Exhibit 4(v)
-------------------------------------------------------------------------------
SHARE SALE AND PURCHASE AGREEMENT
-------------------------------------------------------------------------------
dated as of
February 3, 2004
among
NEC Electronics Corporation,
NEC Yamagata, Ltd.,
J&R Holding Ltd.,
and
Advanced Semiconductor Engineering, Inc.
SHARE SALE AND PURCHASE AGREEMENT
THIS SHARE SALE AND PURCHASE AGREEMENT is made as of the 3rd day of February,
2004 among
NEC Yamagata, Ltd., a company established under the laws of Japan, having its
principal place of business at 1863 Iryuuda, Takahata-machi, Higashi
Okitama-gun, Yamagata, Japan, and a wholly-owned subsidiary of NECEL ("NECY");
NEC Electronics Corporation, a company established under the laws of Japan,
having its principal place of business at ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇-▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("NECEL", and together with NECY, the "Seller
Parties");
Advanced Semiconductor Engineering, Inc., a company established under the laws
of Taiwan, having its principal place of business at ▇▇. ▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ Export Processing Zone, Kaohsiung, Taiwan ("ASE"); and
J&R Holding Ltd., a company established under the laws of Bermuda, having its
principal place of business at Canon's Court, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇
▇▇, ▇▇▇▇▇▇▇, and a wholly-owned subsidiary of ASE (the "Buyer", and together
with ASE, the "Buyer Parties").
The Seller Parties and the Buyer Parties are also hereinafter referred to
collectively as the "Parties", and each of them individually as a "Party".
W I T N E S S T H
WHEREAS, NECY intends to, by way of company split (kaisha bunkatsu) under the
Commercial Code, establish the Company as a wholly-owned subsidiary and transfer
the Business to the Company on and subject to the terms of this Agreement; and
WHEREAS, NECY wishes to sell, and the Buyer wishes to acquire, the entire issued
shares in the Company on and subject to the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein and for
other valuable consideration, the Parties agree as follows:
A G R E E M E N T
1. Definitions and Interpretation
1.1 Definitions
In this Agreement where the context admits:
"Adjustment Dispute Notice" shall have the meaning as specified in
Clause 5.1(b).
"Affiliate" of a specified Person means any Person that controls, is
controlled by or is under common control with such specified Person. For
purposes of this definition, "control" shall mean the possession
(directly or indirectly) of power to direct or cause the direction of
1
management or policies of a Person, whether through ownership of
securities or other ownership interests, by Contract or otherwise.
"Approval" of a Person shall mean any consent, approval, authorization,
waiver, grant, concession, license, permit, exemption or order of,
registration, certificate, declaration or filing with, or report or
notice to, such Person.
"Benefit Plan" shall mean any plan, Contract, policy or procedure under
which any of the following benefits are provided to applicable employees:
health, welfare, unemployment benefits, bonus or other incentive
compensation, pensions, profit sharing, deferred compensation, stock
option or other equity compensation, retirement, medical, dental,
severance pay, lay off or reduction in force, change in control, sick
pay, vacation pay, salary continuation, retainer, leave of absence,
disability, educational assistance, service award, employee discount,
fringe benefit and similar plans, arrangements, policies or practices.
"Book Equity Value" shall have the meaning as specified in Clause 4.1.
"Business" means the semiconductor assembly and test operations of NECY
conducted at the Facilities, exclusive of those related to compound
semiconductor devices, and the assets and rights and Liabilities of NECY
in connection therewith (but excluding the Excluded Liabilities, for
which the Company shall have no Liability).
"Business Assets" shall mean all assets of NECY of every kind and nature
that are principally used in the conduct of the Business. Except for
those Business Assets otherwise agreed between the Parties in writing,
the Business Assets will be transferred to the Company pursuant to the
Company Split.
"Business Day" means any day except (a) Saturday or Sunday, or (b) any
other day on which commercial banks in Tokyo, Japan are closed for
ordinary banking business.
"Business Tax Returns" shall have the meaning as specified in Clause
19(a) of Schedule 8.2.
"Buyer Indemnified Party" shall have the meaning as specified in Clause
14.1.
"Buyer Party Warranties" means the representations and warranties of the
Buyer Parties as set forth in Schedule 8.3 and in the certificate of the
Buyer Parties referenced in Clause 6.1(d).
"Charter Documents" of any Person shall mean such Person's articles of
incorporation, by laws, certificate of formation or equivalent governing
or organizational documents.
"Claim Amount" shall have the meaning as specified in Clause 14.4.
"Company" means a Japanese corporation which will be established under
the Commercial Code as a wholly-owned subsidiary of NECY as a result of
the Company Split and which will consequently assume the Business from
NECY in accordance with this Agreement.
"Company Split" means the company split (kaisha bunkatsu) transaction
under the Commercial Code, which will be conducted as a draw down split
(butteki bunkatsu), and as a result of which the Company will be
established and the Company will assume the Business from NECY in
accordance with this Agreement.
"Company Split Date" means the date on which the Company Split becomes
effective under the Commercial Code, which is anticipated to occur on May
1, 2004 (subject to change as agreed by ASE and NECY).
2
"Company Split Plan" means a company split plan (bunkatsu keikakusho) of
NECY with regard to the Company Split, which shall be prepared in
accordance with Clause 3.1.
"Commercial Code" means the Commercial Code in Japan (1899, March 9, Law
No. 48, as amended).
"Completion" means completion of the sale and purchase of the Shares in
accordance with Article 7 of this Agreement.
"Completion Date" means the day on which Completion takes place, which is
anticipated to occur on May 31, 2004 (subject to change as agreed by ASE
and NECY).
"Completion Date Net Worth" means the difference between the amount of
total assets and the amount of total Liabilities (including the Seller
Loan and the Working Capital Loan, both of which will be paid at
Completion in accordance with Clause 7.4(b)) of the Company set forth on
the Final Completion Date Balance Sheet, which shall be prepared in
accordance with GAAP and practices consistently applied in the
preparation of the Estimated Completion Date Balance Sheet.
"Confidential Information" shall have the meaning as specified in Clause
16.1.
"Contract" means any contract, agreement, lease, commitment, arrangement,
undertaking, practice, understanding or authorization, in each case
whether or not in writing.
"Damages" shall have the meaning as specified in Clause 14.1.
"Deferred Tax Assets" shall have the meaning as specified in Clause
3.2(c).
"Disclosing Party" shall have the meaning as set out in Clause 16.1.
"Dispute" means any controversy, claim or dispute of whatever nature
arising among the Parties with respect to the subject matter of this
Agreement, whether such claim is based on rights, privileges or interests
recognized by or based upon statute, contract, tort, common law or
otherwise.
"Encumbrance" means any mortgage, charge, pledge, lien, assignment,
hypothecation, encumbrance, security interest (including any created by
Law), or other security agreement or arrangement.
"Environmental Claim" means any claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or responsibility for
damages (punitive or otherwise), cleanup, removal, remedial or response
costs, restitution, civil or criminal penalties, injunctive relief, or
other type of relief, resulting from or based upon (a) the presence,
placement, discharge, emission or release (including intentional and
unintentional, negligent and non negligent, sudden or non sudden,
accidental or non accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from any
property, whether or not owned by such person, or (b) any other
circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.
"Environmental Laws" means Basic Environment Law (kankyo kihon ho)
(November 19, 1993, Law No. 91, as amended), Air Pollution Control Law
(taiki osen boshi ho) (June 10, 1968, Law No. 97, as amended), Water
Pollution Control Law (suishitsu odaku boshi ho)
3
(December 25, 1970, Law No. 138, as amended), Noise Regulation Law (so-on
kisei ho) (June 10, 1976, Law No. 64, as amended), Vibration Regulation
Law (shindo kisei ho) (June 10, 1968, Law No. 98, as amended), Soil
Contamination Control Law (February 15, 2003, as amended) and Ground
Pollution Control Law (dojo osen taisaku ho) (May 29, 2002, Law No. 53,
as amended) and other Laws relating to pollution, protection of the
environment, natural resources, or human health and safety.
"Environmental Liability" means any Liability relating to or arising out
of an actual or potential Environmental Claim, whether or not asserted.
"Estimated Completion Date Balance Sheet" means the balance sheet of the
Company set out in Clause 3.2(a).
"Estimated Completion Date Net Worth" means the estimated Completion Date
Net Worth indicated in the Estimated Completion Date Balance Sheet.
"Excluded Liabilities" means (a) all Environmental Liabilities and Seller
Benefit Plan Liabilities (other than the PBO Liability under the NECY
Plans reflected on the Final Completion Date Balance Sheet) of NECY and
its Affiliates, in each case as of, arising from or attributable to
events or circumstances occurring or in existence at, or prior to, the
Completion Date, and (b) all Warranty Liabilities of NECY and its
Affiliates.
"External Claim" shall have the meaning as specified in Clause 15.1.
"Facilities" means the Takahata Factory Premises, the Facility 1 Premises
and the Facility 2 Premises, which constitute the facilities currently
used by NECY for the conduct of the Business.
"Facility 1 Premises" means the premises at Yamagata Denshi's facility in
Yamagata city that are leased by NECY and used for the Business.
"Facility 2 Premises" means the premises at Niino's facility in Higashi
Okitama-gun that are leased by NECY and used for the Business.
"Final Completion Date Balance Sheet" means the balance sheet of the
Company set out in Clause 5.1(a).
"Final Completion Date Net Worth" shall have the meaning as specified in
Clause 5.1(b).
"GAAP" means generally accepted accounting principles applied in Japan.
"Governmental Approvals" means Approvals of Governmental Authorities.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, or any stock exchange or quotation system or
similar self-regulatory organization.
"Hazardous Materials" means contaminants, pollutants, wastes, chemicals
and other materials that are controlled or regulated under or by any
Environmental Laws or with respect to which any Environmental Liability
may arise or be imposed.
"Incorporation Balance Sheet" shall have the meaning as specified in
Clause 3.2(a).
4
"Initial Purchase Price" means the amount equal to the Estimated
Completion Date Net Worth.
"Key Employees" means certain key employees with respect to the Business,
as separately agreed by NECEL and ASE at the date hereof.
"Law" means all applicable provisions of all (i) constitutions, treaties,
statutes, laws (including common law and equity), rules, regulations,
ordinances or codes of any Governmental Authority, and (ii) orders,
decisions, injunctions, judgments, awards and decrees of any arbitrator
or Governmental Authority.
"Lease Agreements" means the lease agreements for the Takahata Factory
Premises, the Facility 1 Premises and the Facility 2 Premises, which are
intended to be entered into by the Company and NECY prior to the
Completion Date, pursuant to which NECY shall lease the respective
Facilities to the Company. The terms and conditions of each Lease
Agreement shall be separately determined by the Parties prior to the
Completion, and shall include the terms and conditions set forth on
Schedule 1.1(i).
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, cost, guaranty or endorsement of or by any Person,
absolute or contingent, accrued or unaccrued, due or to come due,
liquidated or unliquidated, whether or not made or asserted.
"Material Adverse Effect" means a material adverse effect (i) on the
financial condition, operations, assets, Liabilities or prospects of the
Business or the Company, or (ii) on the ability of the Seller Parties to
enter into and perform their obligations under the Transaction Documents.
"Material Contracts" shall have the meaning as specified in Clause 10(b)
of Schedule 8.2.
"Mutual Non-disclosure Agreement" means the Mutual Non-disclosure
Agreement entered into by and between NECEL and ASE dated March 1, 2003.
"NECY Plans" means the taishoku kin retirement plan and the tekikaku
nenkin tax qualified pension plan of NECY as in effect on the date hereof
under which the Transferred Employees are eligible.
"NECY Plan Assets" shall have the meaning as specified in Clause 11.4(a).
"Permitted Encumbrances" means (i) Encumbrances reserved against in the
Final Completion Date Balance Sheet to the extent so reserved, (ii)
mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Encumbrances arising out of operation of
Law with respect to a Liability incurred in the ordinary course of the
Business, (iii) Encumbrances for Taxes which are being contested in good
faith by appropriate Proceedings or Encumbrances for Taxes not yet due,
and (iv) such other Encumbrances that do not and would not be reasonably
likely to materially detract from the value of or impair the use of the
property subject thereto.
"Person" means any natural person, business trust, corporation,
partnership, limited liability company, joint stock company,
proprietorship, association, trust, unincorporated association or any
other legal entity of whatever nature organized under any applicable Law,
an unincorporated organization or any Governmental Authority.
"PBO Liability" means the reasonably estimated aggregate projected
benefit obligation to the Transferred Employees as of the Completion Date
under the NECY Plans, net of the
5
reasonably estimated amount of the NECY Plan Assets agreed by the Parties
pursuant to Clause 11.4, as set forth in the Final Completion Date
Balance Sheet.
"Pre-Completion Period Bonus" shall have the meaning as specified in
Clause 10.4(a).
"Prime Leases" means the lease agreements under which NECY leases the
Facility 1 Premises from Yamagata Denshi and the Facility 2 Premises from
Niino.
"Proceeding" means any action, litigation, arbitration, suit, claim,
proceeding, or investigation or review of any nature, civil, criminal,
regulatory or otherwise, before any Governmental Authority.
"Proposed Transferred Employees" means the permanent employees who, as
agreed upon by NECY and ASE as provided herein, are intended to be
transferred to the Company in connection with the Transactions.
"Purchase Price" means the Final Completion Date Net Worth as determined
in accordance with Clause 5.1.
"Representatives" shall have the meaning as specified in Clause 16.3(a).
"Recipient" shall have the meaning as specified in Clause 16.1.
"Reviewing Accountant" shall have the meaning as specified in Clause
5.1(b).
"Seller's Accountants" shall have the meaning as specified in Clause
5.1(b).
"Seller Benefit Plans" means Benefit Plans (a) maintained by any of the
Seller Parties or their Affiliates, or to or for which any of them
contributes or has Liability, and (b) under which any of the Transferred
Employees receives or is eligible to receive any benefits at or prior to
Completion.
"Seller Disclosure Schedule" shall have the meaning as specified in
Clause 8.1.
"Seller Indemnified Party" shall have the meaning as specified in Clause
14.2.
"Seller Loan" shall have the meaning as specified in Clause 4.2.
"Seller Party Warranties" means the representations and warranties of the
Seller Parties as set forth in Schedule 8.2 and in the certificate of the
Seller Parties referenced in Clause 6.2(e).
"Services Agreement" means the Packaging and Testing Services Agreement
in the form of Exhibit 1.1(i), which shall be executed as of the date
hereof and shall be effective as provided therein.
"Shares" means 7,200 ordinary shares of the Company to be bought and sold
pursuant to Clause 2.1, being all the issued shares in the capital of the
Company.
"Subcontractors Act" shall mean the Act Against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors (Law No. 120, June 1, 1956,
as amended).
"Supplying Period" means the initial four (4) year term of the Services
Agreement, subject to early termination as provided therein.
"Takahata Factory" means the Takahata factory owned by NECY as at the
date hereof located at 1863 Iryuuda, Takahata-machi, Higashi Okitama-gun,
Yamagata, Japan.
6
"Takahata Factory Premises" means the premises at the Takahata Factory
that are owned by NECY and used for the Business.
"Taxes" means (i) all taxes, charges, fees, levies, or other assessments,
imposed by any taxing authority, including income, gross receipts,
excise, property, consumption, sales, use, transfer, payroll, license, ad
valorem, value added, withholding, franchise, estimated, severance and
stamp taxes (including any interest, fines, penalties or additions
attributable to, or imposed on or with respect to, any such taxes,
charges, fees, levies or other assessments), (ii) Liability of a Person
for the payment of any amounts of the type described in clause (i) as a
result of being a member of an affiliated, consolidated, combined,
unitary or similar group, and (iii) Liability of a Person for the payment
of any amounts of the type described in clause (i) as a result of any
express or implied obligation to indemnify any other Person.
"Tax Benefit" shall have the meaning as specified in Clause 14.6.
"Transactions" means the transactions contemplated under this Agreement
and the Transaction Documents.
"Transaction Documents" means the Services Agreement, the Lease
Agreements and the other agreements set forth on Schedule 1.1(ii).
"Transferred Employees" means the individuals who are actually
transferred as permanent employees to the Company in connection with the
Transactions.
"Warranty Liability" means any Liability relating to or arising out of
product warranty, product liability or similar claims, whether express or
implied, arising out of Law, Contract or otherwise, to the extent
relating to the products that are produced by (or the related services
provided by) NECY or the Company prior to the Completion.
1.2 Construction of Certain References
In this Agreement, where the context admits:
(a) where any statement is to the effect that NECY is not aware of any
matter or circumstance, or is a statement qualified by the
expression "so far as NECY is aware" or "to NECY's best knowledge"
or any similar expression, that statement shall refer to the
knowledge of the officers of the Seller Parties principally
responsible for the management and conduct of the Business,
including their actual knowledge and their knowledge obtainable in
a reasonable investigation of the applicable matter;
(b) references to Clauses, Exhibits, and Schedules are references to
Clauses of and Exhibits and Schedules to this Agreement,
references to Paragraphs are, unless otherwise stated, references
to Paragraphs of the Schedule in which the reference appears, and
references to this Agreement include the Exhibits and Schedules;
(c) references to the singular shall include the plural and vice versa
and references to the masculine, the feminine and the neuter shall
include all such genders; and
(d) "company" includes any body corporate.
1.3 Exhibits and Schedules
All Exhibits and Schedules attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement.
7
2. Sale of Shares
2.1 Sale and Purchase of Shares
On the terms and subject to the conditions of this Agreement, NECY agrees
to sell to the Buyer, and the Buyer agrees to purchase from NECY, the
Shares on the Completion Date, free and clear from all Encumbrances.
2.2 Payment of Initial Purchase Price
The Initial Purchase Price shall be paid by the Buyer at the Completion
in consideration of the Shares by wire transfer of immediately available
funds to the bank account designated by NECY in accordance with Clause
7.2. After the Completion Date, the Initial Purchase Price shall be
subject to adjustment pursuant to Clause 5.1.
3. Company Split
3.1 General
The Seller Parties shall complete the Company Split in accordance with
applicable Japanese law and the terms and conditions of this Agreement.
In connection therewith, NECY shall prepare and adopt a Company Split
Plan that is consistent with the terms and conditions of this Agreement
with respect to the Company Split and shall complete the Company Split in
accordance with such plan.
3.2 Deliveries by NECY
As promptly as practicable following the date hereof but not later than
two weeks prior to the Company Split Date, NECY shall deliver the
following to ASE:
(a) Estimated Company Balance Sheets. A proposed estimated balance
sheet of the Company as of the Company Split Date (the
"Incorporation Balance Sheet") and a proposed estimated Completion
Date balance sheet prepared in good faith in accordance with GAAP
and practices consistently applied (the "Estimated Completion Date
Balance Sheet");
(b) PBO Liability. A statement of the proposed PBO Liability, together
with a description of the assumptions and parameters used in
calculating such proposed PBO Liability;
(c) Deferred Tax Assets. A statement of the proposed amount of
deferred Tax assets relating to the PBO Liability to be included
in the Business Assets transferred to the Company in the Company
Split, and reflected on the Incorporation Balance Sheet and the
Estimated Completion Date Balance Sheet (the "Deferred Tax
Assets"). The amount of the Deferred Tax Assets shall be the
estimated amount of valid and permissible income Tax deductions by
the Company resulting from payments under the NECY Plans (and
corresponding to the PBO Liability) to (i) Company employees
scheduled to retire at the age of sixty (60) and (ii) probable
early retirees at the age of fifty-six (56) during the four year
period following the Completion Date, and shall in no event exceed
three hundred ninety-five million Japanese yen (JPY 395,000,000);
and
(d) Transferred Employees. A list and organizational chart identifying
the Proposed Transferred Employees, and including a separate list
for the Key Employees.
8
4. Company Book Value
4.1 The Parties intend that, at the Company Split Date, the Company will have
a book equity value equal to three billion Japanese yen (JPY
3,000,000,000), or another amount mutually agreed by the Parties ("Book
Equity Value"), which shall reflect paid-in capital equal to three
hundred sixty million Japanese yen (JPY 360,000,000).
4.2 To achieve the desired Book Equity Value of the Company described in
Clause 4.1, NECEL will cause the Company to become subject to a loan (the
"Seller Loan") as of the Company Split Date in an amount equal to the
difference between the Company's estimated net book value as of the
Company Split Date and the Book Equity Value. The amount of the Seller
Loan will be agreed by NECEL and ASE prior to the Company Split Date. The
Buyer will cause the Seller Loan to be paid in full at Completion as
provided in Clause 7.4(b).
5. Purchase Price Adjustment
5.1 Post Completion Purchase Price Adjustment
The Purchase Price shall be subject to adjustment after the Completion
Date according to this Clause 5.1.
(a) As soon as practicable, but in any event no later than forty-five
(45) days after the Completion Date, ASE shall, at its cost and
expense, prepare and deliver to NECY a balance sheet of the
Company as of the Completion Date (the "Final Completion Date
Balance Sheet"), including a calculation of the proposed
Completion Date Net Worth of the Company, together with a report
thereon from an internationally recognized firm of independent
certified public accountants reasonably satisfactory to NECY
confirming the consistency of such calculation with GAAP and
practices consistently applied.
(b) NECY shall have a period commencing upon delivery of the Final
Completion Date Balance Sheet by ASE to NECY and expiring
forty-five (45) days after such delivery date to review the Final
Completion Date Balance Sheet. NECY and NECY's independent
certified public accountants (the "Seller's Accountants") shall
have full access during regular business hours and upon reasonable
notice to all relevant books and records and employees of the
Company to the extent necessary to complete their review of the
Final Completion Date Balance Sheet in a manner not unreasonably
interfering with the business of the Company. In the event NECY
disputes that the Completion Date Net Worth was determined in
accordance with GAAP and practices consistently applied with the
Estimated Completion Date Balance Sheet, NECY shall, within
forty-five (45) days after delivery of the Final Completion Date
Balance Sheet, deliver a notice to ASE (the "Adjustment Dispute
Notice"), setting forth in reasonable detail the component or
components which are in dispute and the basis of such dispute. If
the Parties fail to resolve any such dispute within thirty (30)
days after receipt by ASE of the Adjustment Dispute Notice, the
Parties shall submit the dispute to PricewaterhouseCoopers LLP or
its Japanese affiliate (the "Reviewing Accountant") to review the
Completion Date Net Worth set forth on the Final Completion Date
Balance Sheet. Each Party hereby represents and warrants that
neither the Party nor any of its Affiliates uses the Reviewing
Accountant as its accountant or has any material relationship
therewith. The Parties shall make available to the Reviewing
Accountant all work papers and all other information and material
in their possession relating to the matters in the Adjustment
Dispute Notice. The Reviewing Accountant's authority shall be
limited to determining whether the component or components of
Completion Date Net Worth set forth on the Final Completion Date
Balance Sheet which have been so disputed by NECY were
9
calculated in accordance with GAAP and practices consistently
applied with the Estimated Completion Date Balance Sheet and, if
necessary, determining the adjustments required to such Completion
Date Net Worth to cause it to be calculated in accordance with
GAAP and practices consistently applied with the Estimated
Completion Date Balance Sheet. The Reviewing Accountant shall be
instructed by the Parties to use its best efforts to deliver to
the Parties its determination as promptly as practicable after
such submission of the dispute to the Reviewing Accountant. The
Parties hereby expressly agree that the determination of the
Reviewing Accountant shall be final and binding on the Parties
(absent fraud or manifest bad faith by the Reviewing Accountant).
The Completion Date Net Worth on the Final Completion Date Balance
Sheet as determined by ASE (if not disputed), or as modified (if
at all) by agreement of ASE and NECY or by decision of the
Reviewing Accountant, shall be the "Final Completion Date Net
Worth". Each Party shall bear its own expenses and the fees and
expenses of its own representatives and experts, including its
independent accountants, in connection with the preparation,
review, dispute (if any) and final determination of the Final
Completion Date Net Worth. The Parties shall share equally in the
costs, expenses and fees of the Reviewing Accountant.
(c) If the Final Completion Date Net Worth varies greater than one
million Japanese yen (JPY 1,000,000) from the Estimated Completion
Date Net Worth, within five (5) days following the determination
of the Final Completion Date Net Worth, the Purchase Price shall
be adjusted yen for yen and payment shall become due as follows:
(i) if the Final Completion Date Net Worth exceeds the Estimated
Completion Date Net Worth, the Purchase Price shall be increased
by the amount of such excess and the Buyer shall pay over such
excess to NECY in accordance with Clause 5.1(d) below, or (ii) if
the Final Completion Date Net Worth is less than the Estimated
Completion Date Net Worth, the Purchase Price shall be decreased
by the amount of such deficit and NECY shall pay over such deficit
to the Buyer in accordance with Clause 5.1(d) below. If the Final
Completion Date Net Worth varies less than one million Japanese
yen (JPY 1,000,000) from the Estimated Completion Date Net Worth,
no adjustment to the Purchase Price shall be made.
(d) The payment of any adjustment provided for in this Clause 5.1
shall be made by wire transfer of immediately available funds to
an account designated by the receiving party. Any such payment
shall also include interest on the amount of such payment,
calculated for the period between the Completion Date and the date
of payment (both dates are inclusive) at the short term prime rate
then offered by most Japanese city banks (toshi ginko) as
according to the most recent financial and economic statistics
(kinyu keizai toukei) reported by the Bank of Japan.
6. Conditions Precedent to the Completion
6.1 Seller Parties' Conditions
The obligations of the Seller Parties to sell the Shares and deliver the
share certificate representing the Shares to the Buyer and take other
actions which are to occur on the Completion hereof are subject to the
satisfaction as of the Completion of the following conditions:
(a) no Proceeding by any Person with respect to the Transactions shall
be pending or threatened and no statute, rule or regulation and no
injunction, order, decree or judgment of any court or Governmental
Authority of competent jurisdiction shall be in effect as of the
Completion Date which restrains or prohibits the Transactions;
10
(b) the Buyer Party Warranties shall be true and correct in all
material respects (i) on and as of the date hereof and (ii) on and
as of the Completion Date to the same extent as though made on and
as of such date;
(c) the Buyer Parties shall have performed and complied in all
material respects with all agreements and covenants contained in
the Transaction Documents that are required to be performed or
complied with by the Buyer Parties on or prior to the Completion
Date;
(d) pursuant to a certificate satisfactory to the Seller Parties, the
Buyer Parties shall have jointly and severally represented and
warranted to the Seller Parties that (i) the Buyer Party
Warranties are true, accurate and not misleading as of the
Completion Date, and that (ii) the Buyer Parties have performed
and complied in all material respects with all agreements and
covenants contained in the Transaction Documents that are required
to be performed or complied with by the Buyer Parties on or prior
to the Completion Date;
(e) all material Approvals required to consummate the Completion shall
have been granted, made or obtained; and
(f) the Transaction Documents shall have been executed and delivered
by the relevant parties thereto other than the Seller Parties and
shall not have been terminated.
6.2 Buyer Parties' Conditions
The obligations of the Buyer Parties to pay the Initial Purchase Price,
purchase the Shares and take other actions which are to occur on the
Completion are subject to the satisfaction as of the Completion of the
following conditions:
(a) NECY shall have completed the Company Split and transferred the
Business to the Company in accordance with this Agreement. As a
result of the Company Split, the Company shall have (i) been duly
established under Japanese law, and (ii) acquired the Business;
(b) no Proceeding by any Person with respect to the Transactions shall
be pending or threatened and no statute, rule or regulation and no
injunction, order, decree or judgment of any court or Governmental
Authority of competent jurisdiction shall be in effect as of the
Completion Date which restrains or prohibits the Transactions;
(c) the Seller Party Warranties shall be true and correct in all
material respects (i) on and as of the date hereof and (ii) on and
as of the Completion Date to the same extent as though made on and
as of such date;
(d) the Seller Parties shall have performed and complied in all
material respects with all agreements and covenants contained in
the Transaction Documents that are required to be performed or
complied with by the Seller Parties on or prior to the Completion
Date;
(e) pursuant to a certificate satisfactory to the Buyer Parties, the
Seller Parties shall have jointly and severally represented and
warranted to the Buyer Parties that (i) the Seller Party
Warranties are true, accurate and not misleading as of the
Completion Date, and that (ii) the Seller Parties have performed
and complied in all material respects with all agreements and
covenants contained in the Transaction Documents that are
11
required to be performed or complied with by the Seller Parties on
or prior to the Completion Date;
(f) all material Approvals required to consummate the Completion shall
have been granted, made or obtained;
(g) the Transaction Documents shall have been executed and delivered
by the relevant parties thereto other than the Buyer Parties and
shall not have been terminated;
(h) Prior to the consummation of the Company Split:
(i) NECY shall have timely delivered the proposed Incorporation
Balance Sheet and the proposed Estimated Completion Date
Balance Sheet pursuant to Clause 3.2(a), proposed PBO
Liability pursuant to Clause 3.2(b) and proposed amount of
Deferred Tax Assets pursuant to Clause 3.2(c), and shall
have complied with its obligations under Clause 12.3 with
respect to such deliveries;
(ii) ASE shall not have reasonably objected in writing to any
such delivery within two (2) weeks following its receipt
thereof, provided that (1) ASE's objections to such
deliveries shall only be asserted when ASE reasonably
determines (as confirmed by ASE's internationally
recognized outside accounting or actuarial advisors) that
there is non-compliance with GAAP, the applicable terms of
this Agreement or prevailing market assumptions, and (2)
ASE shall disclose the details of the objection to NECY in
writing upon providing the objection notice; and
(iii) NECY and ASE shall have agreed to a resolution of ASE's
objection, if any, following good faith discussions for no
longer than fourteen (14) days after NECY's receipt of
ASE's objection.
The Parties acknowledge that notwithstanding the satisfaction of this
condition to Completion, the Estimated Completion Date Balance Sheet,
the PBO Liability and the Deferred Tax Assets shall be subject to final
review and approval (and additional revisions in connection therewith)
pursuant to the procedures contained in Clause 5.1.
(i) With respect to the Transferred Employees:
(i) Prior to the consummation of the Company Split, ASE shall
have agreed to the list of Proposed Transferred Employees
and the related organizational chart described in Clause
3.2(d);
(ii) At the Completion Date, all of the Key Employees (or their
replacements agreed to in advance by ASE) shall be employed
by the Company, except for any Key Employees whose
employment is prevented due to death, serious illness or
similar events; and
(iii) The aggregate number of Transferred Employees at the
Completion Date shall not exceed 790, and not more than an
immaterial number of such Employees shall have refused to
transfer to the Company or objected to the Transactions;
and
(j) There shall not have occurred any event, fact, circumstance, or
action that would be reasonably likely to have a Material Adverse
Effect.
12
6.3 Waiver
NECY and ASE may each, at its sole discretion, waive in whole or in part
all or any of the conditions to its obligations to consummate the
Completion.
7. Completion
7.1 Time and Place of Completion
Completion shall take place at the offices of TMI Associates which are
located at Roppongi Hills Mori Tower ▇▇▇, ▇-▇▇-▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇,
▇▇▇▇▇, ▇▇▇▇▇ at an agreed time on the Completion Date, or at such other
time and place as NECY and ASE may agree in writing.
7.2 Pre-Completion
At least five (5) Business Days before the Completion Date, NECY shall
give ASE full details of the Seller Parties' bank account(s) to which
the Initial Purchase Price, the Seller Loan payment and the Working
Capital Loan payment are to be remitted.
7.3 NECY's Obligations at Completion
At the Completion, NECY shall deliver to the Buyer:
(a) the share certificate representing the Shares;
(b) abstract copy of the Shareholders' Meeting adopting the resolution
of the Company Split;
(c) copy of the registration documents which NECY has filed with the
Legal Affairs Bureau (homu-kyoku) in connection with the Company
Split with receipt stamp of the Legal Affairs Bureau affixed
thereon;
(d) registered corporate seal of the Company;
(e) all shareholders and board meeting minutes of the Company;
(f) abstract copy of the minutes of the Board of Directors of the
Company which approves the transfer of the Shares from NECY to the
Buyer; and
(g) letters of resignation executed by the directors and auditors of
the Company listed in Schedule 7.3(g).
7.4 ASE's Obligations at the Completion
At the Completion, ASE shall
(a) deliver the certificate certifying the payment of the Initial
Purchase Price for the Shares as provided by Clause 2.2 (before
any adjustment as is therein mentioned); and
(b) cause the Seller Loan and Working Capital Loan to be paid in full
by wire transfer of immediately available funds to the bank
account designated by the Seller Parties in accordance with
Clause 7.2.
13
7.5 New Directors and Auditors
Promptly following the Completion, the Buyer Parties shall cause the
Company to hold the extraordinary shareholders' meeting and appoint and
register new directors and auditors in accordance with the Company's
Charter Documents and Japanese law.
8. Representations and Warranties
8.1 Disclosure
The Seller Party Warranties are given subject to facts and matters
expressly disclosed in the Seller Parties' disclosure schedule attached
hereto (the "Seller Disclosure Schedule"), which shall refer to the
relevant articles and clauses of this Agreement.
8.2 Seller Party Warranties
The Seller Parties hereby jointly and severally represent and warrant to
the Buyer Parties that each Seller Party Warranty set forth in Schedule
8.2 is true, accurate and not misleading as at the date hereof.
8.3 Buyer Party Warranties
The Buyer Parties hereby jointly and severally represent and warrant to
the Seller Parties that each Buyer Party Warranty set forth in Schedule
8.3 is true, accurate and not misleading as at the date hereof.
9. Covenants by ASE
9.1 Pre-Completion Covenants
No later than one (1) day prior to the Company Split Date, ASE Japan Co.,
Ltd. shall change its corporate name to such other name which does not
include or is not similar to "ASE Japan", and immediately after the name
change, notify NECY thereof in writing.
9.2 Use of "ASE Japan"
ASE agrees (on behalf of itself and its Affiliates) that neither it nor
any of its Affiliates will bring any claim or action against the Seller
Parties, or any of their Affiliates or agents, with regard to the use of
"ASE Japan" as the company name of the Company, subject to the Seller
Parties' compliance with their obligations under Clause 12.1(a) and any
express restrictions agreed by the Parties with respect to the use of the
"ASE Japan" name, and except for any Damages regarding the use of "ASE
Japan" as the Company's name to the extent attributable to actions of (i)
the Seller Parties or (ii) the Company prior to the Completion Date that
are not authorized by the Buyer Parties.
9.3 Transfer Restriction of Shares
During the Supplying Period:
(a) ASE shall hold more than two-thirds (2/3) of the voting rights of
the issued and outstanding shares in the Buyer, and the Buyer
shall hold more than two-thirds (2/3) of the voting rights of the
issued and outstanding shares in the Company; and
(b) The product of (i) ASE's ownership percentage of the voting rights
of the issued and outstanding shares in the Buyer times (ii) the
Buyer's ownership percentage of the
14
voting rights of the issued and outstanding shares in the Company
shall exceed fifty percent (50%).
9.4 Paid-in Capital
During the Supplying Period, ASE shall cause the Company to maintain an
amount of paid-in capital of greater than three hundred million Japanese
yen (JPY 300,000,000) in order to prevent the Company from being
categorized as a Subcontractor (shitauke jigyousha) under the
Subcontractors Act. In the event that Article 2, Section 4 of the
Subcontractors Act should be amended, then ASE shall cause the Company to
maintain an amount of paid-in capital so that the Company will not be
categorized as a Subcontractor (shitauke jigyosha) in relation to both
NECY and NECEL under the Subcontractors Act.
9.5 Finance
After the Completion Date, the Seller Parties shall not be responsible
for any financial assistance required by the Company.
9.6 Books and Records
ASE shall procure that:
(a) the Company shall preserve (pursuant to a commercially reasonable
retention program) until the fifth (5th) anniversary of the
Completion the material books, records and documents of the
Company relating to matters recorded therein which occurred on or
before the Completion with respect to the Business; and
(b) until the fifth (5th) anniversary of the Completion (or in the
event of any claim being made by ASE under the Seller Party
Warranties until such later time as the same is determined) NECY
and its agents, accountants, lawyers and other professional
advisers shall be allowed the right to inspect and, at NECY's
expense, take copies of the books, records and documents (but in
each case only in relation to matters recorded therein which
occurred on or before the Completion) at all reasonable times upon
NECY giving reasonable notice of such requirement to the Company.
NECY's rights under this Clause may be exercised solely for
purposes relating to the Transaction Documents or NECY's
compliance with requirements of Governmental Authorities.
9.7 Continuation of Employees
During the Supplying Period, ASE shall ensure that:
(a) material changes to the employment terms (including compensation
package and Benefit Plan) of the Transferred Employees or other
restructuring of the Transferred Employees will not be implemented
without prior written consent of NECEL, not to be unreasonably
withheld, and shall comply with applicable Laws (including
communications with labor unions); provided however that the
following will not require NECEL's prior consent:
(i) the termination of a Transferred Employee for breach of
applicable employment terms, wrongdoing, misconduct or
inadequate job performance (including failure to comply
with management policies or directives) in accordance with
applicable Laws; or
(ii) decisions regarding management personnel of the Company.
15
(b) In the case of Clause 9.7(a)(i), the Company shall provide NECEL
with a copy of the applicable employee termination notice not
later than the earlier of (i) fourteen (14) days prior to the
intended termination date, or (ii) such other date on which a
notice to the employee is required under applicable Law. In the
case of Clause 9.7(a)(ii), the Company shall provide written
notice to NECEL at least fourteen (14) days prior to the
applicable management personnel decision.
10. Employee Arrangements
10.1 The Seller Parties shall use their commercially reasonable efforts to
cause the Proposed Transferred Employees to transfer to the Company in
connection with the Transactions as contemplated by this Agreement. In
connection therewith:
(a) The Parties acknowledge that certain of NECY's employees engaged
in the Business will not be included in the Proposed Transferred
Employees, even though such employees are entitled under Law to be
transferred to the Company in the Company Split. NECY shall use
its commercially reasonable efforts to obtain consents from these
employees not to be transferred in the Company Split; and
(b) The Parties acknowledge that certain of the Proposed Transferred
Employees are not employees who would transfer to the Company by
operation of Law in the Company Split. NECY shall use its
commercially reasonable efforts to obtain consents from these
Proposed Transferred Employees to transfer to the Company in
connection with the Transactions.
10.2 The Seller Parties shall use their commercially reasonable efforts to
cause all independent contractors, contract or temporary workers, leased
employees, consultants and similar persons who provide services with
respect to the Business to continue to provide such services to the
Company following the Completion on terms no less favorable to the
Company than the terms currently in effect.
10.3 Four identified individuals currently seconded to NECY and working in the
Business will continue as seconded employees to the Company upon
Completion; provided that the secondment term shall not be longer than
four (4) years following the Completion Date without ASE's prior consent.
10.4 Pre-Completion Period Bonus
(a) On June 18, 2004 or such other date as designated by NECY, the
Company shall pay certain bonuses as designated by NECY to each of
the Transferred Employees designated by NECY, which corresponds to
the service period from October 1, 2003 to March 31, 2004
("Pre-Completion Period Bonus").
(b) Within five (5) Business Days following the Company's payment of
the Pre-Completion Period Bonus, the Company shall notify NECY of
the Pre-Completion Period Bonus payment, together with
documentation which reasonably demonstrates that the Company has
actually paid the Pre-Completion Period Bonus to the applicable
Transferred Employees.
(c) Within five (5) Business Days following the Company's notification
of payment under Clause 10.4(b), NECY shall reimburse the Company
for its payment of the Pre-Completion Period Bonus, such
reimbursement to be made to the bank account designated by the
Company in writing.
16
11. Benefit Plan Arrangements
11.1 In principle, upon the completion of the Company Split, the Company shall
succeed to and assume the Seller Benefit Plans with respect to the
Transferred Employees for periods from and after the Company Split Date.
For the avoidance of doubt, the treatment of Seller Benefit Plan
Liabilities as part of the Excluded Liabilities (as provided in the
definition of Excluded Liabilities) and the Company's indemnification
rights under Clause 14.1(d) with respect to such Seller Benefit Plan
Liabilities shall not be affected by this Clause and the Company's
succession and assumption contemplated hereby.
11.2 The Seller Parties shall ensure that the Company will not at any time
prior to Completion become subject to, or participate in, or incur any
Liability with respect to the NEC Employee Pension Fund (NEC kigyou
nenkin kikin).
11.3 As promptly as practicable following the date hereof, the Buyer Parties
shall deliver a statement describing the Buyer Parties' intentions
regarding a new health insurance plan that the Transferred Employees will
participate in after the Completion Date.
11.4 NECY Plan Assets
(a) At least two (2) weeks prior to the Company Split Date, NECY may
submit a proposal to ASE for the post-Completion transfer to the
Company of certain investment assets covering the Company's
obligations under the NECY Plans, to the extent such assets relate
to the PBO Liability (such assets contemplated to be transferred
are described herein as the "NECY Plan Assets"). Such proposal
shall include the estimated value of the NECY Plan Assets as of
the Completion Date, and information (including fund trustee and
other third party confirmation) about the feasibility of
transferring the NECY Plan Assets to the Company. NECY and ASE
shall discuss such proposal in good faith. If NECY and ASE agree
on the estimated value of the NECY Plan Assets as of the
Completion Date, such agreed value shall be netted against the
reasonably estimated aggregate projected benefit obligation to the
Transferred Employees as of the Completion Date under the NECY
Plans in determining the amount of the PBO Liability, in
accordance with the definition of such term.
(b) If the Parties are not able to agree on the estimated value of the
NECY Plan Assets as of the Completion Date, no such netting shall
occur in determining the amount of the PBO Liability; provided
that if NECY is able to achieve the transfer of such assets to the
Company within a reasonable period of time following the
Completion, ASE shall cause the Company to compensate NECY in the
amount of such transferred assets promptly after such transfer.
12. Covenants by the Seller Parties
12.1 Pre-Completion Covenants
The Seller Parties shall observe each of the following covenants until
the Completion Date:
(a) NECY shall conduct the Business, and cause the Company to conduct
the Business after the Company Split Date, only in the ordinary
course; and
(b) The applicable Seller Parties shall enter into the Transaction
Documents with the Company at or prior to the Completion Date.
17
12.2 Interim Working Capital
NECEL shall provide debt financing to the Company at an annual interest
rate not to exceed 3-month ▇▇▇ ▇▇▇▇▇ as at 11am (Tokyo time) on the 2nd
Business Day prior to the draw-down date plus 0.55% to finance the
working capital requirements of the Company from the Company Split Date
until the Completion. Repayment of such debt financing (the "Working
Capital Loan") will be paid in full to NECEL at Completion as
contemplated by Clause 7.4(b).
12.3 Access and Availability
Between the date hereof and the Completion Date, the Seller Parties shall
give ASE and its representatives reasonable access during normal business
hours and upon reasonable notice to all the Facilities, financial data
and other books and records of the Seller Parties, to the extent
applicable to or in connection with the Business, the related assets and
liabilities, the establishment of the Company, the Transaction Documents
or compliance by ASE or its Affiliates with the requirements of Law or
Governmental Authorities, and shall furnish ASE and its representatives
with all such information related thereto and facilitate such compliance
therewith, and with access to employees, representatives, independent
contractors, consultants or similar persons, accountants, lawyers and
other professional advisors of the Seller Parties as ASE may reasonably
request, including actuarial and other information, assumptions, and
materials relating to the deliveries by NECY pursuant to Clause 3.2;
provided, however, that such access does not unreasonably disrupt the
normal operations of NECY.
13. Commercially Reasonable Efforts
Each Party shall use its commercially reasonable efforts to cause the
conditions to the other Party's Completion obligations in Article 6 to be
satisfied as soon as practicable, including using its commercially
reasonable efforts to obtain all material Governmental Approvals which
are necessary for the consummation of the Transactions. Without limiting
the foregoing, neither Party shall take any action that would reasonably
be expected to cause any of the other Party's Completion conditions in
Article 6 not to be satisfied as of the Completion.
14. Indemnity
14.1 Indemnification by the Seller Parties
The Seller Parties jointly and severally agree to pay, indemnify and hold
harmless the Buyer Parties, the Company and their respective Affiliates,
directors, officers, employees, agents and assigns (the "Buyer
Indemnified Parties") from and against any and all losses, Liabilities,
claims, damages, judgments, costs and expenses (including reasonable
attorneys' fees) ("Damages") as a result of, or based upon or arising
from:
(a) the breach or inaccuracy of any of the Seller Party Warranties
provided herein or in the certificate of the Seller Parties
pursuant to Clause 6.2(e);
(b) the facts and matters disclosed in Section 11 of the Seller
Disclosure Schedule;
(c) any breach or failure to perform any of the covenants, agreements
or obligations of the Seller Parties in this Agreement; or
(d) the Excluded Liabilities; provided that (i) the Seller Parties'
indemnity obligations with respect to Warranty Liabilities that
are part of the Excluded Liabilities shall expire upon the
expiration of the applicable statute of limitations or effective
term of
18
the Law or Contract (as applicable) giving rise to the Warranty
Liability, and (ii) the Seller Parties' indemnity obligations
with respect to Environmental Liabilities that are part of the
Excluded Liabilities shall expire on the fifth (5th) anniversary
of the Completion Date, provided that if any claim or notice for
indemnity hereunder with respect to Environmental Liabilities
that are part of the Excluded Liabilities is given prior to the
fifth (5th) anniversary of the Completion Date, then the
liability of the Seller Parties for such claim shall continue
indefinitely until such claim is finally resolved.
14.2 Indemnification by the Buyer Parties
The Buyer Parties jointly and severally agree to pay, indemnify and hold
harmless the Seller Parties and their respective Affiliates, directors,
officers, employees, agents and assigns (the "Seller Indemnified
Parties") from and against any and all Damages as a result of, or based
upon or arising from:
(a) the breach or inaccuracy of any of the Buyer Party Warranties
provided herein or in the certificate of the Buyer Parties
pursuant to Clause 6.1(d);
(b) any breach or failure to perform any of the covenants, agreements
or obligations of the Buyer Parties in this Agreement; or
(c) the use of "ASE Japan" as the Company's name, subject to the
Seller Parties' compliance with their obligations under Clause
12.1(a) and any express restrictions agreed by the Parties with
respect to the use of the "ASE Japan" name, and except for any
Damages regarding the use of "ASE Japan" as the Company's name to
the extent attributable to actions of (i) the Seller Parties or
(ii) the Company prior to the Completion Date that are not
authorized by the Buyer Parties.
14.3 Effective Period
The Liabilities of the Seller Parties under the Seller Party Warranties
contained in Schedule 8.2 and of the Buyer Parties under the Buyer
Party Warranties contained in Schedule 8.3 (and their respective
indemnity obligations under this Article 14 with respect to such
warranties) shall cease on the date which is eighteen (18) months after
the Completion Date except that:
(a) if any claim or notice for indemnity hereunder with respect to any
Seller Party Warranties or Buyer Party Warranties is given prior
to the termination of the applicable warranties under this clause,
then the liability of the applicable Parties for such warranties
shall continue indefinitely until such claim is finally resolved;
and
(b) the Seller Party Warranties under Clause 4(b) (Title of Shares),
Clause 14 (Benefit Plans), Clause 17 (Environmental Matters) and
Clause 19 (Taxes) of Schedule 8.2 shall continue through the
expiration of the applicable statute of limitations.
14.4 Procedure for Indemnification
A claim by the Seller Indemnified Parties to the Buyer Parties or by
the Buyer Indemnified Parties to the Seller Parties for indemnification
for any matter (other than an External Claim, which will be governed by
Article 15) shall be made by written notice reasonably specifying the
nature of the claim and the amount of Damages asserted to the extent
known. Upon receipt of such notice, the indemnifying parties and
indemnified parties shall negotiate in good faith for a period of up to
sixty
19
(60) days to agree on the amount of indemnifiable Damages suffered by the
indemnified parties. If no agreement is reached within this sixty (60)
day period, the Parties shall resolve the dispute in accordance with
Clause 18.3 (for the avoidance of doubt, no further discussions between
the Parties under Clause 18.3(a) shall be required as a condition to a
Party's request for arbitration under Clause 18.3). The amount of Damages
agreed by the Parties or the amount of Damages determined in accordance
with Clause 18.3, as the case may be, is hereafter referred to as a
"Claim Amount".
14.5 Limitations on Claim Amount
(a) The Seller Parties shall have no Liability with respect to claims
for indemnity under Clause 14.1(a) (i) for any single claim unless
the Damages under such claim (together with all related claims)
exceeds one million Japanese yen (JPY 1,000,000), or (ii) unless
the aggregate Damages under all such claims from the Completion
Date exceed fifty million Japanese yen (JPY 50,000,000), in which
case the Seller Parties shall be liable (subject always to the
other provisions of this Article 14) for the entire amount of such
Damages. The Buyer Parties shall have no Liability with respect to
claims for indemnity under Clause 14.2(a) (i) for any single claim
unless the Damages under such claim (together with all related
claims) exceeds one million Japanese yen (JPY 1,000,000), or (ii)
unless the aggregate Damages under all such claims exceed fifty
million Japanese yen (JPY 50,000,000), in which case the Buyer
Parties shall be liable (subject always to the other provisions of
this Article 14) for the entire amount of such Damages.
(b) The aggregate indemnification obligations of the Seller Parties to
the Buyer Indemnified Parties pursuant to Clause 14.1(a) or the
Buyer Parties to the Seller Indemnified Parties pursuant to Clause
14.2(a) shall not exceed the amount equal to fifty percent (50%)
of the sum of the Purchase Price plus the Seller Loan.
14.6 Adjustments
Any Claim Amount shall be computed net of (i) any insurance proceeds
received by the indemnified party and (ii) indemnification received by
the indemnified party from a third party (other than a Seller Party or
Buyer Party, as applicable) in connection with such claim. To the
extent that a Claim Amount gives rise to a subsequently realized Tax
Benefit to the indemnified party, the indemnified party shall refund to
the indemnifying party the amount of such Tax Benefit when, as and if
realized. For purposes of this Clause 14.6, "Tax Benefit" means an
amount by which the tax liability of the indemnified party (or group of
corporations including the indemnified party) is reduced (including,
without limitation, by deduction, reduction of income by virtue of
increased tax basis or otherwise, entitlement to refund, credit or
otherwise) plus any related interest received from the relevant taxing
authority. Where the indemnified party has other losses, deductions,
credits or items available to it, the Tax Benefit from any losses,
deductions, credits or items relating to the Claim Amount shall be
deemed to be realized proportionately with any other losses,
deductions, credits or items. In the event that there should be a
determination disallowing the Tax Benefit, the indemnifying party shall
be liable to refund to the indemnified party the amount of any related
reduction previously allowed or payments previously made to the
indemnifying party pursuant to this Article 14.6. The amount of the
refunded reduction or payment shall be deemed a payment under this
Article 14 and thus shall be paid subject to any applicable reductions
under this Article 14.
14.7 Prompt Disclosure of Breach
Until the 18-month anniversary of the Completion Date, each Party will
promptly notify the other Party in writing of any matter or thing of
which it may become aware which is a material breach of or is
inconsistent with any of the warranties contained herein in any
material respect; provided, that any failure or delay to give such
notification shall not affect
20
the indemnification provided under this Agreement except, and only, to
the extent the indemnifying party shall have been actually prejudiced as
a result of such failure or delay.
15. External Claims
15.1 Notification and Consultation
If an indemnified party becomes aware of any actual or threatened
claim, demand or Proceeding asserted by any Person other than a Party
or an Affiliate of a Party in relation to any matter to which the
indemnities provided in Article 14 relate (an "External Claim"):
(a) the indemnified party shall as soon as reasonably practicable
after so becoming aware and in any event within twenty-five (25)
Business Days notify the indemnifying party in writing of (and in
reasonable detail regarding) the External Claim; provided, that
any failure or delay to give such notification shall not affect
the indemnification provided under this Agreement except, and
only, to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure or delay; and
(b) subject always to the condition, and only to the extent, that the
interests of the indemnified party are not actually or potentially
prejudiced thereby, the indemnified party shall thereafter consult
with the indemnifying party in respect of the External Claim and
permit the indemnifying party and its advisers reasonable access
to relevant employees, premises, chattels, documents and records
(including the right to take copies at indemnifying party's
expense of such documents and records) for the purposes of
investigating the External Claim and enabling the indemnifying
party to take any action permitted by this Article 15.
15.2 Defense
(a) The indemnifying party shall be entitled to participate in the
defense of the External Claim and, if it so chooses, to assume and
control the defense thereof with counsel selected by the
indemnifying party and reasonably acceptable to the indemnified
party (which acceptance shall not be unreasonably withheld or
delayed); provided that following such assumption the indemnifying
party diligently conducts the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof, and to employ counsel
at its own expense, provided that the indemnifying party shall be
liable for all reasonable fees and expenses of such counsel in the
circumstances set forth in Clause 15.2(b), it being understood
that the indemnifying party shall control such defense and shall
be empowered to make any settlement with respect to the External
Claim that satisfies the conditions to the indemnified party's
consent obligation pursuant to the last sentence of Clause
15.2(c).
(b) The indemnifying party shall be liable for the reasonable fees and
expenses of legal counsel employed by the indemnified party for
any period during which the indemnifying party has not assumed the
defense thereof (other than the period prior to the date on which
the indemnified party gives notice of the External Claim as
provided above). Notwithstanding the foregoing, if (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of separate counsel for the indemnified
party or (ii) the named parties (including any impleaded parties)
to an External Claim include both the indemnifying party and the
indemnified party and the indemnified party has been advised by
legal counsel that there is material conflict of interest
requiring or making it advisable that the indemnified party have
separate legal counsel, the indemnifying party shall be liable for
all reasonable fees and expenses of
21
separate legal counsel for the indemnified party in connection
with that External Claim.
(c) Whether or not the indemnifying party assumes the defense of an
External Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge,
such External Claim without the indemnifying party's prior written
consent (which consent shall not be unreasonably withheld or
delayed). However, if settled with such consent, the indemnifying
party shall indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment. The
indemnifying party shall not, without the prior written consent of
the indemnified party, effect any settlement, compromise or
discharge of any External Claim in respect of which any
indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless
such settlement, compromise or discharge (i) provides for full
settlement and complete release, without any equitable award or
relief, and (ii) by its terms (or pursuant to a binding commitment
of the indemnifying party) obligates the indemnifying party to pay
the full amount of the liability in connection with such External
Claim (subject to the provisions of Clause 14.5).
16. Confidentiality
16.1 Each Party (the "Recipient") shall maintain in confidence all
information (whether documentary, computerized or oral) furnished by or
on behalf of the other Party (the "Disclosing Party") or which
otherwise comes into the possession of the Recipient as a result of
entering into this Agreement or the Transactions to be consummated at
or prior to the Completion (the "Confidential Information"), shall use
such Confidential Information only for purpose of fulfilling the terms
of this Agreement and shall not disclose any such Confidential
Information to a third party or make any unauthorized use thereof.
Further, the Parties hereby confirm that the information provided from
NECEL or NECY to ASE or the Buyer or those from ASE or the Buyer to
NECEL or NECY pursuant to the Mutual Non-disclosure Agreement shall be
included in the Confidential Information.
16.2 Each Recipient shall treat such Confidential Information with the same
degree of care against disclosure or unauthorized use which it affords
to its own confidential information of a similar nature or a reasonable
degree of care, whichever is greater. The obligation of confidential
treatment shall not apply to any Confidential Information that:
(a) was or has become generally available in the public domain other
than through unauthorized or improper disclosure by the Recipient;
(b) was in the Recipient's possession prior to disclosure by the
Disclosing Party as evidenced by documentary records;
(c) was independently developed by the Recipient, provided that the
person(s) developing the same did not have prior access to
Confidential Information received from the Disclosing Party; or
(d) was received from a third party who had a right to disclose such
information.
Notwithstanding the foregoing, (1) at the Completion, the obligations
of the Buyer Parties under the Mutual Non-disclosure Agreement and this
Article 16 with respect to all information relating to the Business
shall terminate; and (2) from and after the Completion, the Seller
Parties shall, and shall cause their Affiliates to, treat all
information related to the Business (including all information related
to the Business and disclosed to the Seller Parties and their
Affiliates by the Buyer Parties or held or owned by the Seller Parties
or their
22
Affiliates prior to Completion, and excluding information which (i) was
or has become generally available in the public domain other than through
unauthorized or improper disclosure by the Seller Parties, (ii) is
independently developed by the Seller Parties after the Completion, (iii)
is received from a third party who has a right to disclose such
information after the Completion, or (iv) generally relates to NECEL's
assembly and test business) as Confidential Information in accordance
with this Article 16.
16.3 In furtherance, and not in limitation, of the foregoing, each Recipient
agrees to do the following with respect to all such Confidential
Information:
(a) instruct and require all of its officers, directors, employees,
agents, representatives or independent contractors (the
"Representatives") to maintain the confidentiality of such
Confidential Information and not to use such Confidential
Information except as expressly permitted herein; and
(b) restrict such Confidential Information to those of its
Representatives who have a "need to know" consistent with the
purposes for which such Confidential Information was disclosed.
16.4 In the event that a Recipient or any of its respective Representatives
is requested pursuant to or required by the disclosure requirements of
any Law, rule, regulation or form of any Governmental Authority or by
oral questions, interrogatories, requests for information or documents
by any Governmental Authority or other Person in legal proceedings,
subpoenas, civil investigative demands or other similar processes to
disclose any of the Confidential Information received from the
Disclosing Party, the Recipient or the Representative who has been so
requested or required shall provide the Disclosing Party with prompt
written notice of any such request or requirement so that the
Disclosing Party may object to production, seek a protective order or
other remedy and/or waive compliance with the provisions of this
Agreement.
16.5 Each of the Recipients and their respective Representatives, as
applicable, shall exercise their respective commercially reasonable
efforts to preserve the confidentiality of such Confidential
Information, including, without limitation, by cooperating with the
Disclosing Party to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be afforded such
Confidential Information. If in the absence of a protective order or
other appropriate remedy or the receipt of a waiver of the Disclosing
Party, the Recipient or any of its Representatives is nonetheless
legally required or compelled to disclose such Confidential
Information, including to any tribunal or else stand liable for
contempt or suffer other censure or significant penalty, the Recipient
or its Representative may, without liability hereunder, disclose only
that portion of the Confidential Information which is legally required
to be disclosed.
17. Termination
17.1 This Agreement may be terminated at any time prior to the Completion
Date:
(a) By consent in writing of ASE and NECY.
(b) By ASE or NECY, effective immediately upon written notice to the
other party, if there has been a material violation or material
breach by the other party of any representation, warranty,
covenant or agreement contained herein, which violation or breach
shall not have been cured or corrected by the violating or
breaching party within twenty (20) Business Days after receipt of
notice thereof, describing such violation or breach in reasonable
detail.
23
(c) By ASE or NECY, effective immediately upon written notice to the
other party, if the Completion has not occurred by October 31,
2004, other than through the failure of the terminating party to
comply with its obligations hereunder.
17.2 Effect of Termination
If this Agreement is terminated pursuant to Clause 17.1, no Party shall
have any Liability in respect of this Agreement, except for any
Liabilities arising from (i) any material breach of any covenant
contained herein occurring prior to such termination, or (ii) any
material and intentional inaccuracy in any representation or warranty
contained herein occurring prior to such termination; provided that
Article 14 (Indemnity), Article 16 (Confidentiality) and Article 18
(Miscellaneous) shall remain in full force and effect following such
termination.
18. Miscellaneous
18.1 Notices
Any and all notices, requests, demands and other communications
required or otherwise contemplated to be made under this Agreement
shall be in writing and in English and shall be provided by one or more
of the following means and shall be deemed to have been duly given (a)
if delivered personally, when received, (b) if transmitted by
facsimile, on the first (1st) Business Day following receipt of a
transmittal confirmation, or (c) if by international courier service,
on the third (3rd) Business Day following the date of deposit with such
courier service, or such earlier delivery date as may be confirmed in
writing to the sender by such courier service. All such notices,
requests, demands and other communications shall be addressed as
follows:
If to NECY:
NEC Yamagata, Ltd.
1863 Iryuuda
▇▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇-▇▇▇▇
If to NECEL:
NEC Electronics Corporation
1753 ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇
Attention: Vice President, Corporate Strategic Planning Unit
Telephone: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
If to ASE:
Advanced Semiconductor Engineering, Inc.
Rm. 1901, TWTC Int'l Trade ▇▇▇▇.
▇▇/▇, ▇▇▇, ▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ R.O.C.
24
Attention: Mr. ▇▇▇▇ ▇▇
Telephone: ▇▇▇▇-▇-▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇▇-▇-▇▇▇▇-▇▇▇▇
If to the Buyer:
J&R Holding, Ltd.
Canon's Court
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇
Any Party may alter its notice address by notifying the other Parties
of such change of address in conformity with the provisions of this
Clause.
18.2 Governing Law
This Agreement shall be construed in accordance with and governed by
the laws of Japan, without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than
Japan to the rights and duties of the Parties.
18.3 Dispute Resolution
(a) In the event that a Dispute arises hereunder, the Parties shall
engage in mutual good faith discussions to promptly resolve the
Dispute. Such discussions shall include, at a minimum, meetings
and good faith discussions between representatives of each Party
over the forty-five (45) day period commencing with initial notice
of the Dispute.
(b) If the Dispute has not been resolved by the end of such forty-five
(45) day period, then senior representatives of each Party shall
engage in meetings and good faith discussions over the succeeding
forty-five (45) day period. During such meetings and discussions,
such representatives shall discuss a variety of options for
resolving the Dispute. If the Dispute has not been resolved by the
end of such second forty-five (45) day period, such Dispute shall
be settled by binding arbitration in accordance with this Clause.
(c) Each arbitration hereunder shall be administered by the Japan
Commercial Arbitration Association in accordance with its
Commercial Arbitration Rules then in effect by three independent
and impartial arbitrators. Two arbitrators shall be selected by
the respective Parties, one by the claimant(s) and one by the
respondent(s). The third arbitrator shall be appointed by the two
Party-appointed arbitrators or by the Japan Commercial Arbitration
Association if such two arbitrators cannot agree. The place of the
arbitration shall be Tokyo, Japan. The language(s) of the
arbitration shall be English, in which all of the arbitrators
shall be fluent.
(d) Each Party may demand arbitration by filing a written demand with
the other Party within one hundred eighty (180) calendar days
after the expiration of the second forty-five (45) day period
described above. The arbitrators shall have the authority to grant
any equitable and legal remedies that would be available in any
judicial proceeding intended to resolve a Dispute, including the
termination of this Agreement in accordance with its terms.
Notwithstanding the foregoing, either Party shall be entitled to
seek preliminary injunctive relief from any court of competent
jurisdiction, pending the final decision or award of the
arbitrators. The award rendered in an arbitration hereunder shall
be final and non-appealable. Judgment on the award rendered may be
entered in any court having jurisdiction thereof.
25
18.4 Consequential and Other Damages
In no event will a Party be liable under any contract, negligence,
strict liability or other theory for any indirect, incidental,
consequential, punitive or other special damages (including without
limitation lost profits).
18.5 Amendment
This Agreement may not be amended, supplemented or modified except by
an agreement in writing signed by each of the Parties.
18.6 Remedies
Except as expressly provided herein, all rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof
at law or in equity shall be cumulative and not alternative, and the
exercise or beginning of the exercise of any thereof by a Party shall
not preclude the simultaneous or later exercise of any other such
right, power or remedy by such Party.
18.7 Waiver
(a) A Party may waive compliance by another Party with any term or
provision of this Agreement; provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any
other or subsequent failure. No waiver shall be effective unless
it is in writing and is signed by the Party asserted to have
granted such waiver.
(b) Neither the failure nor any delay on the part of a Party to
exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.
18.8 Assignments Prohibited; Successors and Assigns
No Party shall assign, or suffer or permit an assignment of, its rights
or obligations under or its interest in this Agreement without the
prior written consent of the other Parties. Any purported assignment or
other disposition by a Party, except as permitted herein, shall be null
and void. Subject to the foregoing, this Agreement shall be binding
upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns.
18.9 No Third-Party Beneficiaries
Subject to the rights of the Seller Indemnified Parties and the Buyer
Indemnified Parties under Article 14, the terms and provisions of this
Agreement are intended solely for the benefit of each Party hereto and
its respective successors and permitted assigns, and the Parties do not
intend to confer third-party beneficiary rights upon any other Person.
18.10 Severability
If any provisions of this Agreement shall be held to be illegal,
invalid or unenforceable, the Parties agree that such provisions will
be enforced to the maximum extent permissible so as to effect the
intent of the Parties, and the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby. If
26
necessary to effect the intent of the Parties, the Parties will negotiate
in good faith to amend this Agreement to replace the unenforceable
language with enforceable language which as closely as possible reflects
such intent.
18.11 Interpretation
The table of contents and any article, section, subsection, or clause
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. Any reference made in this Agreement to a statute or
statutory provision shall mean such statute or statutory provision as
it has been amended through the date as of which the particular portion
of the Agreement is to take effect, or to any successor statute or
statutory provision relating to the same subject as the statutory
provision so referred to in this Agreement, and to any then applicable
rules or regulations promulgated thereunder. Whenever the words
"include," "includes" or "including" are used in this Agreement, they
shall be deemed, as the context indicates, to be followed by the words
"but (is/are) not limited to." The words "herein," "hereof,"
"hereunder" and words of like import shall refer to this Agreement as a
whole (including its Schedules and Exhibits), unless the context
clearly indicates to the contrary (for example, that a particular
section, schedule or exhibit is the intended reference). Where specific
language is used to clarify or illustrate by example a general
statement contained herein, such specific language shall not be deemed
to modify, limit or restrict the construction of the general statement
which is being clarified or illustrated.
18.12 Number of Days
In computing the number of days for purposes of this Agreement, all
days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a
day that is not a Business Day, then the final day shall be deemed to
be the next Business Day respectively.
18.13 Construction
This Agreement has been negotiated by the Parties and their respective
counsel and shall be fairly interpreted in accordance with its terms
and without any strict construction in favor of or against any of the
Parties.
18.14 Expenses of the Parties
Each Party shall bear the expenses incurred by such Party in connection
with the negotiation and execution of this Agreement.
18.15 Independent Contractor
Each Party is acting as an independent contractor and not as an agent
of the other Parties hereto, and nothing in this Agreement shall be
construed as creating a partnership, joint venture or similar
relationship of any kind among the Parties hereto. No Party shall hold
itself out as having authority to create binding obligations for the
Parties.
18.16 Language
This Agreement is in the English language only, which language shall be
controlling in all respects, and all versions hereof in any other
language shall be for accommodation only and shall not be binding upon
the Parties.
27
18.17 Entire Agreement
This Agreement and the Transaction Documents contain the entire
understanding among the Parties hereto with respect to the subject
matter hereof and supersede all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral
or written, among the Parties. The Parties intend that this Agreement
and the Transaction Documents shall be the several, complete and
exclusive embodiment of their agreement with respect to the subject
matter hereof, and that any evidence, oral or written, of a prior or
contemporaneous agreement that alters or modifies this Agreement or the
Transaction Documents shall not be admissible in any Proceeding
concerning this Agreement or the Transaction Documents. The express
terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof.
18.18 Counterparts
This Agreement may be executed (including, without limitation, by
facsimile signature) in one or more counterparts, with the same effect
as if the Parties had signed the same document. Each counterpart so
executed shall be deemed to be an original, and all such counterparts
shall be construed together and shall constitute one agreement.
28
IN WITNESS WHEREOF, each of the Parties hereto has caused this Share Sale and
Purchase Agreement to be executed by its duly authorized officers as of the day
and year first above written.
NECY: NEC Yamagata, Ltd.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
NECEL: NEC Electronics Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President
and Member of the Board
ASE: Advanced Semiconductor Engineering, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman & CEO
Buyer: J&R Holding Ltd.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1(i) Lease Agreement Terms
Schedule 1.1(ii) Additional Transaction Documents
Schedule 7.3(g) Directors and Auditors of the Company
Schedule 8.2 Seller Party Warranties
Schedule 8.3 Buyer Party Warranties
Exhibit 1.1(i) Services Agreement
Exhibit 4(c) Company's Articles of Incorporation
Seller Disclosure Schedule
Attachment 10(a)(1) to Seller Disclosure Schedule
Attachment 10(a)(2) to Seller Disclosure Schedule
Attachment 10(a)(3) to Seller Disclosure Schedule
Attachment 10(a)(4) to Seller Disclosure Schedule
SCHEDULE 1.1(i): LEASE AGREEMENT TERMS
1. The Lease Agreements for the Facilities will be discussed and executed
prior to the Completion.
2. Lease Agreement for Takahata Factory Premises
2.1 The Company will lease land and building from NECY.
2.2 Rent will be at a level consistent with the prevailing market rate.
2.3 Term will be 4 years plus the Company's option to extend for another
4-year period.
3. Lease Agreements for Facility 1 Premises and Facility 2 Premises
3.1 NECY will sublease the Facility 1 Premises and the Facility 2 Premises to
the Company under the current terms; provided however, the terms and
conditions of such subleases will be changed accordingly if the terms and
conditions of the Prime Leases change (the Parties shall meet and discuss
in good faith any such anticipated changes).
3.2 The Buyer Parties and the Seller Parties shall discuss whether there is a
way to extend the lease term to 4 years, plus the Company's option to
extend for another 4-year period.
4. All fixtures and improvements attached to the building will be
transferred to the Company in the Company Split. These fixtures and
improvements will be depreciated over the lease term. The Company will
have the right to sell the fixtures and improvements back to NECY upon
termination or expiration of the applicable Lease Agreement at book value
net of accumulated depreciation.
5. The Lease Agreements shall contain other leasing arrangements to be
mutually agreed by the Parties.
SCHEDULE 1.1(ii): ADDITIONAL TRANSACTION DOCUMENTS
At the Completion, each of the following additional Transaction Documents shall
be entered into:
1. The Seller Parties and the Company shall enter into an IT Services
Agreement, under which the Seller Parties shall provide certain IT
services to the Company reasonably necessary to continue its operations
for an agreed period after the Completion. Such IT Services Agreement
shall be in form and substance (including price for such services)
reasonably acceptable to the Parties and in accordance with the Services
Agreement.
2. The Seller Parties and the Company shall enter into a Transitional
Services Agreement, under which the Seller Parties shall provide certain
transitional services to the Company reasonably necessary to continue its
operations for an agreed period after the Completion. Such Transitional
Services Agreement shall be in form and substance (including price for
such services) reasonably acceptable to the Parties and in accordance
with the Services Agreement.
SCHEDULE 7.3(g): DIRECTORS AND AUDITORS OF THE COMPANY
1. Directors
Nobukatsu Manabe
Hideto Goto
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
2. Auditor
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
SCHEDULE 8.2: SELLER PARTY WARRANTIES
1. Organization and Standing.
Each Seller Party is, and upon its establishment in the Company Split and
at Completion the Company will be, a corporation duly organized and
validly existing under the laws of Japan. NECY has, and upon its
establishment in the Company Split and at Completion the Company will
have, all requisite corporate power and authority necessary to enable it
to own, lease or otherwise hold the Business Assets and to carry on the
Business as presently conducted.
2. Authorization; Validity; Enforceability.
(a) Each Seller Party has, and upon its establishment in the Company
Split and at Completion the Company will have, all requisite
corporate power and authority to enter into and perform its
obligations under each Transaction Document to which it is a
party.
(b) The execution, delivery and performance by each Seller Party of
this Agreement and each other Transaction Document to which it is
a party has been, and at Completion the execution, delivery and
performance by the Company of each Transaction Document to which
it is a party will be, duly authorized by all necessary corporate
action on the part of the applicable entity.
(c) This Agreement has been, and at Completion each other Transaction
Document to which a Seller Party or the Company is a party will
be, duly executed and delivered by the applicable entity. This
Agreement constitutes, and at Completion each other Transaction
Document to which a Seller Party or the Company is a party will
constitute, the legal, valid and binding obligation of such
entity, enforceable against such entity in accordance with its
terms.
3. No Conflicts.
(a) Conflicts. The execution and delivery by each Seller Party and the
Company of each Transaction Document to which it is a party does
not and will not, and the performance by each such entity of its
obligations thereunder will not, conflict with, result in any
violation of or default (with or without notice or lapse of time
or both) under, give rise to a right of termination, cancellation
or acceleration of any obligation (in each case by any third
party) or to the loss of any benefit by any Seller Party or the
Company under, or result in or require the creation, imposition or
extension of any Encumbrance upon any Business Asset under (1) the
Charter Documents of any Seller Party or the Company, (2) any
Contract to which a Seller Party or the Company is a party or is
otherwise bound, or to which any Business Asset is subject, or (3)
any Law applicable to any Seller Party or the Company.
(b) Approvals. Except as set forth on Section 3(b) of the Seller
Disclosure Schedule, the consummation of the Transactions will not
require any Approval to be obtained or made by any Seller Party or
the Company.
4. The Company.
(a) Upon the Company's establishment in the Company Split and
at Completion:
(i) the Company shall have the authorized, issued and
outstanding capital stock set forth in Section 4(a)
of the Seller Disclosure Schedule;
1
(ii) all issued and outstanding shares of capital stock
of the Company will have been duly authorized and
validly issued, will be fully paid and
nonassessable, and will have been issued in full
compliance with all Japanese laws.
(iii) there will be no (i) outstanding preemptive rights,
subscriptions, options, calls, warrants or other
rights or Contracts to acquire any of the Company's
securities, except for the Buyer's right to purchase
the Shares under this Agreement; (ii) outstanding
securities, instruments or obligations that are or
may become convertible into or exchangeable for any
of the Company's securities; or (iii) Contracts
under which the Company may become obligated to
sell, issue or otherwise dispose of or redeem,
purchase or otherwise acquire any of its securities.
(b) Upon the Company's establishment in the Company Split and
immediately prior to Completion, NECY will be the sole record and
beneficial owner of the Shares, free and clear of all
Encumbrances, and will transfer and deliver to the Buyer at the
Completion valid title to the Shares, free and clear of all
Encumbrances.
(c) Upon its establishment in the Company Split and at Completion, the
Company's Articles of Incorporation will be in the form of Exhibit
4(c). Upon its establishment in the Company Split and at
Completion, the Company shall not be in violation of any of the
provisions of its Articles of Incorporation or of any of the
resolutions of its stockholders, boards of directors or committees
thereof.
(d) Upon its establishment in the Company Split and at Completion, the
Company will not have any subsidiaries.
5. Estimated Completion Date Balance Sheet.
The Estimated Completion Date Balance Sheet delivered as described in
Clause 3.2(a) will be prepared in good faith in accordance with GAAP and
practices consistently applied.
6. No Undisclosed Liabilities.
Upon the consummation of the Company Split and at Completion, the Company
will have no off-balance sheet financing or similar financing
arrangements and no Liabilities which are required to be provided for or
reserved against on a balance sheet prepared in accordance with GAAP,
except for such Liabilities that are reflected or reserved against on the
Final Completion Date Balance Sheet.
7. Absence of Certain Changes.
Since September 30, 2003, the Business has been conducted in the ordinary
course consistent with past practices, and there has been no change,
event or circumstance relating to the Business which, individually or in
the aggregate, has had, or is reasonably likely to have, a Material
Adverse Effect.
8. Business Assets.
(a) The Business Assets constitute all of the assets necessary to
permit the Company to conduct the Business after the Completion in
a manner substantially equivalent to the manner as the Business is
conducted as of the date hereof, in compliance with all Laws,
Governmental Approvals and Contracts applicable to the Business.
2
(b) NECY has, and at Completion the Company will have, good and valid
title to (or valid leases or licenses in respect of) all the
Business Assets, in each case free and clear of all Encumbrances
except Permitted Encumbrances.
(c) All tangible Business Assets (including such assets that are
subject to leases and similar arrangements) are in good operating
condition and repair, ordinary wear and tear excepted, and are
adequate for the purpose for which they are used.
9. Facilities.
(a) NECY is the owner of the Takahata Factory and NEC Corporation is
the owner of the land on which the Takahata Factory is
constructed, in each case free and clear of all Encumbrances
except Permitted Encumbrances. The Facilities constitute the only
real property at which the Business is conducted.
(b) Each Prime Lease is the valid and binding obligation of NECY and,
to the knowledge of NECY, of the landlord thereunder. NECY has
performed all obligations required to be performed by NECY under
each Prime Lease, and no event has occurred that would render NECY
(with or without the lapse of time or the giving of notice, or
both) in breach or default thereunder. To the knowledge of NECY,
no event has occurred that would render the landlord under either
Prime Lease (with or without the lapse of time or the giving of
notice, or both) in breach or default in any respect thereunder.
(c) The Takahata Factory and, to NECY's knowledge, the Facility 1
Premises and the Facility 2 Premises are in compliance with all
applicable Laws and Governmental Approvals. All structures,
buildings, building systems and other improvements at the Takahata
Factory and, to NECY's knowledge, at the Facility 1 Premises and
the Facility 2 Premises, are in working order and repair (fair
wear and tear excepted) and are suitable for the conduct of the
Business thereat.
10. Material Contracts.
(a) All Contracts that will be transferred to the Company in the
Company Split (i) were entered into by NECY in the ordinary course
of the Business, (ii) contain terms and conditions that are
commercially reasonable with respect to the Business, and (iii) do
not provide for termination fee obligations or other potential
Liabilities that are materially adverse to the Company. Except as
disclosed on Section 10(a) of the Seller Disclosure Schedule, none
of the Contracts that will be transferred to the Company in the
Company Split (1) are materially important to the Business (singly
or together with all related Contracts) and (2) in the event of
termination or expiration, would be difficult for the Company to
replace with Contracts containing terms and conditions that are
not materially adverse in the aggregate as compared to the
terminated or expired Contracts. Except as disclosed on Section
10(a) of the Seller Disclosure Schedule, each Contract that will
be transferred to the Company in the Company Split and that
provides for payment or performance by either party thereto having
an aggregate value (alone or with related Contracts) exceeding or
reasonably likely to exceed ten million Japanese yen (JPY
10,000,000) will expire in accordance with its terms or can be
terminated by the Company without payment or penalty prior to the
third anniversary of the Completion Date.
(b) Each Contract that will be transferred to the Company in the
Company Split and that (alone or with related Contracts) is
material to the Business (collectively, the "Material Contracts")
is the valid and binding obligation of NECY (and
3
immediately prior to the Completion, of the Company) and, to the
knowledge of NECY, of each other party thereto. NECY has performed
(and immediately prior to the Completion, the Company shall have
performed) all obligations required to be performed by it under
the Material Contracts, and no event has occurred that would
render it (with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder. To the knowledge
of NECY, no event has occurred that would render any other party
to a Material Contract (with or without the lapse of time or the
giving of notice, or both) in breach or default in any respect
thereunder.
11. Intellectual Property.
To NECY's knowledge, the conduct of the Business as conducted
immediately prior to the Completion does not infringe, constitute a
misappropriation or use or disclose in an unauthorized manner any
intellectual property right of any Person. NECY has not received any
written notice or proposal for licensing or similar arrangement
alleging any such actual or potential infringement, misappropriation or
unauthorized use or disclosure. To NECY's knowledge, NECY has not
received any written proposal indicating that a license under the
intellectual property rights of any third party is necessary in order
to conduct the Business as it is conducted immediately prior to the
Completion.
12. Customers and Suppliers.
The Seller Parties have not received written notice to the effect that
the benefits of any material relationship of NECY or its Affiliates
with customers or suppliers with respect to the Business will not
continue to be available to the Company after the Completion Date.
13. Employment.
(a) The list of Proposed Transferred Employees shall upon delivery in
accordance with Clause 3.2(d) correctly reflect the grade,
salaries, wages and other compensation, participation in Seller
Benefit Plans, dates of employment or service, and positions of
the Proposed Transferred Employees. None of the Transferred
Employees has been granted the right to continued employment or
engagement by NECY, any of its Affiliates or the Company, or to
any compensation following or in connection with termination of
employment or engagement with NECY, any of its Affiliates or the
Company, subject to any rights to receive such compensation
pursuant to applicable Law.
(b) Neither the execution and delivery of the Transaction Documents
nor the consummation of the Transactions contemplated thereby will
result in or give rise to (i) any Liability of the Company to make
any severance, retention, termination, "golden parachute" or other
payment to any Transferred Employee, or (ii) the acceleration of
any other rights or benefits to any Transferred Employee
(including vesting and payments with respect to equity incentives
and other rights under Seller Benefit Plans), in each case whether
pursuant to a Seller Benefit Plan, Contract, Law or otherwise.
(c) There are no claims or Proceedings against or affecting NECY
pending, or to NECY's knowledge, threatened by or pertaining to
any Transferred Employee. NECY has complied with all Laws related
to the employment or engagement of the Transferred Employees,
including Laws related to wages, hours, leaves of absence, equal
opportunity, occupational health and safety, workers'
compensation, severance, employee handbooks or manuals, collective
bargaining, unfair labor practices and the payment of social
security and other Taxes and withholding obligations relating
thereto.
4
(d) Except as set forth in Section 13(d) of the Seller Disclosure
Schedule, none of NECY or its Affiliates is a party to or is
otherwise subject to any obligations relating to any collective
bargaining Contract with respect to the Transferred Employees.
There is no labor strike, slowdown or stoppage with respect to the
Transferred Employees pending or, to NECY's knowledge, threatened
against NECY.
(e) NECY has no knowledge that any of the Key Employees and not more
than an immaterial number of the Transferred Employees have
objected to the proposed Transactions or indicated their intent to
terminate their employment or service with NECY or the Company.
14. Benefit Plans.
Each Seller Benefit Plan that the Company will succeed to and assume
upon the consummation of the Company Split as described in Clause 11.1
complies by its terms and in operation with the requirements provided
by applicable Laws, except for matters that, individually or in the
aggregate, would not have a Material Adverse Effect. Such Seller
Benefit Plans contain terms that in the aggregate are materially
consistent with customary and reasonable Benefit Plan practices in
Japan.
15. Compliance with Laws.
The Seller Parties are and have been in compliance with all Laws that
are applicable to the Business or the Business Assets, and no event has
occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) constitute, or result directly or
indirectly in, a default under, a material breach or violation of, or a
material failure to comply with, any such Law. The Seller Parties have
not received any notice from any Person regarding any actual, alleged
or potential material violation of any Law applicable to the Business
or the Business Assets.
16. Governmental Approvals.
The Seller Parties and their applicable Affiliates have obtained and
are in compliance with all Governmental Approvals that are necessary in
connection with the Business and the Business Assets, and all such
Governmental Approvals are in full force and effect. Each such
Governmental Approval will remain in full force and effect in favor of
the Company upon consummation of the Company Split and upon Completion
without notice to or approval by any Person, without additional payment
and without any modification of rights and privileges thereunder,
except for post-Completion notice filings or Approvals that will be
made or obtained as a matter of routine and the failure to make any
such filings or obtain any such Approvals will not have a Material
Adverse Effect. There is no pending or, to NECY's knowledge, threatened
Proceeding with respect to the suspension, termination, revocation,
cancellation, limitation or impairment of any such Governmental
Approval. No fines or penalties are due and payable in respect of any
such Governmental Approval or any violation thereof.
17. Environmental Matters.
To the knowledge of NECY:
(a) The Business has been and is being conducted in compliance with
applicable Environmental Laws, including with respect to the
storage, release or disposal of Hazardous Materials.
5
(b) The Seller Parties and their Affiliates have timely filed all
material reports, obtained all material Approvals and generated
and maintained all material data, documentation and records
required under any applicable Environmental Laws relating to the
Business and their respective properties relating thereto.
(c) None of the Seller Parties or their Affiliates has received any
notice from any Governmental Authority advising it that it is or
may be responsible for any Environmental Liabilities relating to
the Business.
18. Proceedings and Orders.
There is no Proceeding pending or, to the knowledge of NECY, threatened
against or affecting the Business, any Business Assets, or any Seller
Party or their respective Affiliates with respect thereto. No insurance
company has asserted in writing that any such Proceeding is not covered
by the applicable policy related thereto.
19. Taxes.
(a) Each Tax Return required to be filed by any Seller Party relating
in whole or in part to the Business ("Business Tax Returns"), to
the extent required by applicable Law to be filed before the date
hereof, has been filed, and each filed Business Tax Return is
true, correct and complete. All Taxes shown to be payable on such
Business Tax Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, and no other
Taxes are payable relating in whole or in part to the Business,
whether or not shown on such Business Tax Returns, for any period
ending prior to or including the Completion Date. No Affiliate of
the Seller Parties has been required to file Tax Returns relating
to the Business.
(b) NECY has delivered or made available to ASE correct and complete
copies of all Business Tax Returns filed by the Seller Parties or
their Affiliates for all periods ending on or after March 31,
1999, and copies of all Tax examination reports and notices of
deficiency or assessment with respect to any Business Tax Returns
received by any Seller Party or its Affiliates after March 31,
1999.
(c) (i) No Seller Party or any of its Affiliates has (and upon the
consummation of the Company Split, the Company will not have) any
Liability for Taxes relating to the Business by Contract with any
other Person (including any tax sharing or tax indemnity
agreement); and (ii) there are no Encumbrances for Taxes on the
Business Assets, other than statutory Encumbrances for Taxes not
yet due.
(d) No Business Tax Return filed or required to be filed within seven
(7) years prior to the date hereof has been audited or is
currently the subject of audit or any Tax-related Proceeding by
any Governmental Authority and, to NECY's knowledge, no such audit
or Proceeding is threatened. None of the Seller Parties or their
Affiliates has waived any statute of limitations in respect of any
Tax related to the Business, which waiver remains in effect.
(e) No Seller Party or its Affiliates is a party to or the subject of
any closing agreement, private letter ruling, technical advice
memoranda or advance pricing agreement in respect of any Tax
related to the Business with any Governmental Authority.
20. Accuracy of Information.
6
All information provided by the Seller Parties or their respective
agents and representatives to ASE or its agents and representatives in
connection with this Agreement is true and correct in all material
respects as of the respective dates of such information and does not
omit any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
as of the respective dates of such information; provided that no
representation or warranty is made by the Seller Parties as to any
financial forecasts or projections furnished to ASE or its agents or
representatives, except that such financial forecasts and projections
have been prepared in good faith based on assumptions that are believed
by the Seller Parties to have been reasonable at the time or times
made.
SCHEDULE 8.3: BUYER PARTY WARRANTIES
1. Organization and Standing.
Each Buyer Party is a corporation duly organized and validly existing
under the Laws of the jurisdiction in which it is incorporated.
2. Buyer
(a) ASE is the sole record and beneficial owner of all issued and
outstanding shares of capital stock of Buyer, free and clear of
all Encumbrances.
(b) There are no (i) outstanding preemptive rights, subscriptions,
options, calls, warrants or other rights or Contracts to acquire
any of Buyer's securities; (ii) outstanding securities,
instruments or obligations that are owned by a Person other than
ASE and that are or may become convertible into or exchangeable
for any of Buyer's securities; or (iii) Contracts under which the
Buyer may become obligated to sell, issue or otherwise dispose of
or redeem, purchase or otherwise acquire any of its securities to
a Person other than ASE.
3. Authorization; Validity; Enforceability.
(a) Each Buyer Party has all requisite organizational power and
authority to enter into and perform its obligations under each
Transaction Document to which it is a party.
(b) The execution, delivery and performance by each Buyer Party of
this Agreement and each other Transaction Document to which it is
a party has been duly authorized by all necessary organizational
action on the part of such Buyer Party.
(c) This Agreement has been, and at Completion each other Transaction
Document to which a Buyer Party is a party will be, duly executed
and delivered by such Buyer Party. This Agreement constitutes, and
at Completion each other Transaction Document to which a Buyer
Party is a party will constitute, the legal, valid and binding
obligation of such Buyer Party, enforceable against such entity in
accordance with its terms.
4. No Conflicts.
(a) Conflicts. The execution and delivery by each Buyer Party of each
Transaction Document to which it is a party does not and will not,
and the performance by each Buyer Party of its obligations
thereunder will not, conflict with, result in any violation of or
default (with or without notice or lapse of time or both) under,
give rise to a right of termination, cancellation or acceleration
of any obligation (in each case by any third party) or to the loss
of any benefit by any Buyer Party under, (1) the Charter Documents
of any Buyer Party, (2) any Contract to which a Buyer Party is a
party or is otherwise bound, or (3) any Law applicable to any
Buyer Party, except in each case for any matters that would not
have a material adverse effect on the ability of the Buyer Parties
to enter into and perform their obligations under the Transaction
Documents.
(b) Approvals. Except for the foreign exchange report to be submitted
in connection with the purchase of the Shares to the Ministry of
Economy, Trade and Industry (METI) and the Ministry of Finance,
the consummation of the Transactions will not require any Approval
to be obtained or made by either Buyer Party.
EXHIBIT 1.1(i): SERVICES AGREEMENT
EXHIBIT 4(c): COMPANY'S ARTICLES OF INCORPORATION
(Translation)
ARTICLES OF INCORPORATION
OF
ASE JAPAN CO., LTD.
CHAPTER I
GENERAL PROVISIONS
Article 1. (Trade Name)
The name of the Company shall be ASE Japan Kabushiki Kaisha and shall be
called ASE Japan Co., Ltd. in English.
Article 2. (Purpose)
The purposes for which the Company is established are:
(a) Manufacture and sale of electronic components; and
(b) Any and all other business incidental to the foregoing item.
Article 3. (Location of Head Office)
The head office of the Company shall be located in Yokohama, Kanagawa,
Japan.
Article 4. (Method of Giving Public Notice)
Public notices of the Company shall be given in the Official Gazette.
CHAPTER II
SHARES
Article 5. (Total Number of Shares Authorized to be Issued)
The total number of shares authorized to be issued by the Company shall be
twenty eight thousand (28,000) shares.
Article 6. (Share Certificates)
Share certificates shall be issued by the Company in denomination of one
share, ten (10) shares, one hundred (100) shares and one thousand (1,000)
shares. Provided, however, that in case where it is necessary, the Company shall
issue the share certificate representing other number of shares.
-2-
Article 7. (Restriction on Transfer of Shares)
Any transfer of shares of the Company shall be subject to approval of the
Board of Directors.
Article 8. (Share Handling Regulations)
The registration of transfer of shares, registration of pledge, indication
of trust property, reissuance of share certificates and other matters relating
to handling of shares and required fee in connection therewith shall be governed
by the Share Handling Regulations determined by the Board of Directors.
Article 9. (Record Date)
The Company will treat the shareholders entered in the Shareholder Register
as of the end of each fiscal year to be the shareholders who are entitled to
exercise the rights of shareholders at the Ordinary General Meeting of
Shareholders for that fiscal year. (2) In addition to the preceding paragraph,
the Company may determine the record date with prior public notice by resolution
of the Board of Directors whenever necessary.
CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
Article 10. (Place of General Meetings of Shareholders)
General meetings of shareholders shall be held in the area where the head
office is located, Takahata-machi, Higashiokitama-gun, Yamagata or adjacent area
thereof.
Article 11. (Convocation)
The ordinary general meeting of shareholders of the Company shall be
convened within three (3) months from the following day of the last day of the
fiscal year, and extraordinary general meetings of shareholders may be convened
whenever necessary.
(2) Except as otherwise stipulated in provision of law, the general
meetings of shareholders of the Company shall be convened by the Representative
Director in accordance with a resolution of the Board of Directors. If there are
two or more Representative Directors, it shall be in an order previously
determined by the Board of Directors.
Article 12. (Chairman)
The President shall act as Chairman at the general meetings of
shareholders. In the event that the President is prevented from presiding at the
meeting, another Director shall take his place in an order previously determined
by the Board of Directors.
-3-
Article 13. (Method of Resolutions)
Resolutions of a general meeting of shareholders shall be adopted by at
least a majority of the voting rights of the shareholders present at the
meeting.
Article 14. (Voting by Proxy)
A shareholder is entitled to exercise his voting rights by proxy; provided,
however, that the person designated to exercise such rights pursuant to such
proxy shall submit to the Company before the holding of a general meeting of
shareholders a document attesting to his power of representation.
Article 15. (Minutes)
A summary of the proceedings at a general meeting of shareholders and the
results thereof shall be recorded in the minutes and the chairman and Directors
present thereat shall affix their names thereto.
(2) These minutes stipulated in the preceding paragraph shall be kept at
the head office of the Company for ten (10) years and at the branch office of
the Company for five (5) years.
CHAPTER IV
DIRECTORS AND BOARD OF DIRECTORS
Article 16. (Number of Directors)
The Company shall have a maximum of ten (10) Directors.
Article 17. (Resolution of Election of Directors)
The Directors shall be elected by at least a majority of the voting rights
of the shareholders present at a general meeting of shareholders at which
shareholders representing one-third (1/3) or more of the total voting rights
shall be present.
(2) Cumulative voting shall not be applicable for the resolution described
in the preceding paragraph.
Article 18. (Term of Office of Directors)
The term of office of a Director shall expire upon the conclusion of the
ordinary general meeting of shareholders held in respect of the last fiscal year
ending within two (2) years after his assumption of office.
(2) The term of office of a Director elected to fill a vacancy or to meet
an increase in the number of Directors shall expire at such time as the term of
office of the other Directors then in office is to expire.
-4-
Article 19. (Representative Directors, etc.)
The Representative Directors of the Company shall be elected from among the
Directors by resolutions of the Board of Directors.
(2) The Board of Directors may, by its resolution, elect one President and
a few Senior Managing Director, Managing Director or other Directors with
special titles.
Article 20. (Meeting of the Board of Directors)
The Board of Directors shall decide the management of the business of the
Company according to the law or these Articles of Incorporation.
(2) Matters concerning the Board of Directors shall be governed by the
Regulations of the Board of Directors to be adopted by the Board of Directors.
(3) To convene a meeting of the Board of Directors, a notice shall be
issued to each Director and Statutory Auditor at least three (3) days prior to
the date of meeting; provided, however, that such term of notice may be
shortened or dispensed with in case of emergency.
Article 21. (Remuneration and Retirement Allowances)
Remuneration and retirement allowances to Directors shall be determined by
resolutions of a general meeting of shareholders.
CHAPTER V
STATUTORY AUDITORS
Article 22. (Number of Statutory Auditor)
The Company shall have a maximum of five (5) Statutory Auditors.
Article 23. (Resolution of Statutory Auditors)
The Statutory Auditors shall be elected by at least a majority of the
voting rights of the shareholders present at a general meeting of shareholders
at which shareholders representing one-third (1/3) or more of the total voting
rights shall be present.
Article 24. (Term of Office of Statutory Auditor)
The term of office of a Statutory Auditor shall expire upon the conclusion
of the ordinary general meeting of shareholders held in respect of the last
fiscal year ending within four (4) years after his assumption of office.
(2) The term of office of a Statutory Auditor elected to fill a vacancy
shall expire at such time as the term of office of his predecessor is to expire.
-5-
Article 25. (Remuneration and Retirement Allowances)
Remuneration and retirement allowances to Statutory Auditors shall be
determined by resolutions of a general meeting of shareholders.
CHAPTER VI
ACCOUNTS
Article 26. (Fiscal Year)
The fiscal year of the Company shall be a period from April 1 to March 31
of the following year and the accounts of each fiscal year shall be settled on
the last day of such fiscal year.
Article 27. (Payment of Dividends)
Dividends shall be paid to the shareholders or pledgees registered in the
register of shareholders as of the last day of each fiscal year.
Article 28. (Prescription Period for Payment of Dividends)
In the event that dividends have not been collected within three (3) years
from the date of commencement of payment thereof, the Company shall be relieved
of its obligation to pay such dividends.
CHAPTER VII
SUPPLEMENTAL PROVISIONS
Article 29. (Shares Issued to be Issued upon Incorporation)
The total number of shares issued by the Company upon incorporation shall
be seven thousand and two hundred (7,200) shares.
Article 30. (Initial Term of Office)
Notwithstanding the provision of Article 18 of the Articles of
Incorporation, the term of office of the initial Directors and Statutory
Auditors of the Company shall expire at the close of the ordinary general
meeting of shareholders to be held with respect to the last fiscal year ending
within one (1) year after their assumption of offices.
Article 31. (Initial Fiscal Year)
The initial fiscal year of the Company shall be from the date of its
incorporation to March 31, 2005.
-6-
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION........................................1
2. SALE OF SHARES........................................................8
3. COMPANY SPLIT.........................................................8
4. COMPANY BOOK VALUE....................................................9
5. PURCHASE PRICE ADJUSTMENT.............................................9
6. CONDITIONS PRECEDENT TO THE COMPLETION...............................10
7. COMPLETION...........................................................13
8. REPRESENTATIONS AND WARRANTIES.......................................14
9. COVENANTS BY ASE.....................................................14
10. EMPLOYEE ARRANGEMENTS................................................16
11. BENEFIT PLAN ARRANGEMENTS............................................17
12. COVENANTS BY THE SELLER PARTIES......................................17
13. COMMERCIALLY REASONABLE EFFORTS......................................18
14. INDEMNITY............................................................18
15. EXTERNAL CLAIMS......................................................21
16. CONFIDENTIALITY......................................................22
17. TERMINATION..........................................................23
18. MISCELLANEOUS........................................................24
