxx X00000 xx Xxxxx 0 Xxxx to the Company.
2.10 Litigation. To the knowledge of HongGuan, there are no actions,
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suits, proceedings, orders or investigations pending or threatened against the
Company, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
2.11 Affiliate Transactions. To the knowledge of HongGuan, no
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officer, director or employee of HongGuan (collectively "insiders"), has any
agreement with the Company (other than normal employment arrangements) or any
interest in any property, real, personal or mixed, tangible or intangible, used
in or pertaining to the business of the Company. To the knowledge of HongGuan,
none of the insiders has any direct or indirect interest in any competitor,
supplier or customer of the Company or in any person, firm or entity from whom
or to whom the Company leases any property, or in any other person, firm or
entity with whom the Company transacts business of any nature.
2.12 Compliance with Laws; Permits.
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(a) To the knowledge of HongGuan, the Company has complied in all
material respects with all applicable laws, regulations and other requirements,
including, but not limited to domestic and foreign laws, ordinances, rules,
regulations and other requirements pertaining to product labeling, consumer
products safety, equal employment opportunity, employee retirement, affirmative
action and other hiring practices, occupational safety and health, workers'
compensation, unemployment and building and zoning codes, which materially
affect the business of the Company or its real property and to which the Company
may be subject, and no claims have been filed against the Company alleging a
violation of any such laws, regulations or other requirements.
(b) To the knowledge of HongGuan, the Company has, in full force and
effect, all licenses, consents, permits and certificates, from domestic and
foreign authorities (including, without limitation, agencies regulating
occupational health and safety) necessary to conduct its business and own and
operate its properties (collectively, the "Permits"). To the knowledge of
HongGuan, the Company has conducted its business in compliance with all material
terms and conditions of the Permits.
(c) To the knowledge of HongGuan, the Company has not made or agreed
to make gifts of money, other property or similar benefits (other than
incidental gifts of articles of nominal value) to any actual or potential
customer, supplier, governmental employee or any other person in a position to
assist or hinder the Company in connection with any actual or proposed
transaction.
2.13 "To the knowledge of HongGuan".
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In this Clause, the expression "to the knowledge of HongGuan" shall
mean the knowledge of HongGuan, without HongGuan making any independent
investigation or verification of the truth and accuracy of any of the matters
herein represented and warranted.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PEMSTAR
PEMSTAR hereby represents and warrants to HongGuan that:
3.01 Incorporation and Corporate Power. PEMSTAR is a corporation
---------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Minnesota, with the requisite corporate power and authority to enter
into this Agreement and perform its obligations hereunder.
3.02 Execution, Delivery; Valid and Binding Agreement. The
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execution, delivery and performance of this Agreement by PEMSTAR and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other corporate proceedings
on its part are necessary to authorize the execution, delivery or performance of
this Agreement. This Agreement has been duly executed and delivered by PEMSTAR
and constitutes the valid and binding obligation of PEMSTAR, enforceable in
accordance with its terms.
3.03 No Breach. The execution, delivery and performance of this
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Agreement by PEMSTAR and the consummation by PEMSTAR of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration of any lien, security
interest, charge or encumbrance upon any assets of PEMSTAR, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Certificate of
Incorporation of PEMSTAR or any indenture, mortgage, lease, loan agreement or
other agreement or instrument by which PEMSTAR is bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which PEMSTAR is
subject.
3.04 Governmental Authorities; Consents. PEMSTAR is not required to
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submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by PEMSTAR in connection with its execution,
delivery and performance of this Agreement or the transactions contemplated
hereby.
3.05 Brokerage. No third party shall be entitled to receive any
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brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of PEMSTAR.
ARTICLE IV.
CONDITIONS TO CLOSING
4.01 Conditions to PEMSTAR's Obligations. On the Closing Date,
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HongGuan shall have delivered to PEMSTAR all of the following:
(a) the stock certificate or certificates issued to HongGuan
representing the Shares, accompanied by a duly executed share transfer form;
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(b) resignations (effective as of the Closing Date) from Xx. Xxxxx Xxx as
Managing Director and Director and from Mr. Choo Xxxxx Xxx as Director of the
Company;
(c) a duly completed and executed Working Sheet A (in the prescribed form)
and such other documents and forms as may be required by the Stamp Office for
stamping of the transfer;
(d) such waivers, consents and other documents as may be required to give
good title to the Shares and to enable PEMSTAR to become the registered holder
thereof;
(e) save as otherwise agreed by PEMSTAR, all the books of accounts and
other documents and records kept in relation to or in connection with the books
of accounts and all cheque books and mandates and authorities belonging to the
Company and which are in the possession of HongGuan;
(f) the resolutions of the Board of Directors of the Company approving the
registration of the share transfer referred to in Section 1.03(b)(i) (subject to
stamping) duly signed by its nominees on the Board of Directors; and
(g) such other certificates, documents and instruments as PEMSTAR
reasonably requests related to the transactions contemplated hereby.
4.02 Conditions to HongGuan's Obligations. On the Closing Date, PEMSTAR
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will have delivered to HongGuan the Purchase Price by cashier's order drawn on a
licensed bank in Singapore and made out in favour of HongGuan and such
certificates, documents and instruments as HongGuan reasonably requests related
to the transactions contemplated hereby.
4.03 Additional Agreements.
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(a) PEMSTAR and HongGuan agree that the Joint Venture Agreement between
them dated September 25, 1998 (the "JV Agreement") relating to the Company shall
be terminated pursuant to Section 16.2(d) of the JV Agreement, but HongGuan
acknowledges its continuing obligations relative to confidential information as
set forth in Section 9.2 of the JV Agreement and solicitation of employees as
set forth in Section 9.4 of the JV Agreement, and PEMSTAR acknowledges its
obligation under Section 16.6 of the JV Agreement (as amended in this Clause) to
change the name of the Company so that it does not include the word "HongGuan",
and PEMSTAR shall furnish HongGuan with evidence of such change of name within
three (3) months from the Closing Date. PEMSTAR and HongGuan further agree that
Section 2.5 of the JV Agreement (which relates to the right of first refusal on
expanded business) shall continue for a period of two years (and shall be deemed
incorporated into this Agreement to the extent the JV Agreement is terminated),
and the non-competition obligations set forth in Section 2.3 of the JV Agreement
shall be superseded with the following, which is incorporated herein:
(i) For a period of two years from the date of this Agreement, and
without the permission of the other party: (A) HongGuan will not design, produce
or sell process or test equipment to or for the hard disk drive industry
(fabrication business is excluded) in Asia with the exception of the
Philippines, China and Japan, and will not solicit or accept any business from
PEMSTAR's identified customers that are located in
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the identified countries, which customers and countries are identified on
Exhibit A, and (B) PEMSTAR will not solicit or accept any business from
HongGuan's identified customers that are located in the identified countries,
which customers and countries are identified on Exhibit B.
(ii) For a period of two years from the date of this Agreement, as to
Xxxxxx, Xxxxxx Xxxxxxxxx, Hewlett Packard, Philips Singapore Pte. Ltd. (other
than Optical Storage Division) and Motorola (other than Manufacturing System
Division), which are customers of both PEMSTAR and HongGuan, the first party to
quote on a project and notify the other party in writing of such quote shall
have the exclusive right to accept and perform such project.
(b) HongGuan agrees and undertakes with PEMSTAR that, notwithstanding
Clause 4.7 of the Sub-Lease Agreement dated 3 February 1999 between HongGuan and
the Company ("Sub-Lease Agreement"), as renewed, supplemented, amended and
modified from time to time, HongGuan will, on the Closing Date, enter into a
supplemental agreement with the Company to continue the lease according to the
other terms and conditions of the Sub-Lease Agreement, subject to the right of
either HongGuan or the Company to terminate the sub-lease by giving to the other
party not less than three (3) months' written notice to this effect.
(c) HongGuan agrees and undertakes with PEMSTAR that it will, on the
Closing Date, enter into a supplemental agreement with PEMSTAR and the Company
to vary the terms of the Services Agreement between PEMSTAR, HongGuan and the
Company dated October 7, 1998 to the effect that it shall continue for a period
of two years from the date of this Agreement as to Section 4 and shall continue
unless otherwise terminated by either party giving three months' written notice
to the other as to Sections 3 and 6 (although the purchase of parts and
provision of procurement services described in Section 3 will not be exclusive).
The balance of the Services Agreement shall be terminated (with the exception of
Section 9, which shall continue so long as any other provisions of the Service
Agreement are in effect).
ARTICLE V.
SETTLEMENT OF DISPUTES AND APPLICABLE LAW
5.01 Consultations. The Parties acknowledge that the expeditious and
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equitable settlement of disputes arising under this Agreement or in connection
herewith is to their mutual advantage and in the best interest of the Company.
To this end, the Parties therefore agree to use their best endeavors to resolve
all differences of opinion and to settle all disputes through cooperation and
consultation between a senior executive officer of PEMSTAR and a senior
executive officer of HongGuan.
5.02 Disputes. Any controversy or claim arising out of or relating to this
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Agreement that the Parties are unable to settle within thirty (30) days as set
forth under Section 5.01 above shall be determined by arbitration in accordance
with the Arbitration Rules of the Singapore International Arbitration Centre for
the time being in force, which rules are deemed to be incorporated by reference
into this Section 5.02, by one arbitrator, unless otherwise agreed, appointed in
accordance with the said Rules. The place of arbitration shall be Singapore and
the arbitration shall be conducted in the
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English language. The Party against whom an arbitration award is made shall be
responsible for all fees and expenses of the arbitration as well as the legal
fees of the prevailing Party. If an award is made to both Parties, then each
Party shall pay one-half of the fees and expenses of the arbitration and shall
be responsible for its own legal fees.
5.03 Governing Law. This Agreement shall be governed in all respects
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by, and shall be interpreted and construed in accordance with, the laws of
Singapore, which shall be the proper law of this Agreement notwithstanding any
rule or principle therein contained under which any other law or rule would be
made applicable.
ARTICLE VI.
SURVIVAL; INDEMNIFICATION
6.01 Indemnification by HongGuan.
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(a) Subject to the limitations set out in Section 6.01(b), HongGuan
agrees to indemnify in full PEMSTAR and hold it harmless against any loss,
liability, deficiency, damage, expense or cost (including reasonable legal
expenses) (collectively, "Losses"), which PEMSTAR may suffer, sustain or become
subject to, as a result of (i) any misrepresentation in any of the
representations and warranties of HongGuan contained in this Agreement or in any
exhibits, schedules, certificates or other documents delivered or to be
delivered by or on behalf of HongGuan pursuant to the terms of this Agreement or
otherwise referenced or incorporated in this Agreement (collectively, the
"Related Documents"), (ii) any breach of, or failure to perform, any agreement
of HongGuan contained in this Agreement or any of the Related Documents, or
(iii) any "Claims" (as defined in Section 6.04(a) hereof) or threatened Claims
against PEMSTAR arising out of the actions or inactions of HongGuan or the
Company with respect to the Company's business prior to the Closing
(collectively, "PEMSTAR Losses").
(b) No claim shall be brought by PEMSTAR for any PEMSTAR Losses unless
(i) PEMSTAR delivers to HongGuan written notice, setting forth in reasonable
detail the identity, nature and amount of PEMSTAR Losses related to such claim
or claims prior to the first anniversary of the Closing Date (the "Relevant
Date"), and (ii) the aggregate amount of all PEMSTAR Losses exceeds S$50,000
(the "Basket Amount"); provided that any and all claims (except for claims
pursuant to Section 2.09(e)) for the PEMSTAR Losses shall in no event exceed
S$200,000. And provided further that any claim which has been made or is made on
or before the Relevant Date shall, if it has not been previously satisfied,
settled or withdrawn, be deemed to have been withdrawn, and shall become fully
barred and unenforceable on the expiry of the period of six (6) months
commencing on the Relevant Date, unless proceedings in respect of such claim
shall have been commenced against HongGuan. For this purpose, proceedings shall
not be deemed to have been commenced unless they shall have been issued and
served on HongGuan.
6.02 Indemnification by PEMSTAR.
--------------------------
(a) Subject to the limitations set out in Section 6.02(b), PEMSTAR agrees
to indemnify in full HongGuan and hold it harmless against any Losses which
HongGuan may suffer, sustain or become subject to as a result of (i) any
misrepresentation in any of the representations and warranties of PEMSTAR
contained in this Agreement or in any of the Related Documents, (ii) any breach
of, or failure to perform, any agreement of
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PEMSTAR contained in this Agreement or any of the Related Documents, or (iii)
any Claims or threatened Claims against HongGuan arising out of the actions or
inactions of PEMSTAR with respect to the Company's business after the Closing
(collectively, "HongGuan Losses").
(b) No claim shall be brought by HongGuan for any HongGuan Losses unless
(i) HongGuan delivers to PEMSTAR written notice, setting forth in reasonable
detail the identity, nature and amount of HongGuan Losses related to such claim
or claims prior to the first anniversary of the Closing Date (the "Relevant
Date") and, (ii) the aggregate amount of all HongGuan Losses exceeds the Basket
Amount; provided that any and all claims for the HongGuan Losses shall in no
event exceed S$200,000. And provided further that any claim which has been made
or is made on or before the Relevant Date shall, if it has not been previously
satisfied, settled or withdrawn, be deemed to have been withdrawn, and shall
become fully barred and unenforceable on the expiry of the period of six (6)
months commencing on the Relevant Date, unless proceedings in respect of such
claim shall have been commenced against PEMSTAR. For this purpose, proceedings
shall not be deemed to have been commenced unless they shall have been issued
and served on PEMSTAR.
6.03 Method of Asserting Claims. As used herein, an "Indemnified
--------------------------
Party" shall refer to PEMSTAR or HongGuan, as applicable, the "Notifying Party"
shall refer to the party hereto whose Indemnified Parties are entitled to
indemnification hereunder, and the "Indemnifying Party" shall refer to the party
hereto obligated to indemnify such Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a defendant
in or party to any action or proceeding, judicial or administrative, instituted
by any third party for the liability or the costs or expenses of which are
Losses (any such third party action or proceeding being referred to as a
"Claim"), the Notifying Party shall give the Indemnifying Party prompt notice
thereof. The failure to give such notice shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully a
Claim. The Indemnifying Party shall be entitled to contest and defend such
Claim; provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests and
defends such Claim. Notice of the intention so to contest and defend shall be
given by the Indemnifying Party to the Notifying Party within 20 business days
after the Notifying Party's notice of such Claim (but, in all events, at least
five business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying Party is
not adequately representing or, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its or their own choosing. If the
Notifying Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense. Neither
the Notifying Party nor the Indemnifying Party may concede, settle or compromise
any
11
Claim without the consent of the other party, which consents will not be
unreasonably withheld. Notwithstanding the foregoing, (i) if a Claim seeks
equitable relief or (ii) if the subject matter of a Claim relates to the ongoing
business of any of the Indemnified Parties, which Claim, if decided against any
of the Indemnified Parties, would materially adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each such
case, the Indemnified Parties alone shall be entitled to contest, defend and
settle such Claim in the first instance and, if the Indemnified Parties do not
contest, defend or settle such Claim, the Indemnifying Party shall then have the
right to contest and defend (but not settle) such Claim.
(b) After the Closing, the rights set forth in this Article VI shall be
each party's sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement and the
Related Documents. Notwithstanding the foregoing, nothing herein shall prevent
any of the Indemnified Parties from bringing an action based upon allegations of
fraud in connection with this Agreement and the Related Documents. In the event
such action is brought, the prevailing party's attorneys' fees and costs shall
be paid by the nonprevailing party.
(c) Any indemnification payable under this Article VI shall be, to the
extent permitted by law, an adjustment to purchase price.
ARTICLE VII.
MISCELLANEOUS
7.01 Press Releases and Announcements. Prior to the Closing Date,
--------------------------------
neither party hereto shall issue any press release (or make any other public
announcement) related to this Agreement or the transactions contemplated hereby
or make any announcement to the employees, customers or suppliers of the Company
without prior written approval of the other party hereto, except as may be
necessary, in the opinion of counsel to the party seeking to make disclosure, to
comply with the requirements of this Agreement or applicable law. If any such
press release or public announcement is so required, the party making such
disclosure shall consult with the other party prior to making such disclosure,
and the parties shall use all reasonable efforts, acting in good faith, to agree
upon a text for such disclosure which is satisfactory to both parties.
7.02 Expenses. Except as otherwise expressly provided for herein,
--------
HongGuan and PEMSTAR will pay all of their own expenses (including attorneys'
and accountants' fees in connection with the negotiation and execution of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not) except that PEMSTAR shall be liable for stamp duty payable
on the transfer of the shares.
7.03 Further Assurances. HongGuan agrees that, on and after the
------------------
Closing Date, it shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof.
7.04 Amendment and Waiver. This Agreement may not be amended or waived
--------------------
except in a writing executed by the party against which such amendment or
12
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
7.05 Notices. All notices, demands and other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested, or when receipt is
acknowledged, if sent by facsimile, telecopy or other electronic transmission
device. Notices, demands and communications to PEMSTAR and HongGuan will,
unless another address is specified in writing, be sent to the address indicated
below:
Notices to PEMSTAR: with a copy to:
PEMSTAR INC. Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxx Xxxxx, XX 000 Xxxxx Xxxxxx X.X., Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxxxx, Xxxxxxxxx 00000
X.X.X. X.X.X.
Attention: Xxxxx X. Xxxxxxx Attention: Xxxxxxx X. Xxxxxxx
Telefax: (000) 000-0000 Telefax: (000) 000-0000
Notices to HongGuan: with a copy to:
------------------- --------------
HONGGUAN TECHNOLOGIES BIH, LI & XXX
(S) PTE LTD. #24-01 CPF Building
00 Xxx Xxxx Xxxxxx 00 Xxxxxxxx Xxxx
Xxxxxxxxx 000000 Xxxxxxxxx 000000
Attention: Chief Executive Officer Attention:
Telefax: (00) 0000000 Telefax: (00) 0000000
7.06 Assignment. This Agreement and all of the provisions hereof will be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by either party
hereto without the prior written consent of the other party hereto.
7.07 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
7.08 Complete Agreement. This Agreement and other exhibits hereto and the
------------------
Disclosure Letter, and the other documents referred to herein contain the
complete agreement between the parties and supersede any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way.
13
7.09 Counterparts. This Agreement may be executed in one or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PEMSTAR INC.
By /s/ XXXXXX X. XXXXXX
-------------------------------------
Its Director
-------------------------------------
HONGGUAN TECHNOLOGIES (S) PTE. LTD
By /s/ TEO XXXX XXXXXX
-------------------------------------
Its Managing Director
-------------------------------------
14
HSBC
PRIVATE & CONFIDENTIAL
----------------------
Pemstar (Thailand) Ltd CIB BA 00/0488
000/000 Xxx 0, Xxxxxxxxxxxx Xx,
Xxxxx, Xxxxxxxxx, 00 November 2000
Pathumthani 12130
Attention: Xxxx Xxxxxxxx Maisonti
Dear Xxxx Xxxxxxxx,
BANKING FACILITY AGREEMENT
With reference to your request letter dated 9 August 2000 and your advise dated
8 November 2000 regarding the drawdawn schedule and the maturity date
(attached), we are pleased to advise that we have increased 9-month Term Loan
and hereby confirm our agreement to continue the undermentioned banking
facilities.
These facilities are made available on the specific terms and conditions
outlined herein and on the terms and conditions of any other agreements or
applicable terms entered into or relating to these facilities and upon the
satisfactory completion of the documentation and security and conditions
precedent detailed below.
These facilities are subject to review at any time, and in any event by May
2001, and are also subject to our overriding right of withdrawal and repayment
on demand, including the right to call for cash cover on demand for prospective
and contingent liabilities.
Borrower : Pemstar (Thailand) Ltd
Account No. 001-120591
Lender : The Hongkong and Shandhai Banking Corporation Limited
Please find summary structure of your facilities of which details are described
below:
Present Facilities New Facilities
------------------ --------------
Combined Limit THB 18,000,000.- THB 18,000,000.-
with the following sublimits
Overdraft (THB 18,000,000.-) (THB 18,000,000.-)
Short Term Loan (upto 3 months) (THB 18,000,000.-) (THB 18,000,000.-)
Import Line (THB 18,000,000.-) (THB 18,000,000.-)
Of which Clean Import Loan (30 days) (THB 18,000,000.-) (THB 18,000,000.-)
Guarantee (THB 4,000,000.-) (THB 4,000,000.-)
Foreign Exchange Contract Limit (THB 3,570,000.-) (THB 5,882,000.-)*
(maturity up to 3 months)
9-month Term Loan THB300,000,000.-
* to reflect the current FX weighting risk
9-month Term Loan THB300,000,000.-
Borrower : Pemstar (Thailand) Ltd.
Purpose : To finance the construction of new factory
at the Hi-Tech Industrial Estate.
Amount : THB300,000,000.-
Type : Short term loan, up to 9 months
Interest Rate : 4.23% THB Fixed Rate, based on the undermentioned
drawdown schedule.
Interest Payment : Monthly basis, with grace period during 6DEC00-27FEB01
Interest will be charged on a daily basis commencing
on 28FEB01 and will be payable on the last business
day of every month for that particular advance to the
debit of your current account.
Drawdown Schedule: (THB : Million)
Drawdown Drawdown Date Loan Amount Total Loan Outstanding
-------- ------------- ----------- ----------------------
1/st/ 6 December 2000 37.5 37.5
2/nd/ 8 January 2001 25.0 62.5
3/rd/ 8 February 2001 25.0 87.5
4/th/ 8 March 2001 31.0 118.5
5/th/ 9 April 2001 44.1 162.6
6/th/ 7 May 2001 56.1 218.7
7/th/ 5 June 2001 41.4 260.1
8/th/ 5 July 2001 31.9 292.0
9/th/ 6 August 2001 8.0 300.0
Repayment : Bullet payment of THB300,000,000 on the 5/th/
September 2001.
Final Maturity Date : 5/th/ September 2001 but no later than the expiry date
of the Standby Letter of Credit
Security : Standby Letter of Credit from US Bank National
Association totaling THB300,000,000, the issuance of
which will be in line with
loan drawdown and the expiry date will be at least two
working days after 5SEP01.
Please note the completion of security is required
prior to each loan drawdown.
Arrangement : Nil.
Commitment : Nil.
Prepayment : Nil, but any funding breakage costs must be on the
account of the Borrower.
Availability : Subject to the fulfillment of the conditions precedent
on the Bank Agreement, receipt of duly signed
documents and completion of securities.
Remark : Amendment to Agreement No. 97/05746 dated 26 November
1997 and Additional Agreement No. CIB BA 99/0004 date
4 January 2000.
Condition Precedent
Loan
A Promissory Note must be submitted to the Bank for any drawdown, duly
signed and sealed by the authorized signatories of the borrower.
General Conditions
i) Amounts which are overdue or over limit (as well as amounts demanded and
not paid) in respect of all or any of these facilities will bear interest
from day to day at such rate charged by us from time to time on
unauthorized overdrafts or at aggregate of 2.00% p.a. (or such other rate
as the Bank may notify to you in writing) plus the Bank's prevailing non-
default interest rate applicable to that facility, the Bank's certificate
as to such rate being in the absence of manifest error, conclusive.
ii) If the effect of any, or a change in any official direction or any law or
regulation (including, without limitation, those relating to reserve and
special deposit requirement and taxes) is to increase the cost to us of
advancing, maintaining or funding this facility or to reduce the effective
return to us, we reserve the right to require payment on demand of such
amounts as we consider necessary to compensate us therefore.
iii) All payments by or made on behalf of the Borrower shall be made to the Bank
in immediately available funds to an account designated by the Bank without
any set-off, counter-claim, withholding or condition of any kind except
where the Borrower is compelled by law to make such withholding. In the
event that the Borrower is compelled to make such a withholding, the sum
payable by the
Borrower shall be increased so that the amount actually received by the
Bank is the amount it would have received if there had been no such
withholding.
iv) This Agreement is governed by the laws of Thailand.
v) The Borrower authorizes the Bank, without prejudice to the Bank's rights,
to apply any balance of any account of the Borrower with the Bank in
satisfaction or part satisfaction (as the case may be) of any sum due and
payable by the Borrower. For this purpose, the Bank is authorized to
purchase with moneys standing to the credit of such an account other such
currencies as may be necessary to effect such application.
vi) All costs associated with;
a) any funding breakage costs of the Bank;
b) any amount that is necessary to indemnify the Bank against the
consequences of non compliance or default by yourself of the
terms set out in this Agreement;
c) the negotiation, preparation, execution and enforcement of this
Agreement and the security documents including, but not limited
to, legal fees, stamp duty and out-of-pocket expenses together
with losses flowing form any judgment or claim being payable in a
different currency from that agreed,
shall all be for the Borrower's account and the Bank is authorized to
debit such amounts form the Borrower's account as and when such amounts
fall due.
vii) Please note that interest and other sums chargeable or payable on a
monthly basis will nonetheless accrue from day to day and amounts so
accrued may be demanded at anytime.
You further agree that for interest which is overdue for more than one
year, the Bank shall be entitled to charge compound interest.
viii) No failure or delay by the Bank in exercising any right, power or
privilege hereunder shall operate as a waiver thereof or prejudice any
other or further exercise by the Bank of any of its rights or remedies
hereunder. The rights and remedies herein are cumulative and not exclusive
of any right or remedies provided by law.
Please arrange for the authorized signatories of your company, in accordance
with the terms of the mandate given to the Bank, to sign and return to us the
duplicate copy of this Facility Agreement to signify your understanding and
acceptance of the terms and conditions under which these facilities are granted.
These facilities will remain open for acceptance until the 3.00 p.m. of 10
November 2000 and if not accepted by that date will be deemed to have lapsed
unless otherwise extended in writing by the Bank.
We are pleased to be of continued assistance.
Yours faithfully,
/s/ Vipa Lohabutra
------------------------------------
Vipa Lohabutra
Department Manager Small Business
VL/ssw/cs
We accept the Facilities and the Terms and Conditions stated in this Facility
Agreement and confirm that the above statements of security deposited by us
under assignment of the Hongkong and Shanghai Banking Corporation Limited and
documents executed by us in your favor to secure the above banking facilities
are correct.
PEMSTAR
PEMSTAR (THAILAND) LTD.
/s/ Laddawan Maisonti /s/ Xx Xxxxxxx Nov 10 '00
--------------------------------------------------- ---------------
Authorized signatories and company's chop Date Accepted