EXHIBIT 10.38
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SHARE PURCHASE AGREEMENT
by and among
CRITICAL PATH, INC.,
CRITICAL PATH JAPAN K.K.
MITSUI & CO., LTD.,
MITSUI & CO. (U.S.A.),
NTT COMMUNICATIONS CORPORATION,
and
NEC CORPORATION
Dated as of June 6, 2002
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS......................................................................2
1.1 Certain Definitions.............................................................2
ARTICLE 2 CONSIDERATION; CLOSING; CLOSING DELIVERABLES....................................10
2.1 Sale of Shares.................................................................10
2.2 Purchase Price Adjustment......................................................11
2.3 Wire Instructions..............................................................11
2.4 Closing; Closing Deliverables..................................................11
2.5 Buyer's Conditions to Closing..................................................13
2.6 Sellers' Conditions to Closing.................................................14
2.7 Consummation of Closing........................................................14
2.8 Appointment of Directors and Statutory Auditors................................14
2.9 Termination of Shareholders Agreement..........................................14
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS...................................15
3.1 Authority; No Conflicts........................................................15
3.2 Capitalization; Ownership of Shares, Options and Claims........................16
3.3 Financial Information; Undisclosed Liabilities.................................16
3.4 Loans, Notes, Accounts Receivable; Accounts Payable............................16
3.5 Material Agreements............................................................16
3.6 Consents and Approvals.........................................................17
3.7 Litigation; Proceedings........................................................17
3.8 Actions and Proceedings, etc...................................................17
3.9 Compliance with Applicable Laws................................................17
3.10 Disclosure.....................................................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.........................................18
4.1 Authority; No Conflicts; Governmental Consents.................................18
4.2 Actions and Proceedings, etc...................................................19
4.3 Disclosure.....................................................................19
ARTICLE 5 COVENANTS OF THE SELLERS........................................................19
5.1 Notice of Changes; Updates.....................................................19
5.2 Non-Solicitation...............................................................20
5.3 Further Assurances.............................................................20
5.4 Complete Copies................................................................20
5.5 Conduct Prior to Closing of Sellers............................................20
ARTICLE 6.................................................................................20
6.1 Cooperation....................................................................20
6.2 Confidential Information.......................................................21
6.3 Release........................................................................21
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6.4 Publicity......................................................................22
6.5 Access to Information..........................................................22
6.6 Expenses.......................................................................22
ARTICLE 7 NON-SOLICITATION OF CPP CUSTOMERS...............................................23
7.1 Non-Solicitation Agreement.....................................................23
7.2 Non-Solicitation Covenants: Scope and Choice of Law............................24
7.3 Non-Solicitation Covenants: Assignment by Buyer................................24
7.4 Non-Solicitation Covenants: Remedy for Breach..................................24
ARTICLE 8 TAX REPRESENTATIONS AND COVENANTS...............................................24
8.1 Tax Definitions................................................................24
8.2 Tax Representations and Covenants..............................................25
ARTICLE 9 EMPLOYEE BENEFITS AND EMPLOYEE ARRANGEMENTS.....................................27
9.1 Seconded Employees.............................................................27
9.2 Discharged Employees...........................................................27
ARTICLE 10 INDEMNIFICATION................................................................28
10.1 Survival.......................................................................28
10.2 Indemnification by the Sellers.................................................28
10.3 Indemnification by Buyer.......................................................28
10.4 Procedures Relating to Indemnification.........................................29
10.5 Limitations....................................................................30
10.6 No Contribution................................................................30
ARTICLE 11 TERMINATION....................................................................31
11.1 Bases for Termination..........................................................31
11.2 Notice of Termination, Return of Documents.....................................31
11.3 Effect of Termination..........................................................31
ARTICLE 12 GENERAL PROVISIONS.............................................................31
12.1 Assignment.....................................................................31
12.2 No Third-Party Beneficiaries...................................................32
12.3 Amendments; Waiver.............................................................32
12.4 Waiver of Compliance...........................................................32
12.5 Notices........................................................................32
12.6 Interpretation.................................................................33
12.7 Counterparts...................................................................33
12.8 Severability...................................................................33
12.9 Governing Law..................................................................34
12.10 Dispute Forum..................................................................34
12.11 Exhibits and Schedules.........................................................34
12.12 Entire Agreement...............................................................34
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EXHIBITS:
Exhibit A - Form of Termination Agreement I
Exhibit B - Form of Termination Agreement II
Exhibit C - Seller Wire Transfer Instructions
Exhibit D - Form of Cross Receipt
Exhibit E1 - Form of Buyer's Certificate
Exhibit E2 - Form of Buyer Sub's Certificate
Exhibit F - Form of CPP Certificate
Exhibit G - Form of Sellers' Certificate
Exhibit H - Form of NTTCOM's Certificate
SCHEDULES:
Schedule 2.1 - Share Ownership (pre-Closing)
Schedule 2.2 - Estimated Balance Sheet
Schedule 2.8 - Directors and Statutory Auditors (post-Closing)
Schedule 3.3 - Financial Statements (December 31, 2001 and April 30, 2002)
Schedule 7.1 - CPP Customers
Schedule 8.2 - Exceptions to Tax Representations
Schedule 9.1(a) - Mitsui Seconded Employees
Schedule 9.1(b) - NTTCOM Seconded Employees
Schedule 9.2 - Terms of Discharged Employee Settlement Agreements
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SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (together with all schedules,
appendices and exhibits hereto, the "AGREEMENT"), dated as of June 6, 2002 (the
"EFFECTIVE DATE"), is made by and among Critical Path, Inc., a California
corporation ("CRITICAL PATH"), Critical Path Japan K.K., a company organized and
existing under the laws of Japan and a wholly owned subsidiary of Buyer ("BUYER
SUB"), Mitsui & Co., Ltd., a company organized and existing under the laws of
Japan ("MITSUI"), Mitsui & Co. (U.S.A.), Inc., a New York corporation ("MITSUI
U.S.A."), NTT Communications Corporation, a company organized and existing under
the laws of Japan ("NTTCOM"), NEC Corporation, a company organized and existing
under the laws of Japan ("NEC" and together with MITSUI, Mitsui U.S.A. and
NTTCOM the "SELLERS" or individually, a "SELLER"). Critical Path, together with
its subsidiaries (including Buyer Sub) and operating either directly or through
such subsidiaries, is hereinafter referred to as "BUYER").
W I T N E S S E T H:
WHEREAS, Critical Path, MITSUI and NTTCOM made and entered into
as of the 23rd day of May 2000, an agreement entitled SHAREHOLDERS AGREEMENT
(the "SHAREHOLDERS AGREEMENT"), for the purpose of jointly incorporating and
operating Critical Path Pacific, Inc. ("CPP") in Japan under the laws of Japan
and providing for the purchase of all of the issued and outstanding capital
stock of CPP (the "SHARES");
WHEREAS, pursuant to the Shareholders Agreement, CPP was
incorporated on the 26th day of May 2000 and at such time the shareholders
subscribed for and purchased the following number of Shares:
Critical Path:Sixteen Thousand (16,000) Shares
MITSUI: Fourteen Thousand (14,000) Shares
NTTCOM: Ten Thousand (10,000) Shares;
WHEREAS, as of the date hereof, MITSUI directly owns 24% of the
Shares, Mitsui U.S.A. directly owns 6% of the Shares, NTTCOM directly owns 25%
of the Shares, NEC directly owns 5% of the Shares and Critical Path directly
owns 40% of the Shares;
WHEREAS, MITSUI and CPP made and entered into as of the 21st day
of June 2000, an agreement entitled MANAGEMENT AND SALES ASSISTANCE AGREEMENT
(the "MITSUI AGREEMENT"), whereby MITSUI undertook to provide CPP with
management and sales assistance throughout the term thereof;
WHEREAS, NTTCOM and CPP made and entered into as of the 21st day
of June 2000, an agreement entitled TECHNICAL AND SALES ASSISTANCE AGREEMENT
(the "NTTCOM AGREEMENT"), whereby NTTCOM undertook to provide CPP with technical
and sales assistance throughout the term thereof;
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WHEREAS, on the 12th day of March 2002, Buyer, MITSUI and NTTCOM
decided to conduct a study for the dissolution of CPP (the "DISSOLUTION STUDY")
and on the 29th day of March 2002 the Board of Directors of CPP (the "BOARD")
resolved that CPP should pursue the Dissolution Study;
WHEREAS, notwithstanding the undertaking of the Dissolution
Study as described above, on the 23rd day of April 2002 Buyer sent to MITSUI and
NTTCOM a "LETTER OF OFFER FOR PURCHASE OF SHARES IN CRITICAL PATH PACIFIC, INC."
(the "LETTER OF OFFER") whereby Buyer offered to purchase all of the Shares of
CPP held by MITSUI, NTTCOM, MITSUI U.S.A. and NEC;
WHEREAS, after receipt of the Letter of Offer, MITSUI, NTTCOM,
Mitsui U.S.A. and NEC held discussions regarding the proposed purchase by Buyer
of such Shares;
WHEREAS, now, notwithstanding anything to the contrary set forth
in Articles 12, 18 and 19 of the Shareholders Agreement, Buyer wishes to
purchase from the Sellers, and the Sellers wish to sell to Buyer all of the
Shares now held by the Sellers, on the terms and conditions as herein below set
forth;
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. For all purposes of this Agreement except as
expressly provided or unless the context otherwise requires the following
definitions shall apply:
"ACCOUNT PREPARATION RULES" shall mean the rules for the
preparation of the Monthly Management Accounts of CPP which were adopted by
CPP's Management Executive Committee.
"AFFILIATE" or "AFFILIATE" shall mean, with respect to any
Person, any other Person directly or indirectly Controlling, Controlled by or
under common Control with such first Person.
"AGENTS" or "AGENTS" shall mean officers, other employees,
independent contractors, consultants, directors, shareholders, affiliates and
other agents or representatives.
"AGREEMENT" shall have the meaning assigned thereto in the
preamble.
"APRIL 30 BALANCE SHEET" shall mean the unaudited balance sheet
of CPP as of April 30, 2002 attached to Schedule 3.3.
"APPROVAL" shall have the meaning assigned thereto in Section
3.10.
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"AUDITOR" shall have the meaning assigned thereto in Section
2.2(b).
"BOARD" shall have the meaning assigned thereto in the recitals.
"BUSINESS DAY" shall mean any day that is not a Saturday, Sunday
or other day on which banking institutions in Tokyo, Japan are authorized or
required by law or executive order to close.
"BUYER" shall have the meaning assigned thereto in the preamble.
"BUYER DELIVERABLES" shall have the meaning assigned thereto in
Section 2.4(a).
"BUYER INDEMNITEES" shall have the meaning assigned thereto in
Section 10.2.
"BUYER PARTIES" shall have the meaning assigned thereto in
Section 6.3.
"BUYER SUB" shall have the meaning assigned thereto in the
preamble.
"BUYER'S INDEMNIFICATION CAP" shall have the meaning assigned
thereto in Section 10.5.
"CASH" means cash and cash equivalents, including the line items
of the applicable CPP balance sheets entitled "cash in hand", "deposit in banks"
and "short term loans".
"CASH ADJUSTMENT" shall have the meaning assigned thereto in
Section 2.2(a).
"CLAIM" shall have the meaning assigned thereto in Section
10.4(b).
"CLOSING" shall have the meaning assigned thereto in Section
2.4.
"CLOSING CPP EQUITY" shall mean the assets, less liabilities, of
CPP determined by reference to the Closing Balance Sheet.
"CLOSING CASH BALANCE" shall mean the total amount of Cash held
by CPP as of May 31, 2002, as reflected on the Closing Balance Sheet.
"CLOSING DATE" shall have the meaning assigned thereto in
Section 2.4.
"CLOSING BALANCE SHEET" shall have the meaning assigned thereto
in Section 2.2.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
and any successor federal tax statute.
"COLLATERAL AGREEMENTS" shall mean Termination Agreement I and
Termination Agreement II.
"CONFIDENTIAL INFORMATION" shall have the meaning assigned
thereto in Section 6.2.
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"CONTRACTS" shall mean any contract, agreement, indenture, note,
bond, loan, instrument, lease, conditional sale agreement, purchase order,
mortgage, deed of trust, license, permit, concession, grant, franchise,
commitment, guarantee, other evidence of indebtedness or other binding
arrangement, understanding or agreement, whether or not written, to which CPP is
a party, each a "Contract."
"CONTROL" shall mean the power to direct the affairs of a Person
by reason of ownership of voting shares, by contract or otherwise.
"CP SEC DOCUMENTS" shall mean the reports, proxies, information
statements and prospectuses filed by Buyer with the U.S. Securities Exchange
Commission since December 31, 2000.
"CPP" shall have the meaning assigned thereto in the preamble.
"CPP BUSINESS" shall mean the business of CPP to deliver
advanced Internet messaging solutions to businesses in Japan as conducted on the
Effective Date.
"CPP CUSTOMER" shall have the meaning assigned thereto in
Section 7.1.
"CPP CEO" shall have the meaning set forth in Section 3.10.
"CPP CFO" shall have the meaning set forth in Section 3.10.
"CPP CIO" shall have the meaning set forth in Section 3.10.
"CPP SERVICES" shall mean Internet communications services
including messaging and collaboration solutions for wireless, secure, unified
messaging, basic email and personal information management as provided by CPP on
the Effective Date.
"CRITICAL PATH" shall have the meaning assigned thereto in the
preamble.
"DIRECT CLAIM" shall have the meaning assigned thereto in
Section 10.4.
"DISCHARGED EMPLOYEES" shall have the meaning assigned thereto
in Section 9.2.
"DISCHARGED EMPLOYEE SETTLEMENT AGREEMENTS" shall have the
meaning assigned thereto in Section 9.2.
"DISCLOSING PARTY" shall have the meaning assigned thereto in
Section 6.2.
"DISSOLUTION STUDY" shall have the meaning assigned thereto in
the recitals.
"EFFECTIVE DATE" shall have the meaning assigned thereto in the
preamble.
"EMPLOYEE CLAIM INDEMNITEE" shall have the meaning assigned
thereto in Section 9.2.
"EQUITY ADJUSTMENT" shall have the meaning assigned thereto in
Section 2.2(a).
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"ESTIMATED CPP EQUITY" shall mean the assets, less liabilities,
of CPP determined by reference to the Estimated Balance Sheet.
"ESTIMATED CASH BALANCE" shall mean the total amount of cash and
cash equivalents held by CPP as of May 31, 2002, as reflected on the Estimated
Balance Sheet.
"ESTIMATED BALANCE SHEET" shall mean the estimated unaudited
balance sheet of CPP as of May 31, 2002 attached to Schedule 2.2 hereto.
"FINANCIAL STATEMENTS" shall mean the following as attached to
Schedule 3.3 (i) an audited (a) balance sheet of CPP as of December 31, 2001,
(b) the related statements of operations, changes in stockholders equity, and
cash flows for such fiscal year then ended, and (c) all related notes and
schedules, if any; and (ii) (a) the April 30 Balance Sheet, (b) the related
statements of operations, changes in stockholders equity, and cash flows for the
period then ended, and (c) all related notes and schedules, all of which have
been reviewed, but not audited, by CPP's independent public accountant.
"GAAP" shall mean generally accepted accounting principles in
Japan, consistently applied.
"GOVERNMENTAL AUTHORIZATION" shall mean any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Entity or
pursuant to any Legal Requirement.
"GOVERNMENTAL ENTITY" shall mean any supranational, national,
state, municipal or local government or any agency, authority, bureau,
commission, department or similar body or instrumentality thereof, or any court,
tribunal, administrative or rulemaking agency or entity having jurisdiction over
the parties, CPP, the CPP Business and/or the Transactions.
"INCLUDING" shall mean including without limitation.
"INDEMNIFIABLE LOSSES" shall have the meaning assigned thereto
in Section 10.2.
"INITIAL PURCHASE PRICE" shall have the meaning assigned thereto
in Section 2.1.
"KNOWLEDGE" with respect to a Person, shall mean the knowledge
of the senior management and responsible employees of such Person after due
inquiry.
"KNOWLEDGE OF THE CPP MANAGEMENT" shall mean the knowledge after
due inquiry of the CPP CEO and the CPP CFO.
"LEGAL REQUIREMENT" shall mean any federal, state, local,
municipal, foreign or other law, statute, legislation, constitution, principle
of common law or equity, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, permit, ruling, directive,
pronouncement, requirement (licensing or otherwise), specification,
determination, decision, opinion or interpretation that is, has been or may in
the future be issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity.
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"LETTER OF OFFER" shall have the meaning assigned thereto in the
recitals.
"LIENS" shall mean any liens, mortgages, liabilities, options,
debts, claims, restrictions, preemptive rights, security interests, secured
claims, charges, voting and disposition restrictions or any other encumbrances
of any kind whether contingent, liquidated, disputed, known or unknown.
"MTP" shall have the meaning assigned thereto in Section 7.1.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any
Person, any change, event or effect that, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on (i) the
ability of such Person to perform its obligations under this Agreement or
otherwise consummate the Transactions, (ii) the business, assets, property,
conditions, results of operations, value or financial or other condition of such
Person (as such business in presently conducted and as proposed to be conducted
in the future).
"MATERIAL AGREEMENT" shall mean (a) any lease for real or
personal property (whether as lessor or lessee); (b) any agreement for the
purchase of materials, supplies, goods, services, equipment or other assets
other than in the ordinary course of business; (c) any consulting services,
sales, distribution or other similar agreement providing for the sale by CPP of
materials, supplies, goods, services, equipment or other assets; (d) any
partnership, joint venture or other similar agreement or arrangement; (e) any
agreement relating to the acquisition or disposition of any business (whether by
merger, sale of stock, sale of assets or otherwise); (f) any agreement relating
to indebtedness for borrowed money or the deferred purchase price of property;
(g) any license, franchise or similar agreement; (h) any agency, dealer, sales
representative, marketing or other similar agreement other than in the ordinary
course of business; or (i) any other agreement, commitment, arrangement or plan
not made in the ordinary course of business.
"MAY 2002 MONTHLY GROSS REVENUE" shall have the meaning assigned
thereto in Section 7.3.
"MITSUI" shall have the meaning assigned thereto in the
preamble.
"MITSUI AGREEMENT" shall have the meaning assigned thereto in
the recitals.
"MITSUI SECONDED EMPLOYEES" shall have the meaning assigned
thereto in Section 9.1(a).
"MITSUI SECONDMENT AGREEMENTS" shall mean the agreements between
CPP and MITSUI regarding the secondment of certain employees to CPP, including
the letter dated December 21, 2000 and the memorandum dated December 21, 2000,
with respect to the secondment of ▇▇▇▇▇ ▇▇▇▇▇▇; the letter dated April 25, 2000
and the memorandum dated June 16, 2000 with respect to the secondment of ▇▇▇▇▇▇
▇▇▇▇▇; and the letter dated May 26, 2000 and the memorandum dated June 16, 2000
with respect to the secondment of ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"MITSUI LEASE AGREEMENTS" shall mean the following contracts
between Mitsui Leasing & Development, Ltd. and CPP: (a) Contract Number
L001883400, dated June 1, 2000,
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(b) Contract Number L001884200, dated June 1, 2000, (c) Contract Number
L001884500, dated ▇▇▇▇ ▇, ▇▇▇▇, (▇) Contract Number L002221000, dated May 26,
2000, (e) Contract Number L002223600, dated May 26, 2000, (f) Contract Number
L002224100, dated May 26, 2000, (g) Contract Number L002225000, dated May 26,
2000, (h) Contract Number L002655300, dated September 26, 2000, (i) Contract
Number L010469900, dated December 1, 2000, and (j) Contract Number L012553100,
dated August 1, 2001.
"MITSUI U.S.A." shall have the meaning assigned thereto in the
preamble.
"NEC" shall have the meaning assigned thereto in the preamble.
"NON-SOLICITATION PERIOD" shall have the meaning assigned
thereto in Section 7.1.
"NTTCOM" shall have the meaning assigned thereto in the
preamble.
"NTTCOM AGREEMENT" shall have the meaning assigned thereto in
the recitals.
"NTTCOM SECONDED EMPLOYEES" shall have the meaning assigned
thereto in Section 9.1(b).
"NTTCOM SECONDMENT AGREEMENTS" shall mean the agreements between
CPP and NTTCOM regarding the secondment of certain employees to CPP, including
the memorandum dated June 1, 2000 and the letter dated September 29, 2000, with
respect to, among other things, the secondment of ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇.
"ORDINARY COURSE OF BUSINESS" shall mean the ordinary and usual
course of CPP's business consistent with past practices.
"ORDER" shall mean any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Entity or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" shall mean the articles or
certificate of incorporation and the bylaws of a corporation or a Kabushiki
Kaisha or any charter or similar document adopted or filed in connection with
the creation, formation or origination of a Person and any amendment to any of
the forgoing.
"PERMITS" shall mean any permit, license, certificate,
concession, approval, consent, ratification, permission, clearance,
confirmation, exemption, waiver, franchise, certification, designation, rating,
registration, variance, qualification, accreditation or authorization issued,
granted, given or otherwise made available by or under the authority of a
Governmental Entity.
"PERSON" shall mean an individual, corporation, association,
partnership, limited liability company, joint venture, trust or unincorporated
organization, other form of business or legal entity or Governmental Entity.
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"PRE-CLOSING TAX PERIOD" shall have the meaning assigned thereto
in Section 8.1.
"PRO RATA SHARE" shall have the meaning assigned thereto in
Section 9.2.
"PROCEEDING" shall mean any action, arbitration, audit, claim,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted or
heard by or before or otherwise involving, any Person or Governmental Entity or
arbitrator.
"PURCHASE PRICE" shall have the meaning assigned thereto in
Section 2.1.
"PURCHASE PRICE ADJUSTMENT" shall have the meaning assigned
thereto in Section 2.2(a).
"RECEIVING PARTY" shall have the meaning assigned thereto in
Section 6.2.
"RELEVANT SELLER" shall have the meaning assigned thereto in
Section 10.2.
"RETURNS" shall have the meaning assigned thereto in Section
8.2.
"SCHEDULE" or "SCHEDULE" shall mean a schedule attached hereto
which sets forth exceptions to the representations and warranties and certain
other information called for herein. If a document or matter is disclosed in a
Schedule in connection with a specific section of this Agreement, such document
or matter shall not be deemed to be disclosed in the Schedule in connection with
any other section or provision except where specific repetition or
cross-reference is made.
"SECONDED EMPLOYEES" shall mean the Mitsui Seconded Employees
and the NTTCOM Seconded Employees.
"SELLER" and "SELLERS" shall have the meanings assigned thereto
in the preamble.
"SELLER DELIVERABLES" shall have the meaning assigned thereto in
Section 2.4(b).
"SELLER INDEMNITEES" shall have the meaning assigned thereto in
Section 10.3.
"SELLER PARTIES" shall have the meaning assigned thereto in
Section 6.3.
"SELLER'S INDEMNIFICATION CAP" shall have the meaning assigned
thereto in Section 10.5.
"SHARES" shall have the meaning assigned thereto in the
recitals.
"SHAREHOLDERS AGREEMENT" shall have the meaning assigned thereto
in the recitals.
"SURVIVAL DATE" shall have the meaning assigned thereto in
Section 10.1.
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"TAX" shall have the meaning assigned thereto in Section 8.1.
"TAX ASSET" shall have the meaning assigned thereto in Section
8.1.
"TAXING AUTHORITY" shall have the meaning assigned thereto in
Section 8.1.
"TAX SHARING AGREEMENT" shall have the meaning assigned thereto
in Section 8.1.
"TERMINATION AGREEMENT I" shall mean an agreement between CPP
and MITSUI, substantially in the form attached hereto as Exhibit A, for the
termination of (i) the Mitsui Agreement and (ii) the Mitsui Secondment
Agreements.
"TERMINATION AGREEMENT II" shall mean an agreement between CPP
and NTTCOM, substantially in the form attached hereto as Exhibit B, for the
termination of (i) the NTTCOM Agreement and (ii) the NTTCOM Secondment
Agreement.
"THIRD-PARTY CLAIM" shall have the meaning assigned thereto in
Section 10.4(a).
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement and the Collateral Agreements and all of the actions, events and
transactions set forth therein and any of the agreements in connection with such
actions, events and transactions.
"UNAUDITED CLOSING BALANCE SHEET" shall have the meaning
assigned thereto in Section 2.2.
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ARTICLE 2
CONSIDERATION; CLOSING; CLOSING DELIVERABLES
2.1 Sale of Shares. Subject to the terms and conditions set forth
herein, the Sellers hereby agree to sell to Buyer, through Buyer Sub, all of the
Shares held by Sellers, which Shares are listed on Schedule 2.1 and Buyer,
through Buyer Sub, hereby agrees to pay the Sellers a purchase price of Three
Hundred Sixty Million Yen (Yen360,000,000) in cash (the "INITIAL PURCHASE
PRICE"), subject to the adjustment set forth in Section 2.2 (such purchase price
after such adjustment shall be hereinafter referred to as the "PURCHASE PRICE")
according to each Seller's percentage ownership of the Shares, which percentages
and the corresponding number of Shares owned by each Seller are set forth on
Schedule 2.1.
2.2 Purchase Price Adjustment.
(a) Purchase Price Adjustment. The aggregate Purchase Price will
be adjusted, on a Yen for Yen basis, by the sum of the Equity Adjustment and the
Cash Adjustment, so that the Purchase Price will be increased if such sum is a
positive value and the Purchase Price will be decreased if such sum is a
negative value (the "PURCHASE PRICE ADJUSTMENT"), provided that in no event
shall the Purchase Price Adjustment exceed twenty percent (20%) of the Initial
Purchase Price. No adjustment shall be made unless (i) the absolute value of
Equity Adjustment is greater than 2% of the Estimated CPP Equity or (ii) the
absolute value of the Cash Adjustment is greater than 2% of the Estimated Cash
Balance. The "EQUITY ADJUSTMENT" will be equal to the difference between the
Closing CPP Equity and the Estimated CPP Equity. The "CASH ADJUSTMENT" will be
equal to the difference between the Closing Cash Balance and the Estimated Cash
Balance. For the avoidance of any doubt, the Purchase Price Adjustment shall not
take into account any decrease in the Closing Cash Balance resulting from the
payment of the Initial Purchase Price from any CPP account, if applicable.
(b) Preparation and Delivery of Balance Sheets. The Estimated
CPP Equity and the Estimated Cash Balance shall be set forth on an unaudited
estimated balance sheet of CPP as of May 31, 2002 (the "ESTIMATED BALANCE
SHEET") which (i) shall be prepared in accordance with the Account Preparation
Rules, (ii) shall be certified by the Chief Financial Officer of CPP as of the
date of delivery and (iii) together with all related accounting work papers
shall be delivered by the Sellers to Buyer at least seven (7) Business Days
prior to the Closing Date. The Parties shall cause the Chief Financial Officer
of CPP to prepare a balance sheet of CPP as of May 31, 2002 (the "UNAUDITED
CLOSING BALANCE SHEET") which (i) shall be prepared in accordance with the
Account Preparation Rules, (ii) shall be certified by the Chief Financial
Officer of CPP as of the date of delivery and (iii) together with all related
accounting work papers shall be delivered simultaneously to Chuo Aoyama Audit
Corporation, or such other independent accounting firm as is reasonably
acceptable to all the parties (the "AUDITOR") and the parties hereto no later
than June 15, 2002. The "CLOSING BALANCE SHEET", setting forth the Closing CPP
Equity and the Closing Cash Balance, shall be the Unaudited Closing Balance
Sheet, as approved in accordance with subsection (c) below and as audited by the
Auditor.
(c) Disputes. The Unaudited Closing Balance Sheet shall be
subject to the review of and shall be satisfactory to Buyer. After its receipt
of the Unaudited Closing Balance
10
Sheet, Buyer shall have one week in which to reject the Unaudited Closing
Balance Sheet by written notice to the Sellers. If Buyer does not reject the
Unaudited Closing Balance Sheet within this period it will be deemed approved.
If Buyer rejects the Unaudited Closing Balance, the parties will use their best
efforts to have the Unaudited Closing Balance Sheet revised to the satisfaction
of all parties. In the event that there is a dispute between Buyer, on the one
hand, and the Sellers, on the other hand, regarding the Unaudited Closing
Balance Sheet that cannot be resolved between the parties, each party shall
appoint an auditor to meet in an attempt to resolve such dispute. In the event
that such auditors are unable to resolve the dispute, they shall jointly appoint
a third neutral auditor which shall make a final determination with respect to
the subject of such dispute. On the resolution of any dispute in accordance with
this subsection (c), the Unaudited Closing Balance Sheet shall be deemed
approved.
(d) Settlement of the Purchase Price Adjustment. The Price
Adjustment Amount shall be settled by the parties within five (5) Business Days
following the later of (i) the receipt by the parties of the audit report with
respect to the Closing Balance Sheet or (ii) the resolution of any dispute with
respect thereto in accordance with subsection (c) above. Payment shall be made
by wire transfer to a bank account, as designated by the applicable transferee,
of Buyer or each Seller, and in the case of the Sellers shall be made on a pro
rata basis in accordance with each Seller's respective percentage ownership of
the Shares as set forth on Schedule 2.1.
2.3 Wire Instructions. Attached hereto as Exhibit C are the wire
transfer instructions prepared by each Seller designating the accounts to which
the pro rata amounts of the Initial Purchase Price payable to such Seller at
Closing shall be paid by Buyer Sub.
2.4 Closing; Closing Deliverables. The closing (the "CLOSING") of the
purchase and sale of the Shares shall be held (1) at the offices of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇-▇-▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇, ▇▇▇▇▇
100-0005, at 10:00 a.m., local time, on June 6, 2002, or (2) at such other
place, time, and/or date as the parties hereto may otherwise agree. The date on
which the Closing shall occur is hereinafter referred to as the "CLOSING DATE."
At or prior to the Closing, the parties to the Agreement shall deliver the
following items:
(a) Buyer shall deliver the following items to the Sellers (the "BUYER
DELIVERABLES"):
(i) At the Closing, through Buyer Sub, the Initial Purchase
Price, pro rata according to each Seller's ownership of
the Shares as listed on Schedule 2.1, as directed by the
Sellers prior to the Closing;
(ii) A cross-receipt, substantially in the form of Exhibit D,
executed by Critical Path and Buyer Sub indicating
receipt by Buyer Sub of certificates representing all
Shares being transferred by the Sellers to Buyer Sub;
(iii) At the Closing, a certificate of the corporate secretary
of Critical Path substantially in the form of Exhibit E1
attaching copies of the resolutions of the board of
directors of Critical Path approving the
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Transactions and any other resolutions adopted by
such board in connection with the Transactions; and
(iv) At the Closing, a certificate of the corporate secretary
of Buyer Sub substantially in the form of Exhibit E2
attaching copies of the resolutions of the board of
directors of Buyer Sub approving the Transactions and
any other resolutions adopted by such board in
connection with the Transactions.
(b) Each Seller shall deliver, or cause to be delivered the
following items to Buyer (the "SELLER DELIVERABLES"):
(i) At the Closing, the certificates representing all of the
Shares owned by such Seller;
(ii) A cross-receipt, substantially in the form of Exhibit D,
executed by each Seller indicating receipt by such
Seller of the portion of the Initial Purchase Price
payable to it;
(iii) The Collateral Agreements, each duly executed by each
Seller party thereto;
(iv) At the Closing, a certificate of the Representative
Director of CPP substantially in the form of Exhibit F
attaching copies of (A) the Articles of Incorporation of
CPP as in effect on the Closing Date and (B) the
resolutions of the Board approving the Transactions and
any other resolutions adopted by the Board in connection
with the Transactions;
(v) At the Closing, each Seller other than NTTCOM shall
deliver a certificate of the Representative Director (or
the President, corporate secretary or other director or
executive officer of such Seller with responsibility for
the maintenance of corporate records), substantially in
the form of Exhibit G attaching copies of the
resolutions of the board of directors of such Seller
approving the Transactions and any other resolutions
adopted by such board in connection with the
Transactions (or otherwise certifying approval of the
Transactions by such Seller in accordance with such
Seller's Articles of Incorporation and internal
procedures and Japanese law);
(vi) At the Closing, NTTCOM shall deliver a certificate of
the Senior Vice President of NTTCOM's General Affairs
Department, substantially in the form of Exhibit H,
certifying that the board of directors of NTTCOM has
adopted resolutions approving the Transactions and the
execution of this Agreement;
(vii) At the Closing, MITSUI shall deliver to Buyer the
executed resignation letters of all directors and
statutory auditors of CPP nominated by MITSUI and NTTCOM
shall deliver to Buyer the
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executed resignation letters of all directors and
statutory auditors of CPP nominated by NTTCOM; and
(viii) At the Closing, a copy of the commercial registry of CPP
issued and certified by the local legal bureau as of a
date within five Business Days of the Closing Date.
2.5 Buyer's Conditions to Closing. The obligation of Buyer to purchase
and pay, through Buyer Sub, for the Shares owned by the Sellers shall be subject
to the satisfaction (or waiver by Buyer) as of the Closing of the following
conditions:
(a) (i) The representations and warranties of the Sellers made
in this Agreement and in any certificate or other document to be delivered in
connection with this Agreement shall be true and correct in all respects (in the
case of any representation or warranty containing any materiality qualification)
or in all material respects (in the case of any representation or warranty
without any materiality qualification) on the Effective Date and on and as of
the Closing Date, as though made on and as of the Closing Date (unless and to
the extent any such representation or warranty speaks specifically as of an
earlier date, in which case, as of such earlier date); and (ii) the Sellers
shall have performed or complied in all respects with all obligations and
covenants required by this Agreement to be performed or complied with by the
Sellers by the time of the Closing;
(b) Other than any Proceeding disclosed in the CP SEC Documents,
there shall be no Proceeding pending or threatened which (i) seeks to restrain,
enjoin or prevent the consummation or otherwise affect or undo any of the
Transactions, (ii) seeks to recover damages or to obtain other relief in
connection with any of the Transactions, (iii) seeks severance or wrongful
termination remedies from CPP, (iv) asserts that any Person other than a Seller
or Buyer is the holder or beneficial owner of the any of the Shares or is
entitled to any portion of the Purchase Price, or (v) if adversely determined is
likely to have a Material Adverse Effect on Critical Path, Buyer Sub or CPP. No
preliminary or permanent injunction or other Order by any Governmental Entity
which prevents consummation of any of the Transactions shall have been issued
and remain in effect;
(c) All consents, authorizations, Orders and approvals of, and
registrations, declarations and filings with, any Governmental Entity, required
for or in connection with the execution and delivery of this Agreement and the
consummation of the Transactions shall have been obtained or made;
(d) Buyer shall have received all the Seller Deliverables, which
shall be satisfactory to Buyer;
(e) Buyer shall have completed, to its satisfaction, its due
diligence investigation; and
(f) All original minute books, ledgers and registers (including
the share register) and other corporate records relating to the organization,
ownership and maintenance of CPP shall be in the corporate headquarters of CPP
and Buyer Sub shall have been given access to and control over such records.
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2.6 Sellers' Conditions to Closing. The obligations of the Sellers to
sell and deliver the Shares to Buyer Sub are subject to the satisfaction (or
waiver by the Sellers) as of the Closing of the following conditions:
(a) The representations and warranties of Buyer made in this
Agreement and in any certificate or other document to be delivered in connection
with this Agreement shall be true and correct in all respects (in the case of
any representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty without any
materiality qualification), on and as of the Closing Date, as though made on and
as of the Closing Date (unless and to the extent any such representation or
warranty speaks specifically as of an earlier date, in which case, as of such
earlier date), and Buyer shall have performed or complied in all material
respects with the obligations and covenants required by this Agreement to be
performed or complied with by Buyer by the time of the Closing.
(b) Other than any Proceeding disclosed in the CP SEC Documents,
there shall be no Proceeding pending or threatened which (i) seeks to restrain,
enjoin or prevent the consummation or otherwise affect any of the Transactions,
(ii) seeks to recover damages or to obtain other relief in connection with any
of the Transactions, (iii) asserts that any Person other than a Seller or Buyer
is the holder or beneficial owner of the any of the Shares or is entitled to any
portion of the Purchase Price, or (iv) if adversely determined is reasonably
likely to have a Material Adverse Effect on Critical Path, Buyer Sub or any
Seller. No preliminary or permanent injunction or other Order by any
Governmental Entity which prevents consummation of any of the Transactions shall
have been issued and remain in effect;
(c) All consents, authorizations, Orders and approvals of, and
registrations, declarations and filings with, any Governmental Entity, required
for or in connection with the execution and delivery of this Agreement and the
consummation of the Transactions shall have been obtained or made; and
(d) The Sellers shall have received all the Buyer Deliverables,
which shall be satisfactory to the Sellers;
2.7 Consummation of Closing. All acts, deliveries and confirmations
comprising the Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery or confirmation of the Closing and none of such acts, deliveries, or
confirmations shall be effective unless and until the last of the same shall
have occurred.
2.8 Appointment of Directors and Statutory Auditors. As of Closing,
Buyer Sub hereby nominates and elects to the positions of director and statutory
auditor the persons listed on Schedule 2.8, as specified.
2.9 Termination of Shareholders Agreement. The parties waive any rights
they may have under the Shareholders Agreement, including those set forth in
Articles 12, 17, 18 and 19, with respect to the Transactions. Upon the Closing,
the Shareholders Agreement shall be terminated with respect to all parties
thereto and shall become immediately null and void,
14
provided that, notwithstanding anything to the contrary in Article 20 of the
Shareholders Agreement, only the provisions of Articles 22 and 28 shall survive
such termination.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As of the Effective Date and as of the Closing Date, with respect to any
applicable statement in Sections 3.1, 3.6, 3.8 or 3.10 of this ARTICLE 3,
NTTCOM, Mitsui U.S.A. and NEC each warrant, represent and covenant to Buyer on
behalf of such Seller and not on behalf of any other Seller; and with respect to
any applicable statement in this ARTICLE 3, MITSUI warrants, represents, and
covenants to Buyer on behalf of MITSUI and not on behalf of any other Seller, as
follows:
3.1 Authority; No Conflicts.
(a) Each Seller (other than Mitsui U.S.A.) is duly organized and
validly existing under the laws of Japan. Mitsui U.S.A. is duly organized,
validly existing and in good standing under the laws of the State of New York.
Each Seller has all requisite corporate power and authority to enter into and
perform the covenants in this Agreement and the Collateral Agreements to which
such Seller is a party, and to consummate the Transactions. All corporate acts
and other proceedings required to be taken by each Seller to authorize the
execution, delivery and performance of this Agreement, the Collateral Agreements
to which such Seller is a party and the consummation of the Transactions have
been duly and properly taken. This Agreement has been (and the Collateral
Agreements to which such Seller is a party, when executed and delivered will be)
duly executed and delivered by each Seller and, assuming the due execution
hereof by the other parties hereto, this Agreement constitutes (and the
Collateral Agreements to which such Seller is a party, when executed and
delivered, will constitute) the valid and binding obligation of each Seller,
enforceable against each Seller in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by the
Sellers nor the performance or consummation of the Transactions by the Sellers
will directly or indirectly (with or without notice or lapse of time or both)
(i) contravene, conflict with or result in a violation of (A) any provision of
CPP's Articles of Incorporation or (B) any resolution adopted by the Board or
shareholders of CPP, (ii) contravene, conflict with or result in a violation of
or give any Governmental Entity or other Person the right to challenge any of
the Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which CPP or any Seller, or any of the assets owned
or used by CPP may be subject, (iii) cause Buyer or CPP to become subject to, or
liable for the payment of any Tax, (iv) contravene, conflict with or result in a
violation or a breach of any provision of, or give any Person the right to
declare a default of, or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify any Contract; or
(v) result in the imposition or creation of any Lien upon or with respect to any
of the assets owned or used by CPP.
3.2 Capitalization; Ownership of Shares, Options and Claims. To the
Knowledge of the CPP Management, CPP has no outstanding options, warrants,
subscriptions, rights
15
agreements or other commitments which either (i) obligate CPP to issue, sell or
transfer any shares of the capital stock of CPP or any successor-in-interest,
(ii) obligate CPP or any other Person to register, repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock of CPP, or (iii)
may be the basis for a claim by any Person that such Person has an interest
(contingent or otherwise) in the capital stock of CPP or any
successor-in-interest. To the Knowledge of the CPP Management, other than the
shares owned by Buyer, all issued and outstanding shares of capital stock of CPP
are owned beneficially and of record by the Sellers in such amounts as shown in
Schedule 2.1 hereto and are free and clear of all Liens.
3.3 Financial Information; Undisclosed Liabilities.
(a) To the Knowledge of the CPP Management, the Financial
Statements reflect, and the Closing Balance Sheet when delivered will reflect,
reserves appropriate and adequate for all known liabilities and losses
(including appropriate and adequate reserves for inventory, bad debt and accrued
liabilities) in accordance with the Account Preparation Rules which are based on
normal accounting policies and practice in Japan.
(b) To the Knowledge of the CPP Management, CPP does not have
any obligations, indebtedness or liabilities (including liabilities to current
and former employees, including such liabilities arising out of any severance
obligation, benefit plan, health plan, dental plan, long or short term
disability plan, life insurance plan, or other similar plan or policy of CPP),
whether known, unknown, contingent or otherwise, other than: (i) those disclosed
or adequately reserved for in the April 30 Balance Sheet in accordance with the
Account Preparation Rules which are based on normal accounting policies and
practice in Japan, (ii) obligations, indebtedness or liabilities incurred since
April 30, 2002 in the ordinary course of business or (iii) obligations pursuant
to the Discharged Employee Settlement Agreements.
3.4 Loans, Notes, Accounts Receivable; Accounts Payable. To the
Knowledge of the CPP Management, the April 30 Balance Sheet provides, and the
Closing Date Balance Sheet when delivered will provide, an accurate and complete
breakdown and aging of all accounts receivable, notes receivable and other
receivables of CPP as of the dates thereof. To the Knowledge of the CPP
Management, all receivables set forth on the April 30 Balance Sheet and the
Closing Date Balance Sheet (a) have arisen only from bona fide transactions in
the ordinary course of business, (b) represent valid obligations, (c) are
current and collectible in the aggregate face amounts thereof without any
counterclaim or set-off when due, except to the extent of the normal allowance
for doubtful accounts with respect to accounts receivable that are computed in a
manner consistent with past practices and are reflected in the April 30 Balance
Sheet or the Closing Date Balance Sheet, as the case may be, and (d) are owned
by CPP free of all Liens other than Permitted Liens. The accounts payable of CPP
reflected on the April 30 Balance Sheet and the Closing Date Balance Sheet
arose, and have arisen, from bona fide transactions.
3.5 Material Agreements. To the Knowledge of the CPP Management, there
are no Material Agreements to which CPP is a party or by which CPP is currently
bound that have not been presented to and approved by the Board. To the
Knowledge of the CPP Management, CPP and each other party thereto have performed
all of the obligations required to be due, paid or performed by them to date,
have received no notice of default and are not in default (with due notice or
lapse of time or both) under any Material Agreement to which CPP is a party. To
the
16
Knowledge of the CPP Management, there has not been any breach or anticipated
breach by CPP or any other party of any Material Agreement to which CPP is a
party.
3.6 Consents and Approvals. No consent, approval, authorization or
permit of, or registration, declaration, report or filing with, or notice to any
Governmental Entity or any other Person is required to be obtained or made by
the Sellers in connection with the execution and delivery of this Agreement, the
Collateral Agreements and the consummation of the Transactions.
3.7 Litigation; Proceedings. To the Knowledge of the CPP Management,
there is not currently, and there has not been, any Proceeding against or
affecting CPP or its properties, and there is not currently pending or
threatened any Proceeding or third party claim, including claims by employees,
customers or suppliers, or claims by any Governmental Entity, whether or not
covered by insurance.
3.8 Actions and Proceedings, etc. There is no pending Proceeding that
has been commenced against any Seller or, to the Knowledge of the CPP
Management, CPP, that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Transactions.
3.9 Compliance with Applicable Laws. To the Knowledge of the CPP
Management, CPP is, and has at all times since its inception been, in compliance
with all applicable Legal Requirements. To the Knowledge of the CPP Management,
CPP is not, nor since its inception has it been, in violation of any applicable
Order or other requirement of any Governmental Entity. To the Knowledge of the
CPP Management, immediately after the Closing, each Permit held by CPP will be
valid and in full force and effect with respect to CPP and no such Permit has
been threatened with revocation.
3.10 Disclosure. No statement, representation or warranty of any
Relevant Seller contained in this Agreement, the Collateral Agreements or other
document or information furnished (or to be furnished), whether orally, in
writing or in any medium, in connection with the Transactions, by or on behalf
of the Relevant Seller to Buyer or its Agents, contains any untrue statement of
or omits to state any material fact. The Relevant Seller has not omitted any
information with respect to matters within its Knowledge and control that is
material to CPP, the Collateral Agreements or the Transactions from the
documents or information furnished to Buyer and its Agents, including
information with respect to CPP's capitalization, corporate records, financial
statements and accounts, personal and real property, intellectual property,
suppliers and customers, employees or insurance. There are no facts or
circumstances not fully disclosed in this Agreement or in the other documents
and information furnished (orally, in writing or in any medium) which should be
disclosed to Buyer in order to make any of the representations or warranties
made by the Relevant Seller herein not misleading in any material respect. In
addition to the above representations and warranties, MITSUI and NTTCOM hereby
respectively represent and warrant to Buyer as follows.
(a) MITSUI represents and warrants to Buyer that, ▇▇▇▇▇ ▇▇▇▇▇▇,
the Chief Executive Officer of CPP (the "CPP CEO"), whom MITSUI has nominated
pursuant to Article 8.4 of the Shareholders Agreement, and, ▇▇▇▇▇▇ ▇▇▇▇▇, the
Chief Financial Officer of CPP (the
17
"CPP CFO"), whom MITSUI has nominated pursuant to Section 3.1 of the Mitsui
Agreement, (i) have each performed their respective functions and duties and
caused CPP to be operated up to the Effective Date, and will perform their
respective functions and duties and cause CPP to be operated until the Closing
Date, in strict accordance with the Shareholders Agreement, the applicable laws
and regulations of Japan and the Articles of Incorporation and internal rules
and regulations of CPP and (ii) have not taken, or directly or indirectly caused
CPP to take, and will not take, or cause CPP directly or indirectly to take, any
action by which CPP has incurred or will incur any hidden and contingent
liabilities, in each case without (one of the following, "APPROVAL") (x)
referring such action to the Board at a meeting of the Board at which a member
of the Board appointed by Buyer was or is present and voted to approve such
action or (y) such action being approved through the CPP Ringi application
process (in accordance with its rules and procedures), provided that such
application was, or the results of such process were approved by a member of the
Board appointed by Buyer.
(b) NTTCOM represents and warrants to Buyer that, ▇▇▇▇▇▇ ▇▇▇▇▇,
the Chief Information Officer of CPP (the "CPP CIO") whom NTTCOM has nominated
pursuant to Article 3.1 of NTTCOM Agreement (i) has performed his functions and
duties and caused CPP to be operated up to the Effective Date, and will perform
his functions and duties and cause CPP to be operated until the Closing Date, in
strict accordance with the Shareholders Agreement, the applicable laws and
regulations of Japan and the Articles of Incorporation of CPP and (ii) has not
taken, or directly or indirectly caused CPP to take, and will not take, or cause
CPP directly or indirectly to take, any action by which CPP has incurred or will
incur any hidden and contingent liabilities, in each case without Approval.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as follows:
4.1 Authority; No Conflicts; Governmental Consents.
(a) Critical Path is duly organized, validly existing and in
good standing under the laws of the State of California. Buyer Sub is duly
organized and validly existing under the laws of Japan. Both Critical Path and
Buyer Sub have all requisite corporate power and authority to enter into and
perform the covenants in this Agreement and the Collateral Agreements to which
each is a party and to consummate the Transactions. All corporate acts and other
proceedings required to be taken by Critical Path or Buyer Sub to authorize the
execution, delivery and performance of this Agreement and the Collateral
Agreements to which each is a party and the consummation of the Transactions
have been duly and properly taken. This Agreement has been (and the Collateral
Agreements to which Critical Path or Buyer Sub is a party, when executed and
delivered will be) duly executed and delivered by Critical Path or Buyer Sub, as
the case may be, and, assuming the due execution hereof by the other parties
hereto, this Agreement constitutes (and the Collateral Agreements to which
Critical Path or Buyer Sub is a party, when executed and delivered, will
constitute) the valid and binding obligation of Critical Path or Buyer Sub, as
the case may be, enforceable against Critical Path or Buyer Sub in accordance
with its terms.
18
(b) Neither the execution and delivery of this Agreement by
Critical Path or Buyer Sub nor the performance or consummation of the
Transactions by Critical Path or Buyer Sub will give any Person the right to
prevent, delay, or otherwise interfere with any of the Transactions pursuant to
(i) any provision of Critical Path's or Buyer Sub's Organizational Documents,
(ii) any resolution adopted by the board of directors or shareholders of
Critical Path or Buyer Sub, (iii) any Legal Requirement or Order to which
Critical Path or Buyer Sub may be subject, or (iv) any Contract to which
Critical Path or Buyer Sub is a party or by which Critical Path or Buyer Sub may
be bound.
(c) No consent, approval, authorization or permit of, or
registration, declaration, report or filing with, or notice to any Governmental
Entity or any other Person is required to be obtained or made by Critical Path
or Buyer Sub in connection with the execution and delivery of this Agreement,
the Collateral Agreements and the consummation of the Transactions.
4.2 Actions and Proceedings, etc. There is no pending Proceeding that
has been commenced against Critical Path or Buyer Sub and that challenges, or
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Transactions.
4.3 Disclosure. Buyer represents and warrants to the Sellers that,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, previously the Chief Operating Officer and currently the Vice
President of Marketing of CPP whom Buyer has nominated (i) has performed his
functions and duties and caused CPP to be operated up to the Effective Date, and
will perform his functions and duties and cause CPP to be operated until the
Closing Date, in strict accordance with the Shareholders Agreement, the
applicable laws and regulations of Japan and the Articles of Incorporation of
CPP and (ii) has not taken, or directly or indirectly caused CPP to take, and
will not take, or cause CPP directly or indirectly to take, any action by which
CPP has incurred or will incur any hidden and contingent liabilities, in each
case without (x) referring such action to the Board at a meeting of the Board at
which a member of the Board appointed by the Relevant Seller was or is present
and voted to approve such action or (y) such action being approved through the
CPP Ringi application process (in accordance with its rules and procedures),
provided that such application was, or the results of such process were approved
by a member of the Board appointed by the Relevant Seller.
ARTICLE 5
COVENANTS OF THE SELLERS
Each of the Sellers severally and not jointly covenants and agrees as
follows:
5.1 Notice of Changes; Updates.(a) Each Seller shall give Buyer prompt
written notice if such Seller becomes aware of any event, condition, fact or
circumstance: (i) that occurred or existed on or prior to the Effective Date and
that caused or constitutes an inaccuracy in or a breach of any representation,
warranty or covenant made by such Seller under this Agreement and which was
unknown to such Seller on the date of this Agreement; or (ii) that occurs or
arises or exists after the Effective Date and that causes an inaccuracy in or a
breach of any representation, warranty or covenant made by such Seller in this
Agreement.
19
5.2 Non-Solicitation. Each Seller agrees that it shall not, directly or
indirectly, through any officer, employee, director, agent or otherwise,
solicit, initiate or encourage the initiation or inquiries or proposals from,
provide any confidential information to, or participate in any discussions or
negotiations or cooperate with, any Person (other than Buyer and its Affiliates
and officers, employees, representatives and agents) relating to any transaction
involving any sale by such Seller) of CPP's assets, securities or any similar
transaction involving CPP or otherwise facilitate or encourage any effort or
attempt to do or seek any of the foregoing. Each Seller agrees to promptly
advise Buyer of, and communicate to Buyer the terms of, any such inquiry or
proposal such Seller may receive with respect to CPP's assets or securities and
will cease and cause to be terminated any existing activities or negotiations
with any Persons previously conducted with respect to any such inquiry or
proposal.
5.3 Further Assurances. From time to time after the Closing, at the
request of Buyer and for no further consideration, each Seller shall, and shall
cause its affiliates to, execute, acknowledge and deliver such assignments,
transfers, consents and other documents and instruments and take such other
actions as may be reasonably requested to consummate the Transactions, or to
effectuate any action contemplated under this Agreement. This Section 5.4 shall
not obligate any Seller to take any action with respect to any renegotiations of
Mitsui Lease Agreements.
5.4 Complete Copies. Prior to Closing, the Sellers shall ensure that the
following are retained by CPP and made available to Buyer at the offices or
facilities of CPP and shall deliver the following to Buyer to the extent that
(i) such materials are not available in the offices or facilities of CPP or (ii)
the originals of such materials are in the Sellers' possession or in the
possession of any of the Sellers' accountants, attorneys and other third
parties: (a) all material business records, including all financial records,
bank information, leases, deeds, deeds of trust, security interests, permits,
documents evidencing registration of, and applications for, intellectual
property, insurance records, litigation files, customer and supplier
information, employment records and Material Agreements, each in the form in
which each of such documents is in effect, and (b) all original minute books,
ledgers and registers (including the share register), corporate seals and other
corporate records relating to the organization, ownership and maintenance of CPP
that are required to be maintained pursuant to applicable law or customarily
maintained by Japanese companies.
5.5 Conduct Prior to Closing of Sellers. Each Seller commits to Buyer
that, between the date of this Agreement and the Closing such Seller shall not
sell, dispose of, mortgage, pledge or otherwise transfer or encumber any
interest in any of the Shares.
ARTICLE 6
MUTUAL COVENANTS OF THE PARTIES
Each of the Sellers and Buyer covenants and agrees as follows:
6.1 Cooperation. The parties hereto shall use their best efforts in good
faith to perform and fulfill all conditions and obligations to be fulfilled or
performed by them and it hereunder to the end that the Transactions will be
fully and timely consummated. No party shall
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take any action that is intended or could reasonably be expected to cause any
other party to fail to perform and fulfill all conditions and obligations to be
fulfilled or performed, or that is intended or could reasonably be expected to
cause the Transactions not to be fully and timely consummated. Buyer, MITSUI and
NTTCOM shall vote and shall cause its representatives on the Board to vote in
favor of or consent to any and all actions required to be approved by it in
order to consummate the Transactions.
6.2 Confidential Information. For a period of three (3) years following
the Closing Date, each and every party to this Agreement ("RECEIVING PARTY")
shall keep secret and retain in strictest confidence, and shall not use for the
benefit of itself or others, all confidential information relating, in the case
of the Sellers, to the business or operations of CPP, Buyer or any other Seller,
and, in the case of Buyer, to the business or operations of any Seller (the
"CONFIDENTIAL INFORMATION"), including "know-how," trade secrets, customer
lists, details of client or consultant contracts, pricing policies, marketing
plans or strategies, product development techniques or plans, business
acquisition plans, designs and design projects, inventions and research projects
exclusively relating, in the case of the Sellers, to the business or operations
of CPP, Buyer or any other Seller, and, in the case of Buyer, to the business or
operations of any Seller (any of CPP, Buyer or the Sellers, as applicable, the
"DISCLOSING PARTY"), and the Receiving Party shall not disclose such
Confidential Information to anyone outside of the Disclosing Party, except with
the express written consent of the relevant Disclosing Party. After the Closing,
Buyer shall cause CPP not to disclose any Confidential Information of any Seller
to anyone outside of such Seller, without such Seller's express written consent.
"Confidential Information" shall not include any information that (i) is or
becomes generally available and known to the public other than due to a breach
of this Agreement; (ii) is lawfully received from a third party free to disclose
such information to such Receiving Party after due inquiry by the Receiving
Party of any such obligation; (iii) was released without restriction on use or
disclosure pursuant to the approval of the Disclosing Party; (iv) is known or
possessed by the Receiving Party at the time it received the Confidential
Information if the Receiving Party can prove that such information was in its
possession at such time; (v) such Receiving Party can prove that such
information was independently developed by the Receiving Party without the use
of the Confidential Information; or (vi) is required by law, regulation, or
direction of any Governmental Entity to be disclosed by such Receiving Party,
provided that the Receiving Party gives prompt written notice of such
requirement to the Disclosing Party prior to such disclosure and provides
reasonable assistance to the Disclosing Party at their expense in obtaining an
order protecting the information from public disclosure.
6.3 Release.
(a) Each Seller hereby, on behalf of itself and its respective
successors and assigns, fully and forever releases, discharges and covenants not
to ▇▇▇: CPP, Critical Path and Buyer Sub and each such person's partners,
employees, officers, directors, beneficiaries, agents, stockholders, attorneys,
representatives, successors, assigns and heirs, and any parent, subsidiary,
division, affiliated or related companies and their respective predecessors,
successors and assigns (collectively, "BUYER PARTIES"), from or for, as
applicable, any and all sums of money, accounts, claims, demands, contracts,
actions, debts, controversies, agreements, liabilities, obligations, damages and
causes of action whatsoever, of whatever kind or nature, whether known or
unknown, fixed or contingent, or suspected or unsuspected by them, which they
now own, hold,
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have or claim to have, or at any time heretofore owned, held, had or claimed to
have, including specifically but not exclusively and without limiting the
generality of the foregoing, any and all claims, known or unknown, suspected or
unsuspected by reason of any matter or thing alleged or referred to, or directly
or indirectly or in any way connected with or arising out of or which may
hereafter be claimed to arise out of this Agreement, the Collateral Agreements
and the Transactions or out of the relationship among the Sellers and Critical
Path as shareholders of CPP. Notwithstanding the foregoing, the Sellers do not
release Buyer Parties from covenants, obligations, or liabilities of Buyer
Parties explicitly undertaken pursuant to this Agreement.
(b) Critical Path and Buyer Sub hereby, on their own behalf and,
after the Closing, on behalf of CPP and their and CPP's respective successors
and assigns, fully and forever release, discharge and covenant not to ▇▇▇, and
after the Closing shall cause CPP to fully and forever release, discharge and
covenant not to ▇▇▇: each Seller and each of such Seller's partners, employees,
officers, directors, beneficiaries, agents, stockholders, attorneys,
representatives, successors, assigns and heirs, and any parent, subsidiary,
division, affiliated or related companies and their respective predecessors,
successors and assigns (collectively, "SELLER PARTIES"), from or for, as
applicable, any and all sums of money, accounts, claims, demands, contracts,
actions, debts, controversies, agreements, liabilities, obligations, damages and
causes of action whatsoever, of whatever kind or nature, whether known or
unknown, fixed or contingent, or suspected or unsuspected by them, which they
now own, hold, have or claim to have, or at any time heretofore owned, held, had
or claimed to have, including specifically but not exclusively and without
limiting the generality of the foregoing, any and all claims, known or unknown,
suspected or unsuspected by reason of any matter or thing alleged or referred
to, or directly or indirectly or in any way connected with or arising out of or
which may hereafter be claimed to arise out of this Agreement, the Collateral
Agreements and the Transactions or out of the relationship among the Sellers and
Critical Path as shareholders of CPP. Notwithstanding the foregoing, Critical
Path, Buyer Sub and CPP do not release the Seller Parties from covenants,
obligations, or liabilities of the Seller Parties explicitly undertaken pursuant
to this Agreement.
6.4 Publicity. The Sellers and Buyer agree that no public release or
announcement concerning the Transactions shall be issued by a party without the
prior written consent of the other parties.
6.5 Access to Information. After the Closing, upon reasonable notice,
the parties agree to furnish or cause to be furnished to each other and their
representatives, employees, counsel and accountants access, during normal
business hours, to such information (including records pertinent to the CPP
Business) and assistance relating to the CPP Business as are reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any tax returns, reports or forms or the defense of any tax claim or
assessment.
6.6 Expenses. All costs and expenses incurred in connection with this
Agreement and the Transactions will be paid by the party incurring such costs
and expenses, whether or not the Transactions are consummated, except as
otherwise expressly provided herein; provided, however; that the parties shall
cause CPP not to incur any non de minimis out-of-pocket expenses in connection
with this Agreement.
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ARTICLE 7
NON-SOLICITATION OF CPP CUSTOMERS
7.1 Non-Solicitation Agreement.
(a) For and in consideration of the Transactions, with respect
to the six (6) month period beginning on the Closing Date (the "NON-SOLICITATION
PERIOD"), MITSUI and NTTCOM severally hereby covenant as set forth in this
Section 7.1.
(b) MITSUI hereby covenants with Buyer that it shall cause its
Information Business Group and MITSUI ASSOCIATE & TELEPARK CORP., an Affiliate
of MITSUI ("MTP"), not to solicit or entice the current customers of CPP
described in Schedule 7.1 ("CPP CUSTOMERS") to use such services similar to and
competitive with the CPP Services as the Information Business Group of Mitsui or
MTP may provide.
(c) NTTCOM hereby covenants with Buyer that it shall cause the
Solution Business Division of NTTCOM not to solicit or entice any CPP Customer
to use such services similar to and competitive with CPP Services as the
Solution Business Division of NTTCOM may provide.
(d) If MITSUI or NTTCOM are requested to do so by CPP, MITSUI or
NTTCOM, as applicable, will use commercially reasonable efforts to assist CPP in
CPP's promotion of the CPP Services. If CPP shall have successfully obtained new
customers thanks to MITSUI's or NTTCOM's assistance, Buyer shall cause CPP to
pay to either MITSUI or NTTCOM, as applicable, in consideration of such
assistance a commission at the rate of five percent (5%) of CPP's monthly gross
revenue from such customers for the period of one (1) year from the date when
those customers started using the CPP Services. Buyer shall cause CPP to pay the
earned commission to MITSUI or NTTCOM, as applicable, within two (2) weeks after
receipt by CPP of the related payments from the applicable customers.
(e) During the Non-solicitation Period, MITSUI shall cause all
of its divisions which are using CPP Services at the Effective Date to continue
to use the CPP Services, provided that quality and functions of CPP Services
remains equivalent to or better than the quality and functions of the CPP
Services as provided on the Effective Date.
(f) During the Non-solicitation Period, NTTCOM shall cause its
Platform Technology Development Division, which is using CPP Services at the
Effective Date, to continue to use the CPP Services, provided that quality and
functions of CPP Services remains equivalent to or better than the quality and
functions of the CPP Services as provided on the Effective Date.
7.2 Non-Solicitation Covenants: Scope and Choice of Law. It is the
understanding of the parties that the scope of the covenants contained in this
ARTICLE 7, both as to time and area covered, are necessary to protect the rights
of Buyer and CPP and the goodwill that is a part of the CPP Business. It is the
intention of Buyer, MITSUI and NTTCOM that these covenants as set forth in
Section 7.1 be enforced to the greatest extent (but to no greater extent than
would be permitted under the law of Japan) in time, area, and degree of
participation as is permitted by the
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law of that jurisdiction whose law is found to be applicable to any acts in
breach of these covenants. If any part of such covenant is held invalid, void or
unenforceable by any court of competent jurisdiction, such invalidity, voidness,
or unenforceability shall in no way render invalid, void, or unenforceable any
other part of such covenant or any separate covenants not declared invalid, void
or unenforceable; and this Agreement shall in such case be construed as if the
invalid, void, or unenforceable provisions were omitted.
7.3 Non-Solicitation Covenants: Assignment by Buyer. Buyer, MITSUI and
NTTCOM agree that the covenants of MITSUI and NTTCOM set forth in this ARTICLE 7
may be assigned by Buyer to any Person to whom the CPP Business is transferred
by the sale or transfer of CPP's Shares, assets or otherwise, provided that, in
the event that such sale or transfer results in a change in control of CPP other
than through a change of control or reorganization of Buyer (or any successor),
the prior written consent of MITSUI and NTTCOM, which consent shall not be
unreasonably withheld, shall be required to effect the assignment of such
covenants. It is the intention of Buyer, MITSUI and NTTCOM that these covenants
of each Seller shall inure to the benefit of any Person that may succeed to the
CPP Business (as acquired by Buyer under this Agreement) with the same force and
effect as if these covenants were made directly with such successor. To the
extent required by Japanese law, Buyer shall procure a written agreement from
such buyer, assignee, transferee or other acquiring entity in which said entity
agrees to be bound by the relevant terms and conditions of this Agreement.
7.4 Non-Solicitation Covenants: Remedy for Breach. Buyer, MITSUI and
NTTCOM agree that, in the event of any breach of the covenants in Section 7.1 by
MITSUI or NTTCOM, such breaching Seller shall be liable to CPP for liquidated
damages which shall be calculated in accordance with the following formula:
(i) CPP's May 2002 Monthly Gross Revenue (as defined below) for
each CPP Customer with respect to which the covenants set forth in Section 7.1
have been breached, multiplied by (ii) the number of months of the remaining
Non-solicitation Period from the first month in which CPP receives less than the
May 2002 Monthly Gross Revenue from such customer, multiplied by (iii) three
(3). For the purpose of this ARTICLE 7, the "MAY 2002 MONTHLY GROSS REVENUE"
shall mean the amount of gross revenue which CPP is entitled to receive from the
relevant customer in consideration of the provision of CPP Services during May
2002.
ARTICLE 8
TAX REPRESENTATIONS AND COVENANTS
MITSUI represents, warrants and covenants to Buyer, on behalf of MITSUI
and not on behalf of any other Seller, as of the Effective Date and as of the
Closing Date as follows:
8.1 Tax Definitions. The following terms, as used herein, have the
following meanings:
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"PRE-CLOSING TAX PERIOD" means any Tax period ending on or
before the close of business on the Closing Date or, in the case of any Tax
period which includes, but does not end on, the Closing Date, the portion of
such period up to and including the Closing Date.
"TAX" means (a) any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
corporate excise, severance, stamp, occupation, premium, property, environmental
or windfall profit tax, custom, duty or other tax, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest,
penalty, addition-to-tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such tax
(a "TAXING AUTHORITY"), (b) any liability of CPP for the payment of any amount
of the type described in clause (a) above as a result of being a member of an
affiliated, consolidated, combined or unitary group, and (c) any liability of
CPP for the payment of any amount as a result of being party to any Tax Sharing
Agreement or with respect to the payment of any amounts of the type described in
clauses (a) or (b) above as a result of any express or implied obligation to
indemnify any other Person.
"TAX ASSET" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction carryover or any
other credit or tax attribute which could reduce Taxes (including, without
limitation, credits or other tax attributes which could reduce alternative
minimum Taxes).
"TAX SHARING AGREEMENT" means any existing Tax sharing
agreements or arrangements (whether or not written) binding CPP and any other
agreement or arrangement (including any arrangement required or permitted by
law) which (a) requires CPP to make any Tax payment to or for the account of any
other Person, (b) affords any other Person to utilize any Tax Asset of CPP to
reduce such other Person's Taxes, (c) affords CPP the right to utilize any Tax
Asset of any other Person to reduce any Taxes of CPP, (d) requires or permits
the transfer or assignment of income, revenues, receipts, or gains, or (e)
requires or permits CPP to determine its Tax liability by taking into account or
by reference to the Tax liability, income, revenues, receipts or gains of any
other Person.
8.2 Tax Representations and Covenants. Except as set forth on Schedule
8.2(a), to the Knowledge of the CPP Management:
(a) all Tax returns, statements, reports and forms (including
estimated tax or information returns and reports) required to be filed with any
Taxing Authority with respect to any Pre-Closing Tax Period by or on behalf of
CPP (collectively, the "RETURNS") have been or will be timely filed when due in
accordance with all applicable laws, except where the failure to file would not
subject CPP to any liabilities (including any interest, penalties or
addition-to-tax);
(b) as of the time of filing, the Returns correctly reflected
(and, as to any Returns not filed as of the Effective Date, will correctly
reflect) in all material respects the facts regarding the income, business,
assets, operations, activities and status of CPP and any other information, as
required to be shown therein;
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(c) all Taxes due and payable (whether shown on or reportable on
the Returns) have been timely paid, or withheld and remitted to the appropriate
Taxing Authority;
(d) the charges, accruals and reserves for Taxes with respect to
CPP for any Pre-Closing Tax Period (including any Pre-Closing Tax Period for
which no Return has yet been filed) reflected on the April 30 Balance Sheet
(excluding any provision for deferred income taxes), as adjusted for operations
and transactions in the ordinary course of business since the date of the April
30 Balance Sheet, are adequate to cover such Taxes;
(e) CPP is not delinquent in the payment of any Tax nor has it
requested any extension of time within which to file any Return, which Return
has not yet been filed;
(f) CPP has not granted any extension or waiver of the statute
of limitations period applicable to any Return, which period (after giving
effect to such extension or waiver) has not yet expired;
(g) there is no Proceeding now pending or, to the knowledge of
CPP, threatened against or with respect to CPP in respect of any Tax or Tax
Asset;
(h) CPP has not filed any request for ruling or determination of
any Taxing Authority in respect of any Tax which has been denied during the past
five years or which is pending;
(i) CPP does not own any interest in real property in any
jurisdiction in which a Tax is imposed on the transfer of a controlling interest
in an entity that owns any interest in real property;
(j) CPP has not been a member of an affiliated, consolidated,
combined or unitary group and is not liable for the taxes of any other Person;
(k) all information set forth in the notes to the Financial
Statements relating to Tax matters is true and complete;
(l) CPP is not a party to any Tax Sharing Agreement or is
otherwise under any obligation to pay any third party an amount with respect to
any Tax;
(m) since the date of the April 30 Balance Sheet, neither CPP
nor any Affiliate of CPP has, to the extent it may affect or relate to CPP, made
or changed any tax election, changed any annual tax accounting period, adopted
or changed any method of tax accounting, filed any amended Return, entered into
any closing agreement, settled any Tax claim or assessment, surrendered any
right to claim a Tax refund, or consented to any extension or waiver of the
limitation period applicable to any Tax claim or assessment, if any such action
would have the effect of increasing the Tax liability or decreasing any Tax
Asset of CPP;
(n) since the date of the April 30 Balance Sheet, CPP has not
reserved any amount for or made any payment of Taxes to any other Person or any
Taxing Authority except for such Taxes as were due or payable to the Taxing
Authority or had been properly estimated in accordance with applicable law as
applied in a manner consistent with past practices of CPP; and
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(o) CPP is in compliance with the terms and conditions of any
applicable Tax exemptions, Tax agreements or Tax orders of any government to
which it may be subject or which may have claimed, and the transactions
contemplated by this Agreement will not have any adverse effect on such
compliance.
ARTICLE 9
EMPLOYEE BENEFITS AND EMPLOYEE ARRANGEMENTS
9.1 Seconded Employees.
(a) On or prior to Closing, MITSUI shall terminate the Mitsui
Secondment Agreements (effective as of Closing) or other secondment arrangements
with each employee or consultant of CPP listed on Schedule 9.1(a) (the "MITSUI
SECONDED EMPLOYEES") and shall obtain an appropriate settlement and release
agreement from each such Mitsui Seconded Employee to protect CPP from claims
that may be brought by such Mitsui Seconded Employee against CPP.
(b) On or prior to Closing, NTTCOM shall terminate the NTTCOM
Secondment Agreements (effective as of closing) or other secondment arrangements
with each employee or consultant of CPP listed on Schedule 9.1(b) (the "NTTCOM
SECONDED EMPLOYEES") and shall obtain an appropriate settlement and release
agreement from each such NTTCOM Seconded Employee to protect CPP from claims
that may be brought by such NTTCOM Seconded Employee against CPP.
9.2 Discharged Employees.
(a) Prior to the termination of any employee of CPP within sixty
(60) days following Closing (any employee terminated during such period, a
"DISCHARGED EMPLOYEE"), Buyer shall cause CPP to use its best efforts to
negotiate and enter into a severance settlement agreement on terms the same as
or better than (from the employee's standpoint) those set forth on Schedule 9.2
(the "DISCHARGED EMPLOYEE SETTLEMENT AGREEMENTS") with such Discharged Employee.
(b) In the event that any Discharged Employee seeks severance or
wrongful termination remedies from CPP, Buyer, MITSUI or NTTCOM, or any of their
Affiliates, past, present and future directors, officers, employees, agents or
representatives (together, the "EMPLOYEE CLAIM INDEMNITEE"), other than with
respect to any breach by Buyer or CPP of any Discharged Employee Settlement
Agreement, Buyer, MITSUI and NTTCOM agree to indemnify the other Employee Claim
Indemnitees against Indemnifiable Losses relating to, resulting from or arising
out of the employment or termination of the Discharged Employees, in each case
in accordance with its Pro Rata Share. The "PRO RATA SHARE" of each of Buyer,
MITSUI and NTTCOM shall be determined by dividing (x) the number of Shares held
by such person prior to Closing by (y) the number of shares held by Buyer,
MITSUI and NTTCOM together prior to Closing. Such indemnification shall be
provided in accordance with the procedures set forth in Section 10.4.
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ARTICLE 10
INDEMNIFICATION
10.1 Survival. The representations and warranties of the parties shall
survive the execution and delivery hereof and the delivery of all of the
documents executed in connection herewith and shall continue in full force and
effect after the Effective Date and after the Closing Date and shall remain in
full force and effect until the first anniversary of the Closing Date (the
"SURVIVAL DATE"), provided, however, that (a) all representations and warranties
set forth in ARTICLE 8 shall survive until thirty (30) days after expiration of
all applicable statutes of limitations; and (b) any claim for indemnification
based upon a breach of any such representation or warranty and asserted prior to
the Survival Date by written notice in accordance with Section 10.4 shall
survive until final resolution of such claim. Any covenants, agreements or
undertakings of a party contained herein or made pursuant hereto that by their
terms are to be performed after the Closing Date, shall survive until fully
performed.
10.2 Indemnification by the Sellers. Each Seller (the "RELEVANT SELLER")
shall severally indemnify, defend and hold harmless CPP, Critical Path, Buyer
Sub, their Affiliates and each of their past, present and future directors,
officers, employees, agents and representatives (together, the "BUYER
INDEMNITEES") from and against, and pay or reimburse the Buyer Indemnitees for,
any and all losses, liabilities, obligations, claims, damages, civil or criminal
penalties and fines, out-of-pocket costs and expenses, including any attorneys'
fees and expenses, without duplication ("INDEMNIFIABLE LOSSES") relating to,
resulting from or arising out of:
(a) any inaccuracy in, or breach of, any representation or
warranty by the Relevant Seller contained herein, in any Collateral Agreement or
in any certificate delivered pursuant to this Agreement;
(b) any breach by the Relevant Seller of any covenant, agreement
or undertaking by the Relevant Seller contained in this Agreement, the
Collateral Agreements or in any certificate delivered pursuant to this
Agreement; and
(c) any claim by a Seconded Employee of the Relevant Seller for
any severance payment or compensation or employee benefits due to such Seconded
Employee after the Closing Date.
10.3 Indemnification by Buyer. Buyer shall indemnify, defend and hold
harmless the Sellers, their Affiliates and each of their past, present and
future directors, officers, employees, agents and representatives (together, the
"SELLER INDEMNITEES") from and against, and pay or reimburse the Seller
Indemnitees for, any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(a) any inaccuracy in, or breach of, any representation or
warranty by Buyer (including Buyer Sub) contained herein, in any Collateral
Agreement or in any certificate delivered pursuant to this Agreement; and
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(b) any breach by Buyer of any covenant, agreement or
undertaking by Buyer (including Buyer Sub) contained in this Agreement, the
Collateral Agreements or in any certificate delivered pursuant to this
Agreement.
10.4 Procedures Relating to Indemnification.
(a) In order for an indemnified party to be entitled to any
indemnification provided for under this ARTICLE 10 in respect of, arising out of
or involving a claim or demand made by any Person, firm, governmental authority
or corporation against the indemnified party (a "THIRD-PARTY CLAIM"), such
indemnified party must notify the indemnifying party in writing, and in
reasonable detail, of the Third-Party Claim as promptly as reasonably possible
after receipt by such indemnified party of written notice of the Third-Party
Claim but no later than the applicable Survival Date. The indemnified party
shall deliver to the indemnifying party, within five Business Days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Third-Party Claim. If a Third-Party Claim is made against an indemnified party,
the indemnifying party, promptly upon receipt of notice of such Third-Party
Claim, will acknowledge its obligation to indemnify the indemnified party
therefor.
(b) In order for an indemnified party to be entitled to any
indemnification provided for under this ARTICLE 10 in respect of, arising out of
or involving a claim or demand made by the indemnified party (a "DIRECT CLAIM"
and, together with a Third-Party Claim, a "Claim"), the indemnified party must
notify the indemnifying party in reasonable detail, of the Direct Claim as
promptly as reasonably possible after the indemnified party becomes aware of
such claim but no later than the applicable Survival Date. The indemnified party
shall deliver to the indemnifying party, within five Business Days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Direct Claim. If a Direct Claim is made, the indemnifying party, promptly upon
receipt of notice of such Direct Claim, will acknowledge its obligation to
indemnify the indemnified party therefor.
(c) In connection with any claim giving rise to indemnity
hereunder or resulting from or arising out of any claim by a Person who is not a
party, the indemnifying party at its sole cost and expense may, upon written
notice to the indemnified party, assume the defense of any such claim if the
indemnifying party acknowledges to the indemnified party in writing its
obligation to indemnify the indemnified party with respect to all elements of
such claim, and thereafter diligently conducts the defense thereof with counsel
reasonably acceptable to the indemnified party. The indemnified party shall be
entitled to employ counsel separate from counsel employed by the indemnifying
party in any such action and to participate therein, but the fees and expenses
of such counsel employed by the indemnified party shall be at their expense
unless counsel for the indemnified party shall have advised that it is
reasonably likely that the indemnified party may raise a defense or claim that
is inconsistent with any defense or claim available to the indemnifying party,
in which case such fees and expenses shall be borne by the indemnifying party.
In no event shall the indemnifying party consent to the entry of any judgment or
enter into any settlement (or have any liability for losses with respect
thereto) which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to all indemnified parties of a release from all
liability with respect to such claims.
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(d) If the indemnifying party does not assume the defense of
such claim within thirty (30) days after written notice thereof from the
indemnified party or does not thereafter diligently conduct such defense in a
manner acceptable to the indemnified party, the indemnified party may defend
against such claim in such manner as they may deem appropriate and at the sole
cost and expense of the indemnifying party.
10.5 Limitations.
(a) The right to indemnification or other remedy based on the
representations, warranties, covenants and obligations in this Agreement will
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time whether before or after the
Effective Date or the Closing Date, with respect to, the accuracy or inaccuracy
of or compliance with any such representations, warranties, covenants and
obligations. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification or other
remedy based on such representations, warranties, covenants and obligations.
(b) The foregoing indemnification provisions are in addition to,
and not in derogation of, any statutory or common law remedy any party may have
for breach of representation, warranty, or covenant.
(c) Notwithstanding anything herein to the contrary, no Seller
shall be obligated to indemnify the Buyer Indemnitees or any other Seller
Indemnitees under this ARTICLE 10 to the extent that the aggregate of all
Indemnifiable Losses of the Buyer Indemnitees and the other Seller Indemnitees,
including all Indemnifiable Losses arising under ARTICLES 7 or 9, exceeds the
portion of the Purchase Price received by such Seller (or, in the case of
MITSUI, by MITSUI, NEC and Mitsui U.S.A.) (with respect to each Seller, the
"SELLER'S INDEMNIFICATION Cap"); provided, however, that the Seller's
Indemnification Cap shall not apply to any indemnification obligation of such
Seller (x) arising out of, relating to or resulting from fraud or intentional
misrepresentation by such Seller; (y) arising out of, relating to or resulting
from a breach of any of such Seller's representations, warranties or covenants
in ARTICLE 8 or Section 6.2; or (z) if the Transaction does not close.
(d) Notwithstanding anything herein to the contrary, Buyer shall
not be obligated to indemnify the Seller Indemnitees under this ARTICLE 10 to
the extent that the aggregate of all Indemnifiable Losses of the Seller
Indemnitees, including all Indemnifiable Losses arising under ARTICLE 9, exceeds
the Purchase Price (the "BUYER'S INDEMNIFICATION CAP"); provided, however, that
the Buyer's Indemnification Cap shall not apply to any Buyer indemnification
obligation (x) arising out of, relating to or resulting from fraud or
intentional misrepresentation by Buyer (including Buyer Sub); (y) arising out
of, relating to or resulting from a breach of any of Buyer's (including Buyer
Sub's) representations, warranties or covenants in Section 6.2; or (z) if the
Transaction does not close.
10.6 No Contribution. Each Seller waives, and acknowledges and agrees,
that he, she, it and they will not have and will not exercise or assert (or
attempt to exercise or assert), any right of contribution, right of subrogation,
right of indemnity or other similar right or remedy
30
against CPP, with respect to any action or failure to act by CPP occurring on or
prior to the Closing or in connection with any actual or alleged breach of any
representation, warranty, covenant or other obligation or agreement set forth in
this Agreement or any certificate delivered in connection with this Agreement.
ARTICLE 11
TERMINATION
11.1 Bases for Termination. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the Transactions abandoned
at any time prior to the Closing Date:
(a) by mutual written consent of the parties hereto;
(b) by Buyer if any of the conditions set forth in Section 2.5
shall have become incapable of fulfillment, and shall not have been waived by
Buyer;
(c) by the Sellers if any of the conditions set forth in Section
2.6 shall have become incapable of fulfillment, and shall not have been waived
by the Sellers;
(d) by Buyer or the Sellers if the Closing does not occur on or
prior to July 31, 2002;
provided, however, that the party seeking termination pursuant to clause (b),
(c) or (d) is not in material breach of any of its representations, warranties,
or in material breach of any of its covenants or agreements contained in this
Agreement.
11.2 Notice of Termination, Return of Documents. In the event of
termination by the Sellers, on the one hand, or by Buyer, on the other, pursuant
to this ARTICLE 11, written notice thereof shall forthwith be given to the other
party and the Transactions shall be terminated, without further action by any
party.
11.3 Effect of Termination. If this Agreement is terminated and the
Transactions are abandoned as described in this ARTICLE 11, this Agreement shall
become void and of no further force and effect, except for the provisions of (a)
Section 6.2 (Confidential Information), (b) Section 6.6 (Expenses), (c) Section
6.2 (Publicity), and (d) this Section 11.3. Nothing in this ARTICLE 11 shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or to impair the right of any party
to compel specific performance by another party of its obligations under this
Agreement.
ARTICLE 12
GENERAL PROVISIONS
12.1 Assignment. Except as set forth below or as otherwise provided in
this Agreement, this Agreement and the rights and obligations hereunder shall
not be assignable or transferable by any of Buyer or the Sellers without the
prior written consent of each of the other
31
parties hereto, which consent shall not be unreasonably withheld. This Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns. To this end, to the extent
required by Japanese law, the relevant party shall procure a written agreement
from such assignee, transferee or other acquiring entity in which said entity
agrees to be bound by the relevant terms and conditions of this Agreement.
12.2 No Third-Party Beneficiaries. Except for Persons entitled to
indemnification under ARTICLE 10 hereof, this Agreement is for the sole benefit
of the parties hereto, and nothing herein express or implied shall give or be
construed to give to any Person or entity, other than the parties hereto, any
legal or equitable rights hereunder, including any right to enforce any
obligations of any party hereto.
12.3 Amendments; Waiver. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by each party hereto.
12.4 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party, granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
12.5 Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
by prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when delivered by hand, telexed, cabled or telecopied, three days
after mailing (one Business Day in the case of express mail or overnight courier
service), as follows:
(i) if to Buyer or Buyer Sub:
Critical Path, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to a Seller:
32
if to MITSUI:
Mitsui & Co., Ltd.
▇-▇ ▇▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ 100-0004
Attention: General Manager, Media Business Division
Facsimile: (▇▇) ▇▇▇▇-▇▇▇▇
if to Mitsui U.S.A.:
Mitsui & Co. (U.S.A.), Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇-▇▇▇▇
Attention: General Manager, Electronics &
Information Business Dept.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to NTTCOM:
NTT Communications Corporation
NISHI-SHINBASHI ▇▇▇▇.▇ ▇▇▇▇▇
▇▇-▇, ▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ 105-0003
Attention: Executive Manager, Manufacturing &
Supply Chain Sales Department,
Solution Business Division
Facsimile: (▇▇) ▇▇▇▇-▇▇▇▇
if to NEC:
NEC Corporation
▇▇-▇ ▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
Attention: Department manager, 4th Sales Department
Transportation & Service Industries
Solutions Division
Facsimile: (▇▇) ▇▇▇▇-▇▇▇▇
12.6 Interpretation. The headings contained in this Agreement, in any
Exhibit, Appendix or Schedule hereto and in the table of contents to this
Agreement, are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
12.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
12.8 Severability. If any provision of this Agreement or the application
of any such provision to any Person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
33
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Japan applicable to agreements made and to be
performed entirely within Japan, without regard to the conflicts of law
principles of Japan.
12.10 Dispute Forum. If any dispute shall arise in respect of or in
connection with this Agreement, the parties hereto shall try to amicably settle
it through good-faith deliberation among the parties hereto. Shall such dispute
not be amicably settled within three (3) months after the date of occurrence
thereof, it shall be finally settled through arbitration conducted in English in
Tokyo, Japan in accordance with the rules of at the Japan Commercial Arbitration
Association. The costs of the arbitration, including any Japanese Commercial
Arbitration Association administration fee, the arbitrator's fee, and costs of
the use of facilities during the hearings, shall be borne equally by the parties
to the arbitration. Attorneys' fees may be awarded to the prevailing or most
prevailing party at the discretion of the arbitrator. The arbitrator shall not
have any power to alter, amend, modify or change any of the terms of this
Agreement. The award rendered therein shall be final and binding upon the
parties hereto. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
12.11 Exhibits and Schedules. All Exhibits, Appendices and Schedules
annexed hereto or referred to herein that are delivered concurrently with the
signing of this Agreement are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Inclusion of any matter in any
Schedule does not imply that such matter would, under the provisions of this
Agreement, have to be included in such Schedule. If any event, condition, fact
or circumstance that is required to be disclosed in any Schedule hereto would
require a change to such Schedule if the Schedule were dated as of the date of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Sellers shall promptly deliver to Buyer an update to the
Schedule specifying such change and shall use its best efforts to remedy same,
as applicable; provided, however, that no such update shall be deemed to
supplement or amend the Schedule attached hereto for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
the Sellers in this Agreement or (ii) determining whether any of the conditions
set forth in ARTICLE 2 have been satisfied.
12.12 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and, except to the extent specifically set forth herein, supersedes all
prior agreements and understandings relating to such subject matter.
[The remainder of this page has been intentionally left blank.
The next page is the signature page.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
CRITICAL PATH, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name:
-----------------------------------
Title:
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CRITICAL PATH JAPAN K.K.
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
MITSUI & CO., LTD.
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
MITSUI & CO. (U.S.A.), INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NTT COMMUNICATIONS CORPORATION
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NEC CORPORATION
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------