ASSET PURCHASE AGREEMENT

Exhibit 2.1

 

EXECUTION COPY

 

 

 

 

ASSET PURCHASE AGREEMENT

among

INTERNATIONAL WIRE GROUP, INC.,

GLOBAL WIRE LTD.,

GLOBAL WIRE INC.,

MONTGOMERY WIRE CORPORATION,

WYRE WYND CORPORATION

and

NEGEV WIRE TRADING INC.

 

Dated as of June 3, 2008

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

 

 

 

 

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TABLE OF CONTENTS

(continued)

 

Exhibits

 

 

 

 

 

 

 

 

 

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Disclosure Schedules

 

 

 

 

 

 

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ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) dated as of June 3, 2008, by and among International Wire Group, Inc., a Delaware corporation (“ Purchaser ”), and Global Wire Inc., a Delaware corporation (“ Global Wire USA ”), Montgomery Wire Corporation, a Delaware corporation (“ Montgomery Wire ”), Wyre Wynd Corporation, a Delaware corporation (“ Wyre Wynd ” and together with Global Wire USA and Montgomery Wire, “ U.S. Sellers ”), Negev Wire Trading Inc., a Delaware corporation (“ Trading Company ”), and Global Wire Ltd., an Israeli corporation (“ Parent ” and together with U.S. Sellers and Trading Company, each, a “ Seller ” and collectively, “ Sellers ”).

W I T N E S S E T H:

WHEREAS , Sellers presently conduct the Business; and

WHEREAS , Sellers desire to sell, transfer and assign to Purchaser (or its designated Affiliate or Affiliates), and Purchaser desires to (or to cause its designated Affiliate or Affiliates to) acquire and assume from Sellers, all of the Purchased Assets, Israeli Purchased Assets and Assumed Liabilities, all as more specifically provided herein.

NOW , THEREFORE , in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

 

DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1 :

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“ Affiliated Group ” means any affiliated group within the meaning of Section 1504 of the Code or any comparable or analogous group under applicable Law.

“ Bond Counsel ” means Gallagher, Callahan & Gartrell, P.C.

“ Business ” means (i) the operation of the Montgomery Wire Facility, the Wyre Wynd Facility and the Leased Real Properties and (ii) the business of U.S. Sellers, including the

 

 

 

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fabrication and sale of silver-plated, nickel-plated or bare wire (including single end, bunched, stranded, cabled and bobbin wire and braided products).

“ Business Day ” means any day of the year on which national banking institutions in New York and in Israel are open to the public for conducting business and are not required or authorized to close.

“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Connecticut Property Transfer Act ” means Sections 22a-134 et seq. of the Connecticut General Statutes.

“ Consent Order ” means that Consent Order No. WC5397, DEP/WPC 058-011, between the State of Connecticut, Department of Environmental Protection, and Global Wire Inc., Wyre Wynd Division, dated as of November 5, 2003.

“ Consequential Damages ” means damages that are not probable nor reasonably foreseeable nor flow directly from the breach or alleged breach of this Agreement, the Seller Documents or the Purchaser Documents.

“ Contract ” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license, purchase orders, commitment or other arrangement, understanding or undertaking, commitment or obligation, whether written or oral, and any schedules, exhibits and auxiliary instrument forming a part thereof.

“ Current Assets ” means the trade and other accounts receivable (after deducting reel deposits), prepaid expenses to the extent Purchaser can realize the benefit thereof following the Closing and Inventory of U.S. Sellers; provided , however , it shall not include (i) cash or cash equivalents, (ii) any amounts owed from the Sellers or their directors, officers, employees or Affiliates, (iii) any deferred Tax assets or Tax receivable accounts or (iv) any accounts receivable (including related reel deposits) relating to sales of the inventory of Trading Company prior to the Closing Date (such accounts receivable to be determined in a manner consistent with the accounts receivable as of December 31, 2007, which are set forth on Schedule 1.1(f) ) (the “ Trading Company Receivables ”). For purposes of illustration, a calculation of the Current Assets as of the Balance Sheet Date, with reconciliations to the Balance Sheet, is attached as Schedule 1.1(e) .

“ Current Liabilities ” means the trade and other accounts payable of U.S. Sellers, including any amounts payable for Inventory in transit; provided , however , it shall not include (i) any reel deposits that have been properly deducted from Current Assets in the Final Working Capital, (ii) deferred Tax liabilities or Tax payable accounts or (iii) any accounts payable of Global Wire USA relating to the inventory of Trading Company sold by Global Wire USA to customers of the Business prior to the Closing Date (the “ Trading Company Payables ”). For

 

 

 

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purposes of illustration, a calculation of the Current Liabilities as of the Balance Sheet Date, with reconciliations to the Balance Sheet, is attached as Schedule 1.1(e) .

“ Documents ” means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title policies, lists of past, present and/or prospective customers, supplier lists, regulatory filings, operating data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other similar materials related to the Business and the Purchased Assets, in each case whether or not in electronic form.

“ Eilat and Netivot Equipment ” means all of the Machinery and Equipment set forth on Schedule 1.1(a) .

“ Employees ” means all individuals (including common law employees) who are primarily employed by U.S. Sellers in connection with the Business immediately prior to the Closing.

“ Environmental Costs and Liabilities ” means all debts, losses, liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and reasonable costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred imposed under Environmental Law as a result of any claim or demand by any Governmental Body or other Person or any violation of Environmental Law, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, Environmental Permit, Order or agreement with any Governmental Body or other Person, which relates to any environmental, health or safety condition, violation of Environmental Law or a Release or threatened Release of Hazardous Materials.

“ Environmental Law ” means any foreign, federal, state or local law (including common law), statute, code, ordinance, rule, regulation or final Order in any way relating to the protection of human health and safety as it relates to exposure to Hazardous Materials, the environment or natural resources, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq. ), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq. ), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq. ), the Clean Water Act (33 U.S.C. § 1251 et seq. ), the Clean Air Act (42 U.S.C. § 7401 et seq. ), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq. ), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq. ), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq. ), as each has been or may be amended and the regulations promulgated pursuant thereto.

“ Environmental Permit ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body required by Environmental Laws for the operation of the Business.

 

 

 

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“ ERISA ” means the Employment Retirement Income Security Act of 1974, as amended.

“ Excluded Contracts ” means the Contracts set forth on Schedule 1.1(b) .

“ Former Employees ” means all individuals (including common law employees) who were employed by the U.S. Sellers in connection with the Business but are no longer so employed as of the Closing Date.

“ GAAP ” means generally accepted accounting principles in the United States, as in effect as of the date of the applicable time or period covered by any Financial Statement, and for all other purposes of this Agreement, as in effect as of the date hereof.

“ Governmental Body ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign, federal, state, or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

“ Hardware ” means any and all computer and computer-related hardware, including computers, file servers, facsimile servers, scanners, color printers, laser printers and networks.

“ Hazardous Material ” means any substance, material or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls and urea formaldehyde insulation.

“ Indebtedness ” of any Person means, without duplication, (i) the principal, accreted value, accrued and unpaid interest, prepayment and redemption premiums or penalties (if any), unpaid fees or expenses and other monetary obligations in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business, but including the current liability portion of any indebtedness for borrowed money); (iii) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; (iv) all obligations of such Person under interest rate or currency swap transactions (valued at the termination value thereof); (v) all obligations of the type referred to in clauses (i) through (iv) of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; and (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).

 

 

 

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“ Indebtedness Payoff ” means the amount of funds to be paid to RBS Citizens on behalf of Sellers to discharge in full the Indebtedness owed to RBS Citizens as of the Closing pursuant to a payoff letter to be provided by RBS Citizens setting forth such amounts and which includes an undertaking by RBS Citizens to provide all authorizations, instructions and documents necessary to discharge upon receipt of such amount any further obligations of Sellers with respect to such Indebtedness and any Liens securing such Indebtedness.

“ Indemnity Escrow Amount ” means $1,500,000, which shall be deposited with the Escrow Agent and held for disbursement pursuant to the Escrow Agreement.

“ Intellectual Property ” means all right, title and interest in or relating to intellectual property and related priority rights, whether protected, created or arising under the laws of the United States or any other jurisdiction or under any international convention, including: (i) all patents and applications therefor, including all provisionals, continuations, divisionals, and continuations-in-part thereof and patents issuing thereon, along with all reissues, reexaminations, substitutions, renewals and extensions thereof (collectively, “ Patents ”); (ii) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, corporate names, trade styles, logos and other source or business identifiers and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof (collectively, “ Marks ”); (iii) all Internet domain names; (iv) all copyrights, works of authorship and moral rights and all mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith, along with all reversions, extensions and renewals thereof (collectively, “ Copyrights ”); (iv) trade secrets (“ Trade Secrets ”); and (v) all other intellectual property rights arising from or relating to any Technology.

“ Intellectual Property Licenses ” means (i) any grant by a U.S. Seller to another Person of any right relating to or under the Purchased Intellectual Property and/or Purchased Technology and (ii) any grant by another Person to any U.S. Seller of any right relating to or under any third Person’s Intellectual Property and/or Technology.

“ Inventory ” means all inventory (including raw materials, work in process, finished goods, scrap material and obsolete goods) used or held for use in the Business, including any Inventory in transit from any third-party supplier or in storage at any location as set forth on Schedule 5.6(b) , but not including the inventory of Trading Company or of tolling customers.

“ IRBs ” means (i) the Industrial Facility Revenue Bonds (Montgomery Wire Corporation Issue – Series 1998) and (ii) the Variable Rate Demand Industrial Development Bonds (Wyre Wynd Corporation Project) Series 2000.

“ IRS ” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

“ Israeli Purchased Assets ” means the Eilat and Netivot Equipment, the Reels, the Customer List and the Wire Specifications, collectively.

 

 

 

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“ Knowledge of Sellers ” means the knowledge, after due inquiry, of those Persons identified on Schedule 1.1(c) .

“ Law ” means any foreign, federal, state or local law (including common law), statute, code, ordinance, rule, regulation, Order or other requirement, but excluding any Environmental Law.

“ Legal Proceeding ” means any judicial, administrative or arbitral actions, suits, mediations, investigations, inquiries, proceedings or claims (including counterclaims) by or before a Governmental Body, but excluding any proceeding to the extent arising under Environmental Laws.

“ Liability ” means any debt, loss, damage, adverse claim, fines, penalties, interest, liability or obligation (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, matured or unmatured, determined or determinable, disputed or undisputed, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise), and including all costs and expenses relating thereto (including all fees, disbursements and expenses of legal counsel, experts, engineers and consultants and costs of investigation), but excluding any Environmental Costs and Liabilities.

“ Lien ” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement, encumbrance or any other restriction or limitation whatsoever.

“ Machinery and Equipment ” means all machinery, furniture, fixtures, furnishings, equipment, vehicles, leasehold improvements, and other tangible personal property owned by U.S. Sellers and used or held for use in the Business, including all artwork, desks, chairs, tables, Hardware, copiers, telephone lines and numbers, telecopy machines and other telecommunication equipment, cubicles and miscellaneous office furnishings and supplies.

“ Material Adverse Effect ” means any event, circumstance, condition, fact, effect or other matter that individually or in the aggregate with any such event, circumstance, condition, fact, effect or other matter, has had or could reasonably be expected to have a material adverse effect on (i) the business, assets, properties, results of operations or condition (financial or otherwise) of the Business, taken as a whole; (ii) the value of the Purchased Assets or a material increase in the amount of Assumed Liabilities; or (iii) the ability of Sellers to consummate the transactions contemplated by this Agreement or perform its obligations under this Agreement or the Seller Documents. Any determination as to whether or not a Material Adverse Effect has occurred shall be made without duplicating any debt, liability or other obligation of or owing by Purchaser to the extent such debt, liability or other obligation arises from the same fact.

“ Montgomery Wire Facility ” means the approximately 83,000 square foot building located at Littleton, New Hampshire occupied by Montgomery Wire, and that certain

 

 

 

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real property upon which the building is located. The Montgomery Wire Facility includes the real property fee interests owned by Montgomery Wire, including any buildings, structures, landscaping, utility lines, driveways, fences, parking areas, contiguous and adjacent entry rights, and all other improvements to such real property that are owned by Montgomery Wire and located in and upon such real property, and all rights, privileges and easements appurtenant to the foregoing.

“ Montgomery Wire Indenture ” means that certain Loan and Trust Agreement, dated as of February 1, 1998, by and among the Business Finance Authority of the State of New Hampshire, Montgomery Wire and US Bank, as it may be amended, modified or supplemented from time to time.

“ Non-Disclosure Agreement ” means the non-disclosure agreement, dated August 22, 2006, by and among Purchaser and Parent.

“ Order ” means any order, injunction, judgment, doctrine, decree, ruling, writ, assessment or arbitration award of a Governmental Body.

“ Ordinary Course of Business ” means the ordinary and usual course of normal day-to-day operations of the Business, as conducted by Sellers, through the date hereof consistent with past practice.

“ Permits ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body, but excluding any Environmental Permit.

“ Permitted Exceptions ” means, to the extent not causing a material impairment to the value or use of the applicable asset, (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in the policies of title insurance that have been delivered to Purchaser prior to the date hereof and which do not restrict the current use of the Seller Property by the U.S. Sellers in the Business (other than Liens for Taxes for prior years or Liens securing Indebtedness); (ii) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings and for which an appropriate reserve has been established therefor in the Financial Statements in accordance with GAAP; (iii) mechanics’, carriers’, workers’ and repairers’ Liens arising or incurred in the Ordinary Course of Business that are not resulting from a breach, default or violation by any Seller of any Contract or Law; and (iv) zoning, entitlement and other land use regulations and Environmental Laws by any Governmental Body, provided that such legal requirements have not been materially violated.

“ Person ” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“ Purchased Contracts ” means all Contracts set forth on Schedule 1.1(d) and all purchase orders (from customers and to suppliers) entered into in the Ordinary Course of Business.

 

 

 

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“ Purchased Intellectual Property ” means all Intellectual Property owned, used or held for use by any U.S. Seller in the Business, including the Company Marks.

“ Purchased Technology ” means all Technology owned, used or held for use by any U.S. Seller in the Business.

“ RBS Citizens ” means RBS Citizens, National Association (successor by merger to Citizens Bank of Massachusetts).

“ Reels ” means the reels set forth on Schedule 1.1(g) .

“ Release ” means any release, spill, emission, leaking, pumping, pouring, injection, deposit, dumping, emptying, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, or into or out of any property of any Hazardous Material occurring prior to the Closing Date.

“ Remedial Action ” means all actions including any capital expenditures undertaken to (i) clean up, remove, treat or in any other way address any Hazardous Material; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care; or (iv) to correct a condition of noncompliance with Environmental Laws.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ S&P ” means Standard & Poor’s.

“ SEC ” means the United States Securities and Exchange Commission.

“ Software ” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code; (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise; (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons; and (iv) all documentation, including user manuals and other training documentation related to any of the foregoing.

“ Spare Parts ” means all spare parts used or held for use by U.S. Sellers in the Business.

“ Tax ” or “ Taxes ” means (i) any and all U.S. federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever; (ii) all interest, penalties, fines, additions to tax or additional amounts

 

 

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imposed by any Taxing Authority in connection with any item described in clause (i); and (iii) any liability in respect of any items described in clauses (i) and/or (ii) payable by reason of Contract, assumption, transferee liability, operation of law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under law) or otherwise.

“ Taxing Authority ” means the IRS and any other Governmental Body responsible for the administration of any Tax.

“ Tax Return ” means any return, report or statement required to be filed with respect to any Tax (including any elections, declarations, schedules or attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes any Seller or any of its Affiliates.

“ Technology ” means, collectively, all Software, technology, information, designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein.

“ US Bank ” means U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company).

“ WARN ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and the rules and regulations promulgated thereunder.

“ Wire Specifications ” means the wire specifications for all wire manufactured in Israel as set forth on Schedule 1.1(h) .

“ Working Capital ” means Current Assets reduced by Current Liabilities, in each case as determined in accordance with GAAP as applied in a manner consistent with the methods, policies, principles, practices and procedures with consistent classifications, judgments and estimation methodologies used by U.S. Sellers, including those regarding the establishment of general and specific reserves, all as used in the preparation of the Balance Sheet. For purposes of illustration, the calculation of the Working Capital, attached as Schedule 1.1(e) is a schedule setting forth the Working Capital as of the Balance Sheet Date with reconciliations to the Balance Sheet.

“ Working Capital Adjustment Escrow Amount ” means $750,000, which shall be deposited with the Escrow Agent and held for disbursement pursuant to the Escrow Agreement.

 

 

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“ Wyre Wynd Facility ” means the approximately 210,000 square foot building located at Jewett City, Connecticut, together with all improvements, fixtures, easements and other appurtenances thereto and all rights and privileges in respect thereof.

“ Wyre Wynd Indenture ” means that certain Indenture of Trust, dated as of December 1, 2000, by and between the Connecticut Development Authority and US Bank, as it may be amended, modified or supplemented from time to time.

1.2        Terms Defined Elsewhere in this Agreement . For purposes of this Agreement, the following terms have meanings set forth in the sections indicated:

 

 

 

 

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(a)       Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

Calculation of Time Period . When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Dollars . Any reference in this Agreement to $ shall mean U.S. dollars.

Exhibits/Schedules . The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

 

 

 

 

 

Gender and Number . Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

Headings . The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

Herein . The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

Including . The word “including” or any variation thereof means (unless the context of its usage requires otherwise) “including, but not limited to,” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

(b)       The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II

 

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

2.1        Purchase and Sale of Assets . On the terms set forth in this Agreement, at the Closing Purchaser (or its designated Affiliate or Affiliates) shall purchase, acquire and accept from U.S. Sellers, and U.S. Sellers shall sell, transfer, assign, convey and deliver to Purchaser (or its designated Affiliate or Affiliates) all U.S. Sellers’ right, title and interest in, to and under the Purchased Assets, free and clear of all Liens except for Permitted Exceptions. “ Purchased Assets ” shall mean all of the business, assets, properties, contractual rights, goodwill, going concern value, rights and claims of U.S. Sellers used or held for use in the Business as of the Closing Date, wherever situated and of whatever kind and nature, real or personal, tangible or intangible, whether or not reflected on the books and records of U.S. Sellers (other than the Excluded Assets), including each of the following assets:

(b)       all trade and other accounts receivable of U.S. Sellers except for the Trading Company Receivables (the “ Purchased Accounts Receivables ”);

(c)       all deposits (including customer deposits and security for rent, electricity, telephone or otherwise) and prepaid charges and expenses, including any prepaid rent, of U.S. Sellers;  

 

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(d)       all tangible personal property used or held for use by U.S. Sellers in the Business as of the Closing Date, including all (A) Inventory and (B) Machinery and Equipment;

(e)       all rights of U.S. Sellers under each Real Property Lease, together with all improvements, fixtures and other appurtenances thereto and rights in respect thereof;

(f)        all rights of U.S. Sellers to any claims, demands, judgments, suits, actions or causes of action related to the Business, whether known or unknown, and whether arising before or after the Closing Date (other than any litigation in any way related to Global Wire B.V. or Global Signal Cables (India) Pvt. Ltd., including any litigation matters set forth on Schedule 5.15 relating in any way to such entities or to Thomas Solomon);

(g)       all Documents that are related to the Business, including Documents relating to products, services, marketing, advertising, promotional materials, Purchased Intellectual Property, personnel files for Transferred Employees and all files, customer files and documents (including, payment history, payment terms, credit information and contact information), supplier lists, records and design specifications for the Purchased Assets, whether or not physically located on the premises referred to in Section 2.1(a) , but excluding personnel files for Employees of Sellers who are not Transferred Employees;

(h)       all Permits and Environmental Permits used or held for use by U.S. Sellers in the Business as of the Closing Date (which includes all Permits necessary to conduct the Business as currently conducted) and all rights, and incidents of interest therein;

(i)        all rights of U.S. Sellers under the Purchased Contracts, including all claims or causes of action with respect to the Purchased Contracts;

(j)        (A) the Purchased Intellectual Property and the Purchased Technology, including all product specifications, (B) all of U.S. Sellers’ right, title and interest in and to all computer systems (including management information and order systems, Hardware, servers, computers, printers, scanners, monitors, peripheral and accessory devices and the related media, manuals, documentation and user guides) used or held for use by U.S. Sellers in the Business as of the Closing Date and (C) all of the right, title and interest of U.S. Sellers in or to any Software used or held for use in the Business as of the Closing Date;

(k)       all supplies and Spare Parts used or held for use by U.S. Sellers in the Business as of the Closing Date;

(l)        all rights of Sellers under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors to the extent relating to products sold or services provided to any Seller or to the extent affecting any Purchased Assets;

(m)      all third-party property and casualty insurance proceeds, and all rights to third-party property and casualty insurance proceeds, in each case to the extent received or receivable in respect of the Business;

 

 

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(o)       all goodwill, customer lists and other intangible assets used or held for use by U.S. Sellers in the Business as of the Closing Date, including the goodwill associated with the Purchased Intellectual Property.

It is agreed that the Seller Property, Leased Real Property, Inventory, Machinery and Equipment, Spare Parts, Purchased Intellectual Property, Purchased Technology, Software, Hardware and other personal property included in the Purchased Assets shall be transferred in AS IS physical condition or repair on the Closing Date, subject only to the representations and warranties of Sellers set forth in Article V .

2.2        Excluded Assets . Nothing herein contained shall be deemed to sell, transfer, assign or convey the Excluded Assets to Purchaser, and Sellers hereby retain all right, title and interest to, in and under the Excluded Assets. “ Excluded Assets ” shall mean each of the following assets:

(d)       all minute books, organizational documents, stock registers and such other books and records of Sellers as pertain to ownership, organization or existence of any Sellers;

(e)       all Employee Benefit Plans other than the U.S. Sellers’ group health plans set forth on Schedule 8.3(a) , and any trusts, insurance policies or administration contracts, or other assets solely relating thereto;

(f)        all U.S. federal or state income tax refunds relating to taxes paid by Sellers, for all periods or portions of periods ending prior to the Closing Date; and

(g)       all rights, indemnities, reimbursements and claims related to or arising under the Asset Purchase Agreement between Live Wire Inc. and Southwire Company, dated on or about March 29, 1996.

2.3        Assumption of Liabilities . On the terms set forth in this Agreement, at the Closing Purchaser (or its designated Affiliate or Affiliates) shall assume and agree to pay or otherwise discharge, in accordance with their terms, the following liabilities of U.S. Sellers (collectively, the “ Assumed Liabilities ”):

(a)       all Liabilities of U.S. Sellers under the Purchased Contracts that arise out of or relate to the period from and after the Closing Date;

(b)       all Liabilities under any guarantees of Parent to third parties set forth on Schedule 2.3(b) ;

 

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                                  (c)       all Current Liabilities as of the Closing Date to the extent explicitly included as Current Liabilities in the Final Working Capital;

(d)       all Liabilities of U.S. Sellers  under U.S. Sellers' group health plan set forth on Schedule 8.3(a) and under COBRA; and

(e)       all payment obligations related to the reel deposits of customers that are properly reflected in the Final Working Capital.

2.4        Excluded Liabilities . Purchaser will not assume and shall not be liable for any Excluded Liabilities. Sellers shall perform, satisfy and discharge in accordance with their respective terms all Excluded Liabilities. “ Excluded Liabilities ” shall mean all Liabilities and Environmental Costs and Liabilities of Sellers arising out of, relating to or otherwise in respect of the Business other than the Assumed Liabilities, including the following Liabilities:

(a)       “ Excluded Environmental Costs and Liabilities ,” which shall mean all Environmental Costs and Liabilities, but only to the extent: (i) arising out of conditions as they existed, or noncompliance or events occurring, on or prior to the Closing Date; (ii) are or would have been required or necessary to achieve compliance under Environmental Laws as they were in effect on or prior to the Closing Date, which are related to: (A) the ownership or operation by Sellers of (I) the Montgomery Facility or Wyre Wynd Facility (or any condition thereon) (including (x) the Release or continuing Release of any Hazardous Material or (y) any noncompliance with Environmental Laws) or (II) the Business, (B) the Excluded Assets or any other real property formerly owned, operated, leased or otherwise used by any Seller: (C) the offsite transportation, storage, disposal, treatment or recycling of Hazardous Material generated by and taken offsite by or on behalf of any Seller prior to and through the Closing Date, or (D) Sellers’ Breach Obligations, Sellers’ Transfer Act Obligations or Sellers’ Consent Order Obligations (as those terms are defined in Section 7.15 of this Agreement);

(b)       except to the extent specifically provided in Article VIII , all Liabilities arising out of, relating to or with respect to (i) the employment or performance of services, or termination of employment or services by any Seller of any Employee or Former Employee, (ii) workers’ compensation claims against any Seller, irrespective of whether such claims are made prior to or after the Closing or (iii) any Employee Benefit Plan;

(c)       all Liabilities arising out of, under or in connection with Contracts that are not Purchased Contracts and, with respect to Purchased Contracts, Liabilities in respect of a breach by or default of any U.S. Seller accruing under such Contracts with respect to any period prior to Closing;

(d)       all Liabilities of Sellers accruing, arising out of, or relating to the conduct of the business and operations of Sellers or their respective Affiliates, including the manufacture, sale or shipment of any product by any Seller or its Affiliates on or before the Closing Date;

(e)       all Liabilities arising out of, relating to or otherwise in respect of any products manufactured or sold by any Seller on or before the Closing Date, including customer

 

 

returns (in the amount of the appropriate credit to the customer less the amount received or that can be  received at such time for the scrap metal value of the product) or product warranty and product liability claims and liabilities;

(f)        all Liabilities in respect of any pending or threatened Legal Proceeding, or any claim arising out of, relating to or otherwise in respect of (i) the operation of the Business to the extent such Legal Proceeding or claim relates to such operation on or prior to the Closing Date, or (ii) any Excluded Asset;

(g)       all Liabilities relating to any dispute with any client or customer of the Business existing as of the Closing Date or based upon, relating to or arising out of events, actions or failures to act prior to the Closing Date;

(h)       all Liabilities arising out of, under or in connection with any Indebtedness of Sellers;

(i)        all Liabilities for (i) Transfer Taxes, (ii) Taxes of Sellers or any of their Affiliates, (iii) Taxes that relate to the Purchased Assets, the Israeli Purchased Assets or the Assumed Liabilities for taxable periods (or portions thereof) ending on or before the Closing Date, including Taxes allocable to Sellers pursuant to Section 10.2(a) , and (iv) payments under any Tax allocation, sharing or similar agreement (whether oral or written);

2.5        Purchase and Sale of the Israeli Purchased Assets . On the terms set forth in this Agreement, at the Closing Purchaser (or its designated Affiliate or Affiliates) shall purchase, acquire and accept from Parent, and Parent shall sell, transfer, assign, convey and deliver to Purchaser (or its designated Affiliate or Affiliates) all Parent’s right, title and interest in, to and under the Israeli Purchased Assets, free and clear of all Liens except for Permitted Exceptions.

(a)       From time to time following the Closing and except as prohibited by Law, U.S. Sellers shall make available to Purchaser such data in personnel records of Transferred Employees as is reasonably necessary for Purchaser to transition such Employees into Purchaser’s records.

(b)       From time to time following the Closing, Sellers and Purchaser shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases and aquittances and such other instruments, and shall take such further actions, as may be necessary or appropriate to assure fully to Purchaser and its successors or assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Purchaser under this Agreement and the Seller Documents and to assure fully to Sellers and their successors and assigns, the assumption

 

 

of the liabilities and obligations intended to be assumed by Purchaser under this Agreement and the Purchaser Documents, and to otherwise make effective the transactions contemplated hereby and thereby.

(c)       Nothing in this Agreement nor the consummation of the transactions contemplated hereby shall be construed as an attempt or agreement to assign any Purchased Asset or any Israeli Purchased Assets, including any Contract, Permit, certificate, approval, authorization or other right or any Assumed Liability, which by its terms or by Law or Environmental Law is nonassignable without the consent of a third party or a Governmental Body or is cancelable by a third party in the event of an assignment (“ Nonassignable Assets ”) unless and until such consent shall have been obtained. Each Seller shall, and shall cause its Affiliates to, use its reasonable best efforts to cooperate with Purchaser at Purchaser’s request in endeavoring to obtain such consents by investing reasonable efforts. To the extent permitted by applicable Law or Environmental Law, in the event consents to the assignment thereof cannot be obtained, such Nonassignable Assets shall be held, as of and from the Closing Date, by the applicable Seller or an Affiliate of such Seller in trust for Purchaser and the covenants and obligations thereunder shall be performed by Purchaser in the applicable Seller’s or Affiliate’s name and all benefits and obligations existing thereunder shall be for Purchaser’s account. Each Seller shall take or cause to be taken at the Purchaser’s expense such actions in such Seller’s name or otherwise as Purchaser may reasonably request so as to provide Purchaser with the benefits of the Nonassignable Assets and to effect collection of money or other consideration that becomes due and payable under the Nonassignable Assets, and such Seller or the applicable Affiliate of such Seller shall promptly pay over to Purchaser all money or other consideration received by it in respect of all Nonassignable Assets. As of and from the Closing Date, each Seller on behalf of itself and its Affiliates authorizes Purchaser, to the extent permitted by applicable Law or Environmental Law and the terms of the Nonassignable Assets, at Purchaser’s expense, to perform all the obligations and receive all the benefits of any Seller or its Affiliates under the Nonassignable Assets and appoints Purchaser its attorney-in-fact to act in its name on its behalf or in the name of the applicable Affiliate of such Seller and on such Affiliate’s behalf with respect thereto.

2.7        Purchase Price Allocation . Purchaser and Parent shall allocate the Total Consideration among the Purchased Assets and the Israeli Purchased Assets as agreed by the parties and described on Schedule 2.7 . Purchaser shall prepare and deliver to Parent within sixty (60) days after the Closing Date final drafts of Form 8594 and any required exhibits thereto (the “ Asset Acquisition Statement ”) allocating, in accordance with Schedule 2.7 , the Total Consideration among the Purchased Assets and the Israeli Purchased Assets. Purchaser shall prepare and deliver to Parent from time to time revised copies of the Asset Acquisition Statement (the “ Revised Statements ”) so as to report any matters on the Asset Acquisition Statement that need updating (including purchase price adjustments, if any) consistent with the agreed upon allocation. The Total Consideration paid by Purchaser for the Purchased Assets and the Israeli Purchased Assets shall be allocated in accordance with the Asset Acquisition Statement or, if applicable, the last Revised Statements, and all income Tax Returns and reports filed by Purchaser and Sellers shall be prepared consistently with such allocation.

 

 

2.8        Right to Control Payment . Purchaser shall have the right, but not the obligation, to make any payment due from any Seller with respect to any Excluded Liabilities which are not paid by such Seller within thirty (30) Business Days following written request for payment from Purchaser (or sooner if the nature of the liability so requires); provided , however , that if such Seller advises Purchaser in writing during such period that a good faith payment dispute exists or such Seller has reasonable defenses to non-payment with respect to such Excluded Liability, then Purchaser shall not have the right to pay such Excluded Liability. Sellers agree to reimburse Purchaser promptly and in any event within thirty (30) Business Days following written notice of such payment by Purchaser for the amount of any payment made by Purchaser pursuant to this Section 2.8 . If Purchaser has not received payment by the end of such thirty (30) day period, Purchaser, in its sole discretion, may proceed to recover, and Sellers shall direct the Escrow Agent to release, such amounts from the Escrow Account in accordance with Section 9.5 and may either waive Sellers’ obligation to pay Purchaser directly or may continue to seek payment from Sellers for such amounts.

2.9        Receivables . Each Seller shall, if requested by Purchaser, provide reasonable assistance to Purchaser in the collection of accounts receivable. Sellers further agree to cooperate with Purchaser (or its designated Affiliate or Affiliates) to transition any lockbox accounts used in the Business to Purchaser (or its designated Affiliate or Affiliates). If any Seller shall receive payment in respect of accounts receivable that are included in the Purchased Assets, then such Seller shall promptly forward such payment to Purchaser. Each Seller agrees not to attempt to collect the Trading Company Receivables from the customers of the Business during the three (3) month period commencing on the Closing Date. Purchaser (or its designated Affiliate or Affiliates) shall use its commercially reasonable efforts to collect the Trading Company Receivables in the ordinary course of business together with its own receivables, and Purchaser shall promptly forward payment of any Trading Company Receivables less any reel deposits payable in connection therewith to Parent. To the extent any reel deposits related to reels associated with Trading Company Receivables or owed to customers in connection with the delivery of any Reels are payable by Purchaser, such amount shall be deducted from any payments to be forwarded to Parent on account of Trading Company Receivables collected or, upon the request of Purchaser, Sellers shall direct the Escrow Agent to release from the Escrow Account any surplus amount not deducted from future payments to Parent in accordance with Section 9.5 and Purchaser may either waive Sellers’ obligation to pay Purchaser directly or may continue to seek payment from Sellers for such amounts. Upon the expiration of such three (3) month period, collection of Trading Company Receivables shall be implemented exclusively by Sellers.

ARTICLE III

 

CONSIDERATION

3.1        Consideration . The aggregate consideration for the Purchased Assets and the Israeli Purchased Assets shall be (a) an amount in cash equal to $27,050,000 to be paid to U.S. Sellers for the Purchased Assets subject to adjustment as provided in Section 3.3(b) and further under Section 3.3(g) ; (b) an amount in cash equal to $750,000 to be paid to Parent for the Israeli Purchased Assets (together with the amounts set forth in clause (a) above, the “ Closing

 

 

Date Payment ”); (c) the Eilat Payment as further described in Section 3.6 (together with the Closing Date Payment the “ Purchase Price ”); and (d) the assumption of the Assumed Liabilities (together with the Purchase Price, the “ Total Consideration ”).

3.2        Payment of Purchase Price . At the Closing, Purchaser shall pay the Closing Date Payment less (i) the Working Capital Adjustment Escrow Amount less (ii) the Indemnity Escrow Amount less (iii) the Indebtedness Payoff, by wire transfer of immediately available funds into the account(s) designated by Sellers. At the Closing, Purchaser shall pay, on behalf of Sellers, (i) to JPMorgan (the “ Escrow Agent ”), by wire transfer of immediately available funds, to the account(s) (the “ Escrow Account ”) designated by the Escrow Agent, the Working Capital Adjustment Escrow Amount and the Indemnity Escrow Amount, in accordance with the terms of this Agreement and the Escrow Agreement in the form of Exhibit C , by and among Purchaser, Global Wire USA and the Escrow Agent (the “ Escrow Agreement ”) and (ii) to RBS Citizens, the Indebtedness Payoff by wire transfer of immediately available funds in accordance with the payoff letter provided with respect thereto.

(a)       Not later than five (5) Business Days prior to the Closing Date, Parent shall cause to be prepared and delivered to Purchaser a statement (the “ Estimated Statement ”) showing the amount reasonably estimated by Parent, in good faith, to be the Working Capital as of 11:59 pm on the day immediately preceding the Closing Date (the “ Estimated Working Capital ”), together with supporting documentation used by Parent in calculating and preparing the Estimated Statement and such other documentation as Purchaser shall reasonably request. In the event Purchaser objects to Parent’s calculation of the amount of the Estimated Working Capital as set forth in the Estimated Statement, Purchaser shall deliver to Parent at least two (2) Business Days prior to the Closing Date a written statement in reasonable detail describing Purchaser’s objections to the Estimated Statement (“ Purchaser’s Objection Notice ”). Purchaser and Parent shall use their commercially reasonable efforts to resolve any of Purchaser’s objections to the Estimated Statement as described in Purchaser’s Objection Notice, and Parent shall make such revisions to the Estimated Statement as mutually agreed between Parent and Purchaser, and, if any changes are made, shall deliver a copy of such revised Estimated Statement to Purchaser one (1) Business Day prior to the Closing Date. With respect to any of Purchaser’s objections that are not resolved before the Closing Date, the parties shall proceed as follows: (i) if the aggregate amount of Purchaser’s unresolved objections is less than $200,000, the Closing shall proceed with Parent’s estimate of such disputed amounts, and (ii) if the aggregate of Purchaser’s unresolved objections is greater than $200,000, then the mid-point between Purchaser’s unresolved objections and Parent’s estimate of such disputed amounts shall be used for purposes of proceeding to Closing. The final amount used as the Estimated Working Capital pursuant to this Section 3.3(a) shall be referred to as the “ Final Estimated Working Capital ”.

(b)       If the Final Estimated Working Capital exceeds $15,100,000 (the “ Working Capital Target ”), the Closing Date Payment shall be increased by the amount of such difference, and if the Working Capital Target exceeds the Final Estimated Working

 

 

Capital, the Closing Date Payment shall be decreased by the amount of such difference, in each case, subject to further adjustment as provided below.

(c)       Purchaser and U.S. Sellers shall jointly conduct a physical inventory of the Inventory on the Closing Date, in which, inter alia, the assets of all tolling customers shall be identified. As soon as practicable, but in no event later than sixty (60) days after the Closing Date, Parent shall cause to be prepared and delivered to Purchaser a closing statement setting forth Current Assets and Current Liabilities as of 11:59 pm on the day immediately preceding the Closing Date (the “ Closing Statement ”) and a certificate based on such Closing Statement setting forth Parent’s calculation of the amount of Working Capital as of such time (“ Closing Working Capital ”). In connection with the preparation of the Closing Statement, Parent shall seek the input of Purchaser in preparing such Closing Statement in accordance with GAAP and on a basis consistent with the preparation of the Balance Sheet.

(d)       If Purchaser disagrees with Parent’s Closing Statement or with the calculation of Closing Working Capital, all delivered pursuant to Section 3.3(c) , Purchaser may, within twenty (20) Business Days after delivery of the Closing Statement, deliver a notice to Parent disagreeing with such calculation and setting forth Purchaser’s calculation of such amount. Any such notice of disagreement shall specify those items or amounts as to which Purchaser disagrees, and Purchaser shall be deemed to have agreed with all other items and amounts contained in the Closing Statement and the calculation of Closing Working Capital delivered pursuant to Section 3.3(c) .

(e)       If a notice of disagreement shall be duly delivered pursuant to Section 3.3(d) , Purchaser and Parent shall, during the fifteen (15) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Closing Working Capital, which amount shall not be less than the amount thereof shown in Parent’s calculation delivered pursuant to Section 3.3(c) nor more than the amount thereof shown in Purchaser’s notice of disagreement delivered pursuant to Section 3.3(d) . If the parties so resolve all disputes, the computation of Closing Working Capital, as amended to the extent necessary to reflect the resolution of the dispute, shall be conclusive and binding on the parties. If during such period, Purchaser and Parent are unable to reach an agreement, they shall promptly thereafter cause one of the “big four” certified public accountants that is not the accountant for Purchaser or Sellers or alternatively such other entity as may be agreed to by the parties (or if unable or unwilling to accept its mandate, an independent accountant to be mutually agreed upon by Purchaser and Parent) (such independent accounting firm or other agreed upon expert, as the case may be, the “ Expert ”) to review this Agreement and the disputed items or amounts for the purpose of calculating Closing Working Capital (it being understood that in making such calculation, the Expert shall be functioning as an expert and not as an arbitrator). In making such calculation, the Expert shall consider only those items or amounts in the Closing Statement and Parent’s calculation of Closing Working Capital as to which Purchaser has timely disagreed. The Expert shall deliver to Parent and Purchaser, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Expert), a report setting forth such calculation. Such report shall be final and binding upon Purchaser and Sellers. The fees, costs and expenses of the Expert’s review and report shall be allocated to and borne by Purchaser and

 

 

Sellers based on the inverse of the percentage that the Expert’s determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the Expert. For example, should the items in dispute total in amount to $1,000 and the Expert awards $600 in favor of Parent’s position, 60% of the costs of its review would be borne by Purchaser and 40% of the costs would be borne by Sellers.

(f)        Purchaser and Sellers shall, and shall cause their respective representatives to, cooperate and assist in the preparation of the Closing Statement and the calculation of Closing Working Capital and in the conduct of the review referred to in this Section 3.3 , including the making available to the extent necessary of books, records, work papers and personnel.

(g)       (i)      If the Final Working Capital exceeds the Final Estimated Working Capital, then Purchaser shall pay to Sellers, in the manner and with interest as provided in Section 3.3(h) , the amount of such excess as an adjustment to the Purchase Price and, in addition to the said excess payment, shall direct the Escrow Agent to release the entire Working Capital Adjustment Escrow Amount (less any unpaid fees owed by Sellers pursuant to Section 3.3(e) ) to Sellers.

                                              (ii)     If the Final Estimated Working Capital exceeds the Final Working Capital, then Sellers shall direct the Escrow Agent to release from the Working Capital Adjustment Escrow Amount to Purchaser, in the manner and with interest as provided in Section 3.3(h), the amount of such excess as an adjustment to the Purchase Price. To the extent funds remain in the Working Capital Adjustment Escrow Amount after the payment contemplated by the preceding sentence and Sellers have paid any fees required to be paid by them pursuant to Section 3.3(e), Purchaser shall direct the Escrow Agent to release to Sellers the balance of the Working Capital Adjustment Escrow Amount.

                                             (iii)      For purposes of this Agreement, the following terms shall have the meanings specified below:

(A)      “ Final Working Capital ” means Working Capital as reflected in any Final Determination; provided , however , that in no event shall Final Working Capital be more than Parent’s calculation of Closing Working Capital delivered pursuant to Section 3.3(c) , or less than Purchaser’s calculation of Closing Working Capital in its notice of disagreement delivered pursuant to Section 3.3(d) .

(B)      “ Final Determination ” means, with respect to Final Working Capital, either of the following:

(1)      Parent’s calculation of Closing Working Capital set forth in the Closing Statement delivered pursuant to Section 3.3(c) if no notice of disagreement with respect thereto is duly delivered pursuant to Section 3.3(d) ; or

 

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 (2)       if such a notice of disagreement is delivered, (x) as agreed by Purchaser and Sellers pursuant to Section 3.3(e) or (y) in the absence of such agreement, as shown in the Expert’s report delivered pursuant to Section 3.3(e) .

(h)       Any payment pursuant to Section 3.3(g) shall be made by Purchaser or Sellers, as the case may be, by wire transfer of immediately available funds to the account of such other party as may be designated in writing by such other party within three (3) Business Days after the Final Working Capital has been determined. The amount of any payment to be made pursuant to this Section 3.3 shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the rate of interest published by The Wall Street Journal, Eastern Edition, from time to time as the “prime rate” at large U.S. money center banks during the period from the Closing Date to the date of payment. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed.

(i)        In the event the Working Capital Adjustment Escrow Account is insufficient to satisfy any payment owed to Purchaser under this Section 3.3 , Sellers shall pay to Purchaser any such deficit; provided , however , that Purchaser, in its sole discretion, may proceed to recover, and Sellers shall direct the Escrow Agent to release, any such deficit out of the Indemnity Escrow Amount and may either waive Sellers’ obligation to pay Purchaser directly or may continue to seek payment from Sellers for such deficiency.

3.4        Post-Closing Adjustment to Purchase Price for Certain Uncollected Purchased Accounts Receivable and Obsolete Inventory .

(a)       Any amounts collected from any customer of the Business on account of any Purchased Accounts Receivables or any Trading Company Receivables shall be applied to the oldest open invoice first unless the customer designates payment to a particular invoice or unless the customer disputes the invoice, in which event the payment will be applied against the designated invoice or the next oldest undisputed invoice.

(b)       Purchaser shall use the same care in collecting Purchased Accounts Receivables as it does with accounts receivable generated after the Closing. Purchaser shall periodically after the Closing provide Parent with a list of "problem" accounts receivable. Sellers shall provide reasonable assistance to Purchaser in the collection of Purchased Accounts Receivables. If any Seller shall receive payment in respect of Purchased Accounts Receivable, then such Seller shall promptly forward such payment to Purchaser.

(c)       If any Purchased Accounts Receivables are uncollected by Purchaser or its designed Affiliate or Affiliates, as applicable, one hundred twenty (120) days after Closing, Purchaser or its designated Affiliate or Affiliates, as applicable, shall have the right to sell such outstanding Purchased Accounts Receivable to Parent or U.S. Sellers for the full value of such Purchased Accounts Receivable, and Purchaser or its designated Affiliate or Affiliates, as applicable, shall be paid for such Purchased Accounts Receivable (and it shall constitute a Loss under Section 9.2 and shall be subject to the limitations on indemnification under Section

 

 

 

 9.4(a) ) and which are payable in accordance with Section 9.5 . Upon payment for Purchased Accounts Receivable by Parent or any U.S. Seller (whether as a result of the payment through the Indemnity Escrow Account or directly by such party), Purchaser shall assign such uncollected Purchased Accounts Receivable to Parent or such U.S. Seller, which shall be free to pursue collection of the amounts due so long as such collection efforts are consistent with Parent or such U.S. Seller’s past practice, such collecting party provides advance notice to Purchaser (sufficient to allow Purchaser to provide input) of material actions taken and Purchaser is given the right to participate in such efforts.

                                (d)       In the event that Purchaser determines that any Inventory included in the Final Estimated Working Capital or the Final Working Capital is obsolete, Purchaser shall have the right to recover from Sellers the value attributed to such Inventory in the Final Estimated Working Capital or the Final Working Capital, as applicable, less the amount received, or that can be received at such time, for the scrap metal value of such Inventory. Purchaser or its designated Affiliate or Affiliates, as applicable, shall be paid by Sellers such net amount (and it shall constitute a Loss under Section 9.2 and shall be subject to the limitations on indemnification under Section 9.4(a) ) and which amount shall be payable in accordance with Section 9.5 . For purposes of this Section 3.4(d) , “obsolete” shall mean Inventory that has not been sold during the six (6) month period immediately preceding the Closing Date or for which a purchase order has not been placed during such period.

3.5        Customer Credits . If Purchaser receives any return, or a customer notifies Purchaser of a product warranty or product liability claim, of a product sold by any Sellers prior to the Closing, Purchaser shall notify Sellers of such return or claim, and Purchaser, after consultation with Sellers, shall determine in good faith (and in consultation with Parent) whether to credit such customer’s account for such return or claim or to take some other action to cure customer’s complaint. Purchaser agrees to in good faith determine the validity of each customer’s claim and use its commercially reasonable efforts to re-use any returns. In the event that Purchaser credits the customer’s account for such return or claim, Purchaser shall be paid for such credit in accordance with Section 9.5 (in the case of a return, such payment to Purchaser shall deduct the amount received, or that can be received at such time, for the scrap metal value of the product and such net amount shall constitute a Loss under Section 9.2 and shall be subject to the limitations on indemnification under Section 9.4(a) ) and the parties shall instruct the Escrow Agent to release funds in the amount of such claim.

3.6        Eilat Payment . Promptly after receipt by Purchaser (in accordance with Section 7.8 ) of the final item of the Eilat and Netivot Equipment, Purchaser shall pay to Parent an amount equal to $750,000 (the “ Eilat Payment ”) by wire transfer of immediately available funds to an account designated in writing by Parent.

ARTICLE IV

 

CLOSING

4.1        Closing . The closing of the purchase and sale of the Purchased Assets, the Israeli Purchased Assets and the assumption of the Assumed Liabilities provided for in Article II

 

 

 

(the “ Closing ”) shall take place at the offices of Weil, Gotshal & Manges LLP located at 200 Crescent Court, Suite 300, Dallas, Texas, 75201 at 10:00 a.m. (Dallas time) on June 30, 2008, or if the conditions in Sections 4.2 and 4.3 have not been satisfied (other than conditions that by their nature are to be satisfied at Closing, but subject to the satisfaction or waiver of those conditions at such time), on the third (3rd) Business Day after satisfaction of such conditions, unless another time, date or place is agreed to in writing by the parties hereto (the “ Closing Date ”).

4.2        Conditions Precedent to Obligations of Purchaser . The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law or Environmental Law):

(a)       the representations and warranties of Sellers set forth in this Agreement qualified as to materiality or Material Adverse Effect shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the date of this Agreement and as of the Closing as though made at and as of the Closing, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties qualified as to materiality or Material Adverse Effect shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date);

(b)       each Seller shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by it on or prior to the Closing Date;

(c)       there shall not have been or occurred any event, change, occurrence or circumstance that, individually or in the aggregate with any such events, changes, occurrences or circumstances, has had or which could reasonably be expected to have a Material Adverse Effect since the Balance Sheet Date;

(d)       Purchaser shall have received a certificate signed by an officer of Parent, in form and substance reasonably satisfactory to Purchaser, dated as of the Closing Date, to the effect that each of the conditions specified above in Sections 4.2(a)-(c) have been satisfied in all respects;

(e)       Purchaser shall have received copies of resolutions of the board of directors of each Seller authorizing the transactions contemplated hereby and such other documents as Purchaser may reasonably request;

(f)        no Legal Proceedings shall have been instituted or threatened or claim or demand made against any Seller or Purchaser seeking to restrain or prohibit, or to obtain damages resulting in a Material Adverse Effect with respect to, the consummation of the transactions contemplated hereby, and there shall not be in effect any Order by a Governmental

 

 

Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(g)       Sellers shall have obtained all consents, waivers and approvals set forth on Schedules 5.3(a) and 5.3(b) ;

(h)       Trading Company shall have delivered to Purchaser a duly executed Supply Agreement;

(i)        Trading Company shall have delivered to Purchaser a duly executed Agency Agreement;

(j)        each U.S. Seller shall have provided Purchaser with an affidavit of non-foreign status that complies with section 1445 of the Code (a “ FIRPTA Affidavit ”);

(k)       Sellers shall have delivered, or caused to be delivered, to Purchaser one or more duly executed bills of sale in the form attached hereto as Exhibit A ;

(l)        Sellers shall have delivered, or caused to be delivered, to Purchaser one or more duly executed assignment and assumption agreements in the form attached hereto as Exhibit B ;

(m)      Sellers shall have delivered, or caused to be delivered, to Purchaser a warranty deed for the Montgomery Wire Facility in a form reasonably satisfactory to Purchaser and such other documents as are necessary to enable recordation of the deed;

(n)       Sellers shall have delivered, or caused to be delivered, to Purchaser a duly executed Escrow Agreement in the form attached hereto as Exhibit C ;

(o)        Trading Company shall have delivered to Purchaser a duly executed Lease Agreement in the form attached hereto as Exhibit F ;

(p)       Sellers shall have delivered, or caused to be delivered, a title insurance policy with respect to the transfer of the real property fee interest in the Montgomery Wire Facility owned by Montgomery Wire insuring good and marketable title to such real property, subject only to Permitted Exceptions, with coverage in the amount of the portion of the Purchase Price allocated to the real estate (which allocation shall be done as to the real property prior to Closing in consultation with First American Title Insurance Company);

(q)       Wyre Wynd and Montgomery Wire shall have: (i) given notice of defeasance of the IRB’s to RBS Citizens, the Trustee (as defined under each of the IRBs) and the Remarketing Agent (as defined under each of the IRBs), not less than two (2) days prior to Closing; (ii) deposited not later than 10 a.m. (New Hampshire time), on the morning of the date that is one (1) Business Day prior to Closing, by wire transfer to the designated escrow account of an escrow agent mutually acceptable to Seller, RBS Citizens and the Trustee (which, unless otherwise required by RBS Citizens and the Trustee, shall be First American Title Insurance Company) an amount sufficient to fully reimburse RBS Citizens for all sums to be drawn by the

 

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Trustee on the irrevocable standby letters of credit issued by RBS Citizens to the Trustee assuming the Trustee redeems the IRBs in full on the next optional redemption date after the Closing, and to cover the cost of all associated fees, expenses and costs associated therewith incurred by Sellers, Trustee, RBS Citizens and the Remarketing Agent and including any charges of S&P in issuing no-downgrade letters and any charges associated with obtaining a verification letter from a verification agent of the Trustee’s choosing); (iii) obtained, on or prior to the Closing Date, a no-downgrade letter from S&P in form and substance satisfactory to Trustee’s legal counsel, and a verification letter in form and substance satisfactory to Trustee’s legal counsel, for purposes of obtaining the Trustee’s approval for defeasance of the IRBs on the Closing Date, (iv) performed any other actions recommended by Bond Counsel or legal counsel to the Trustee or to RBS Citizens to be performed by Sellers on or before the Closing in order to maintain a payoff schedule for the IRBs of not more than sixty (60) days following the Closing Date; and (v) performed any other action required by the Trustee, RBS Citizens or the Remarketing Agent to complete the payoff of the IRBs following the Closing;

(r)        Sellers shall have delivered to the escrow agent set forth in Section 4.2(q) above, for delivery to Purchaser in accordance with the terms of escrow agreed to by Sellers, RBS Citizens and the Trustee, mortgage discharges and termination statements terminating all mortgages and other Liens securing the IRBs; and

(s)       Sellers shall have prepared and delivered to Purchaser a copy of the Connecticut Property Transfer Act “Form III” duly executed by Global Wire USA as the “transferor” and “certifying party” (the terms “transferor” and “certifying party” shall have the definitions or usage set forth in the Connecticut Property Transfer Act).

4.3        Conditions Precedent to Obligations of Seller . The obligations of Sellers to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by Sellers in whole or in part to the extent permitted by applicable Law or Environmental Law):

(a)       the representations and warranties of Purchaser set forth in this Agreement qualified as to materiality or Material Adverse Effect shall be true and correct, and those not so qualified shall be true and correct in all material respects, as of the date of this Agreement and as of the Closing as though made at and as of the Closing, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties qualified as to materiality or Material Adverse Effect shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date);

(b)       Purchaser shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date;

(c)       Sellers shall have received a certificate signed by an officer of Purchaser, in form and substance reasonably satisfactory to Sellers, dated as of the Closing Date, to the

 

 

effect that each of the conditions specified above in Sections 4.3(a)-(b) have been satisfied in all respects;

(d)       no Legal Proceedings shall have been instituted or threatened or claim or demand made against any Seller or Purchaser seeking to restrain or prohibit, or to obtain damages resulting in a Material Adverse Effect with respect to, the consummation of the transactions contemplated hereby, and there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(e)       Purchaser (or its designated Affiliate or Affiliates) shall have delivered, or caused to be delivered, to Sellers a duly executed Agency Agreement in the form attached hereto as Exhibit E ;

(f)        Purchaser (or its designated Affiliate or Affiliates) shall have delivered, or caused to be delivered, to Sellers a duly executed Lease Agreement in the form attached hereto as Exhibit F ;

(g)       Purchaser (or its designated Affiliate or Affiliates) shall have delivered, or caused to be delivered, to Sellers a duly executed assignment and assumption agreement in the form attached hereto as Exhibit B ;

(h)       Purchaser shall have delivered, or caused to be delivered, to Sellers a duly executed Escrow Agreement in the form of Exhibit C ;

(i)        Purchaser (or its designated Affiliate or Affiliates) shall have delivered, or caused to be delivered, to Sellers a duly executed Supply Agreement in the form attached hereto as Exhibit D ;

(j)        Purchaser shall have delivered, or caused to be delivered, a duly executed copy of the Connecticut Property Transfer Act “Form III” as the “transferee,” to be prepared by or on behalf of Global Wire USA (the term “transferee” shall have the definition or usage set forth in the Connecticut Property Transfer Act); and

(k)       Purchaser shall have delivered to Sellers a list providing the names of each of U.S. Sellers’ Employees that have accepted the offer of employment served to them by Purchaser.

4.4        Delivery of the Purchased Assets and the Israeli Purchased Assets and Payment of Closing Date Payment . Title to the Purchased Assets and to the Israeli Purchased Assets shall pass to Purchaser (or its designated Affiliate or Affiliates) as of the Closing against full payment of the Closing Date Payment in accordance with Section 3.2 . Upon Closing, Sellers will place Purchaser (or its designated Affiliate or Affiliates) in full possession and control of the Purchased Assets and of the Israeli Purchased Assets, wherever located. All information capable of electronic transmission will be transmitted to Purchaser (or its designated Affiliate or Affiliates) in such manner, in which case such information shall not be transferred in any tangible form, and any inadvertent transfer of a tangible manifestation of such information shall

 

 

promptly be returned to the applicable Seller upon discovery of Purchaser’s (or its designated Affiliate or Affiliates’) receipt thereof. All other assets will be delivered by Sellers to Purchaser (or its designated Affiliate or Affiliates) or the site designated by Purchaser by means of delivery designated by Purchaser.

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF SELLERS

Each U.S. Seller hereby, jointly and severally, represents and warrants to Purchaser that as of the date hereof and at and as of the Closing Date:

5.1        Organization and Good Standing . Each Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now conducted. Each Seller is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization. Each Seller has delivered to Purchaser true, complete and correct copies of its certificate of incorporation and bylaws or other comparable organizational documents as in effect on the date hereof.

5.2        Authorization of Agreement . Each Seller has all requisite power, authority and legal capacity to execute and deliver this Agreement and each Seller has all requisite power, authority and legal capacity to execute and deliver each other agreement, document or instrument or certificate contemplated by this Agreement or to be executed by such Seller in connection with the transactions contemplated by this Agreement (the “ Seller Documents ”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each of the Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite company action on the part of each Seller. This Agreement and each of the Seller Documents has been duly and validly executed and delivered by each Seller and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement and each of the Seller Documents constitutes, legal, valid and binding obligations of each Seller, enforceable against each Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).  

(a)       Except as set forth on Schedule 5.3(a) , none of the execution and delivery by Sellers of this Agreement or the Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by each Seller with any of the provisions hereof or thereof will conflict with, or result in any violation or breach of, or conflict

 

 

with or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a material benefit under, or give rise to any obligation of any Seller to make any payment under, or to the increased, additional, accelerated or guaranteed rights or entitlements of any Person under, or result in the creation of any Liens upon any of the Purchased Assets or the Israeli Purchased Assets of any Seller under any provision of (i) the certificate of incorporation or bylaws or comparable organizational documents of such Seller; (ii) any Material Contract, Real Property Lease, Personal Property Lease or Seller Permit; (iii) any Order applicable to such Seller or by which any of the properties or assets of such Seller is bound; or (iv) material requirement of applicable Law or Environmental Law.

(b)       Other than any consents received on or prior to the date hereof and except as set forth on Schedule 5.3(b) , no consent, waiver, approval, Permit or authorization of or filing with, or notification to, any Person or Governmental Body is required on the part of any Seller in connection with (i) the execution and delivery of this Agreement or the Seller Documents, the compliance by any Seller with any of the provisions hereof and thereof, the consummation of the transactions contemplated hereby and thereby or the taking by any Seller of any other action contemplated hereby or thereby, or (ii) the continuing validity and effectiveness immediately following the Closing of any Contract or Permit of any Seller.

(a)       Attached as Schedule 5.4(a) is (i) the audited consolidated balance sheets of U.S. Sellers as at December 31, 2007, 2006 and 2005 (with respect only for the period commencing on July 1, 2005) and the related audited consolidated statements of income and of cash flows of U.S. Sellers for the years then ended and (ii) the unaudited consolidated balance sheet of U.S. Sellers as at March 31, 2008, and the related consolidated statement of income and cash flows of U.S. Sellers for the three (3) month period then ended (such audited and unaudited statements, including the related notes and schedules thereto, are referred to herein as the “ Financial Statements ”). Each of the Financial Statements, together with any additional financial information provided to Purchaser between the date hereof and the Closing Date pursuant to Section 7.12 , is complete and correct in all material respects, has been prepared in accordance with GAAP consistently applied (except with respect to the unaudited financial statements for normal recurring year-end adjustments that, individually or in the aggregate, would not be material) without modification of the accounting principles used in the preparation thereof throughout the periods presented and presents fairly in all material respects the financial position, results of operations and cash flows of U.S. Sellers as at the dates and for the periods indicated.

For the purposes hereof, the audited balance sheet of U.S. Sellers as at December 31, 2007 is referred to as the “ Balance Sheet ” and December 31, 2007 is referred to as the “ Balance Sheet Date .”

(b)       Each U.S. Seller makes and keeps books, records and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of its assets. Each U.S. Seller maintains systems of internal accounting controls sufficient to provide

 

 

reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

(c)       U.S. Sellers have provided to Purchaser copies of all issued auditors’ reports, letters to management regarding accounting practices and systems of internal controls, and all responses to such letters from management, in each case to the extent relating to the Business and the operation thereof.

5.5        No Undisclosed Liabilities . Except as set forth on Schedule 5.5 , none of the U.S. Sellers have, and the Purchased Assets and the Israeli Purchased Assets are not subject to, any Indebtedness or Liabilities (whether or not required under GAAP to be reflected on a balance sheet or the notes thereto) other than those (i) specifically reflected in, fully reserved against or otherwise described in the Balance Sheet or the notes thereto, (ii) incurred in the Ordinary Course of Business since the Balance Sheet Date, or (iii) that are immaterial to U.S. Sellers.

(a)       (i) U.S. Sellers own and have good title to each of the Purchased Assets, and Parent owns and has good title to each of the Israeli Purchased Assets, wherever located, free and clear of all Liens other than Permitted Exceptions and the Liens set forth on Schedule 5.6(a) , which will be extinguished as of Closing, and no other Person has any interest whatsoever in any of the Purchased Assets or the Israeli Purchased Assets other than Permitted Exceptions. The delivery to Purchaser of the instruments of transfer of ownership contemplated by this Agreement will vest good title to the Purchased Assets and the Israeli Purchased Assets in Purchaser, free and clear of all Liens other than Permitted Exceptions. (ii) Except for the sale of Inventory from Trading Company to Global Wire USA, the Purchased Assets constitute all of the assets and properties used or held for use in the Business as of the Closing Date. The Purchased Assets were sufficient to enable the U.S. Sellers to conduct the Business in the last two years producing the results shown in the Financial Statements.

(b)       Except as set forth on Schedule 5.6(b) , all Inventory, Machinery and Equipment, and Spare Parts are physically located at the Montgomery Wire Facility or Wyre Wynd Facility and no Inventory, Machinery, and Equipment, or Spare Parts are under consignment, or are in storage at any other location.

5.7        Absence of Certain Developments . Except as expressly contemplated by this Agreement or as set forth on Schedule 5.7 , since the Balance Sheet Date, (i) U.S. Sellers have conducted the Business only in the Ordinary Course of Business and (ii) there has not been a Material Adverse Effect affecting the Business, the Purchased Assets, the Israeli Purchased

 

 

Assets or the Assumed Liabilities. Without limiting the generality of the foregoing, since the Balance Sheet Date:

(i)        there has not been any damage, destruction or loss, whether or not covered by insurance, with respect to the Purchased Assets or the Israeli Purchased Assets having a replacement cost of more than $20,000 for any single loss or $100,000 for all such losses;

(ii)       no U.S. Seller has awarded or paid any bonuses to Former Employees or Employees of such U.S. Seller with respect to the fiscal year ended December 31, 2007, except to the extent accrued on the Balance Sheet or entered into any employment, deferred compensation, severance or similar agreement (nor amended any such agreement) or agreed to increase the compensation payable or to become payable by it to any of such U.S. Seller’s directors, officers, employees, agents or representatives or agreed to increase the coverage or benefits available under any severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan, payment or arrangement made to, for or with such directors, officers, employees, agents or representatives;

(iii)      no U.S. Seller has made or rescinded any election relating to Taxes or settled or compromised any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or except as may be required by applicable Law, made any change to any of its methods of reporting income or deductions for U.S. federal income tax purposes from those employed in the preparation of its most recently filed U.S. federal tax returns, in each case, to the extent related to the Business or the Purchased Assets;

(iv)      no U.S. Seller has failed to promptly pay and discharge current liabilities except for liabilities not material in amount that are disputed in good faith by appropriate proceedings;

(v)       no U.S. Seller has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person other than in the Ordinary Course of Business;

(vi)      no U.S. Seller has mortgaged, pledged or subjected to any Lien any of its assets, or acquired any assets or sold, assigned, transferred, conveyed, leased or otherwise disposed of any assets of such U.S. Seller, except for assets acquired or sold, assigned, transferred, conveyed, leased or otherwise disposed of in the Ordinary Course of Business;

(vii)     no U.S. Seller has discharged or satisfied any Lien, or paid any obligation or Liability, except in the Ordinary Course of Business;

(viii)    no U.S. Seller has canceled or compromised any debt or claim or amended, modified, canceled, terminated, relinquished, waived or released any Contract

 

or right except in the Ordinary Course of Business and which, in the aggregate, would not be material to U.S. Sellers taken as a whole;

(ix)      no U.S. Seller has issued, created, incurred, assumed or guaranteed any Indebtedness other than in the Ordinary Course of Business;

(x)       no U.S. Seller has committed to make any capital expenditures in excess of $100,000 individually or $300,000 in the aggregate;

(xi)      no U.S. Seller has instituted or settled any material Legal Proceeding resulting in a loss in excess of $10,000 in the aggregate;

(xii)     no U.S. Seller has granted any license or sublicense of any rights under or with respect to any Purchased Intellectual Property;

(xiii)    no U.S. Seller has made any loan to, or entered into any other transaction with, any of its shareholders, Affiliates, officers, directors, partners or employees, except for any advances made to Employees in the Ordinary Course of Business; and

(xiv)    no U.S. Seller has agreed, committed, arranged or entered into any understanding to do anything set forth in this Section 5.7 .

(a)       (i) All Tax Returns required to be filed by or on behalf of each U.S. Seller and any Affiliated Group of which any U.S. Seller is or was a member have been duly and timely filed with the appropriate Taxing Authority in all jurisdictions in which such Tax Returns are required to be filed, and all such Tax Returns are true, complete and correct in all material respects; and (ii) all Taxes of each U.S. Seller due and payable have been fully and timely paid.

(b)       All deficiencies asserted or assessments made as a result of any examinations by any Taxing Authority of the Tax Returns of each U.S. Seller have been fully paid, and there are no other audits or investigations by any Taxing Authority in progress, nor has any U.S. Seller received any notice from any Taxing Authority that it intends to conduct such an audit or investigation.

(c)        Schedule 5.8(c) lists (i) all types of Taxes paid, and all types of Tax Returns filed by or on behalf of each U.S. Seller in connection with, or with respect to, the Purchased Assets or the Business, and all types of Taxes paid and all types of Tax Returns filed by, and (ii) all of the jurisdictions that impose such Taxes or with respect to which any U.S. Seller has a duty to file such Tax Returns. U.S. Sellers have made available to Purchaser complete copies of material Tax Returns relating to the Purchased Assets or the Business relating to taxable periods that ended on or after December 31, 2005. Parent has made available to Purchaser complete copies of material Tax Returns relating to taxable periods that ended on or after December 31, 2005.

 

 

(d)       Each U.S. Seller have complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes and has duly and timely withheld and paid over to the appropriate Taxing Authorities all amounts required to be so withheld and paid over under all applicable Laws.

(e)       No claim has been made by a Taxing Authority in a jurisdiction in which a U.S. Seller does not currently file a Tax Return such that such U.S. Seller is or may be subject to taxation by that jurisdiction.

(f)        No agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including any applicable statute of limitation) or the period for filing any Tax Return, in each case with respect to the Business, the Purchased Assets or the Israeli Purchased Assets, has been executed or filed with any Taxing Authority. No Person has requested any extension of time within which to file any Tax Return with respect to the Business, the Purchased Assets or the Israeli Purchased Assets, which Tax Return has since not been filed. No agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including any applicable statute of limitation) or the period for filing any Tax Return has been executed or filed with any Taxing Authority by.

(g)       There are no Liens for Taxes upon the Purchased Assets, except for Permitted Exceptions.

(h)       No U.S. Seller is a “foreign person” within the meaning of section 1445 of the Code.

(i)        None of the Purchased Assets or the Israeli Purchased Assets is an interest (other than indebtedness within the meaning of section 163 of the Code) in an entity taxable as a corporation, partnership, trust or real estate mortgage investment conduit for U.S. federal income tax purposes.

(j)        No issue has been raised by any Taxing Authority, which, by application of the same principles, would reasonably be expected to affect the Tax treatment of the Purchased Assets or the Israeli Purchased Assets in any taxable period (or portion thereof) ending after the Closing Date.

(k)       No power of attorney with respect to any Tax matter or Tax sharing, Tax indemnity or Tax allocation agreement or similar contract or arrangement is currently in force with respect to the Purchased Assets or the Israeli Purchased Assets that would, in any manner, bind, obligate or restrict Purchaser after the Closing Date.

(l)        None of the Purchased Assets, the Israeli Purchased Assets or any property used in the Business is (i) “tax-exempt use property” within the meaning of section 168(h)(1) of the Code, (ii) “tax-exempt bond financed property” within the meaning of section 168(g) of the Code, (iii) “limited use property” within the meaning of Rev. Proc. 2001-28, (iv) described in section 168(g)(1)(A) of the Code with respect to which a U.S. Seller has claimed

 

 

depreciation deductions in determining its U.S. federal income tax liability or (v) subject to any provision of Law comparable to any of the provisions listed above.

(a)       (i) The Montgomery Wire Facility and the Wyre Wynd Facility are the only interests in real property owned in fee by U.S. Sellers (the “ Owned Property ”), and (ii) Schedule 5.9(a) sets forth a complete list of all real property and interests in real property leased by U.S. Sellers (the “ Leased Real Property ” and, together with the Owned Properties, the “ Seller Property ” ) as lessee or lessor, including a description of the lease (the “ Real Property Leases ”) for such Leased Real Property (including the name of the third party lessor or lessee and the date of the lease or sublease and all amendments thereto). U.S. Sellers have good and marketable fee title to all Owned Property, free and clear of all Liens of any nature whatsoever, except (A) those Liens set forth on Schedule 5.9(a) , which will be extinguished as of the Closing Date, and (B) Permitted Exceptions. The Seller Properties constitute all interests in real property currently used, occupied or currently held for use by U.S. Sellers in connection with the Business. All of the Seller Properties and buildings, fixtures and improvements thereon are owned or leased by U.S. Sellers. None of the improvements located on the Seller Properties constitute a legal non-conforming use or otherwise require any special dispensation, variance or special permit under any Laws or Environmental Laws. U.S. Sellers have delivered to Purchaser true, correct and complete copies of (i) all deeds and title reports for the Owned Properties and (ii) the Real Property Leases, together with all amendments, modifications or supplements, if any, thereto. Seller Properties are not subject to any leases, rights of first refusal, options to purchase or rights of occupancy, except the Real Property Leases set forth on Schedule 5.9(a) .

(b)       Each U.S. Seller, as applicable, has a valid, binding and enforceable leasehold interest under each of the Real Property Leases under which it is a lessee, free and clear of all Liens other than Permitted Exceptions. Each of the Real Property Leases is in full force and effect. No U.S. Seller is in default under any Lease, and no event has occurred and no circumstance exists which, if not remedied, and whether with or without notice or the passage of time or both, would result in such a default. No U.S. Seller has received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by such U.S. Seller under any of the Real Property Leases and, to the Knowledge of Sellers, no other party is in default thereof, and no party to any Real Property Lease has exercised any termination rights with respect thereto.

(c)       U.S. Sellers have all material certificates of occupancy, Permits of any Governmental Body necessary or useful for the current use and operation of each Seller Property, and U.S. Sellers have fully complied with all material conditions of the said Permits applicable to them. No default or violation, or event that with the lapse of time or giving of notice or both would become a default or violation, has occurred in the due observance of any Permit.

(d)       There does not exist any actual or, to the Knowledge of Sellers, threatened or contemplated condemnation or eminent domain proceedings that affect any Seller

 

 

Property or any part thereof, and no U.S. Seller has received any notice, oral or written, of the intention of any Governmental Body or other Person to take or use all or any part thereof.

(e)       No U.S. Seller has received any notice from any insurance company that has issued a policy with respect to any Seller Property requiring performance of any structural or other repairs or alterations to such Seller Property.

(f)        No U.S. Seller owns, holds, is obligated under or is a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell, assign or dispose of any real estate or any portion thereof or interest therein.

For purposes of this Section 5.9 , U.S. Sellers shall include Trading Company.

(a)       Except as set forth on Schedule 5.10(a) , U.S. Sellers (and Parent with respect to any items of tangible personal property included in the Israeli Purchased Assets), have good and marketable title to all of the items of tangible personal property used or held for use by U.S. Sellers in the Business (except as sold or disposed of subsequent to the date hereof in the Ordinary Course of Business and not in violation of this Agreement), free and clear of any and all Liens, other than Permitted Exceptions.

(b)        Schedule 5.10(b) sets forth all leases of personal property (“ Personal Property Leases ”) involving annual payments in excess of $10,000 relating to personal property used or held for use by U.S. Sellers in the Business or to which any U.S. Seller is a party or by which the properties or assets of any U.S. Seller are bound. All of the items of personal property under the Personal Property Leases are in all material respects in the condition required of such property by the terms of the lease applicable thereto during the term of the lease. U.S. Sellers have delivered to the Purchaser true, correct and complete copies of the Personal Property Leases, together with all amendments, modifications or supplements thereto.

(c)       Each U.S. Seller has a valid, binding and enforceable leasehold interest under each of the Personal Property Leases under which it is a lessee. Each of the Personal Property Leases under which each U.S. Seller is a lessee is in full force and effect and such U.S. Seller has not received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by such U.S. Seller under such Personal Property Leases and, to the Knowledge of Sellers, no other party is in default thereof, and no party to such Personal Property Leases has exercised any termination rights with respect thereto.

(a)        Schedule 5.11(a) sets forth an accurate and complete list of all Patents, registered Marks, pending applications for registration of Marks, unregistered Marks, registered Copyrights, pending applications for registration of Copyrights, and Internet domain names included in the Purchased Intellectual Property owned, filed or applied for by any U.S. Seller. Schedule 5.11(a) lists (i) the record owner of each such item of Purchased Intellectual Property, (ii) the jurisdictions in which each such item of Purchased Intellectual Property has been issued,

 

(b)       Except as disclosed in Schedule 5.11(b) , U.S. Sellers are the sole and exclusive owners of all right, title and interest in and to all of the Purchased Intellectual Property listed or required to be listed on Schedule 5.11(a) . U.S. Sellers are the sole and exclusive owner of, or have valid and continuing rights to use, sell, license and otherwise exploit, as the case may be, all other Purchased Intellectual Property, Purchased Technology and Intellectual Property and Technology licensed to U.S. Sellers under the Intellectual Property Licenses as the same is used, sold, licensed and otherwise exploited in the Business as presently conducted and proposed to be conducted, free and clear of all Liens.

(c)       None of the Purchased Intellectual Property, the Purchased Technology, or the manufacturing, licensing, marketing, importation, offer for sale, sale or use of any products or services in connection with the Business as presently conducted, or the currently proposed business practices, methods or operations of U.S. Sellers infringe, constitute an unauthorized use of, misappropriate, dilute or violate any Intellectual Property, Technology or other right of any Person (including pursuant to any non-disclosure agreements or obligations to which any U.S. Seller or any of its Employees or Former Employees is a party). The Purchased Intellectual Property, the Purchased Technology and the Intellectual Property and Technology licensed to U.S. Sellers under the Intellectual Property Licenses include all of the Intellectual Property and Technology used or held for used by U.S. Sellers to conduct the Business in the manner in which the Business is conducted as of the Closing Date.

(d)       Except with respect to licenses of commercial off-the-shelf Software available on reasonable terms for a license fee of no more than $10,000, U.S. Sellers are not required, obligated, or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner of, licensor of, or other claimant to any Purchased Intellectual Property or Purchased Technology, or any other Person, with respect to the use thereof or in connection with the conduct of the Business as currently conducted.

(e)       Each of the Intellectual Property Licenses that any U.S. Seller is a party to is in full force and effect and is the legal, valid and binding obligation of such U.S. Seller and of the other parties thereto, enforceable against each of them in accordance with its terms and, upon consummation of the transactions contemplated by this Agreement, shall continue in full force and effect without penalty or other adverse consequence. No U.S. Seller is in material default under any such Intellectual Property License, nor, to the Knowledge of Sellers, is any other party to an Intellectual Property License in default thereunder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder. No party to any of the Intellectual Property Licenses has exercised any termination rights with respect thereto. U.S. Sellers have, and will transfer to Purchaser at the Closing, good and valid title to the Intellectual Property Licenses, free and clear of all Liens other than Permitted Exceptions. U.S. Sellers have delivered or otherwise made available to Purchaser true, correct and complete copies of all of the Intellectual Property Licenses, together with all amendments, modifications or supplements thereto.

 

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(f)        No U.S. Seller is the subject of any pending or, to the Knowledge of Sellers, threatened Legal Proceedings that involve a claim of infringement, unauthorized use, misappropriation, dilution or violation of any Intellectual Property, Technology or other proprietary right by any Person against any U.S. Seller or challenging the ownership, use, validity or enforceability of any Purchased Intellectual Property, Purchased Technology or Intellectual Property or Technology licensed to any U.S. Seller under the Intellectual Property Licenses. No U.S. Seller has received written notice of any such threatened claim and, to the Knowledge of Sellers, there are no facts or circumstances that would form the basis for any such claim or challenge. The Purchased Intellectual Property and Purchased Technology, and U.S. Sellers’ rights in and to the Purchased Intellectual Property, Purchased Technology and Intellectual Property and Technology licensed to U.S. Sellers under the Intellectual Property Licenses, are valid and enforceable.

(g)       To the Knowledge of Sellers, no Person is infringing, violating, misusing, diluting or misappropriating any Purchased Intellectual Property or Purchased Technology, and no such claims have been made against any Person by any U.S. Seller.

(h)       There are no Orders to which any U.S. Seller is a party or by which any U.S. Seller is bound that restrict any right to use any Purchased Intellectual Property, Purchased Technology or Intellectual Property or Technology licensed to any U.S. Seller under any Intellectual Property License.

(i)        The consummation of the transactions contemplated hereby will not result in the loss or impairment of Purchaser’s right to own or use any of the Purchased Intellectual Property or Purchased Technology. Neither this Agreement nor any transaction contemplated by this Agreement will result in the grant by any U.S. Seller (or, to the Knowledge of Sellers, any third Person) to any third Person of any license or right with respect to any Purchased Intellectual Property or Purchased Technology pursuant to any Contract to which any U.S. Seller is a party or by which any assets or properties of any U.S. Seller are bound.

(j)         Schedule 5.11(j) sets forth a complete and accurate list of (i) all Software included in the Purchased Intellectual Property or Purchased Technology and developed by or for any U.S. Seller and (ii) all other Software used or held for use by U.S. Sellers in the Business that is not exclusively owned by U.S. Sellers, excluding, in each case, commercial off-the-shelf Software available on reasonable terms for a license fee of no more than $10,000.

(k)       No U.S. Seller has incorporated any “open source,” “freeware,” “shareware” or other Software having similar licensing or distribution models (“ Open Source ”) in, or used any Open Source in connection with, any Software included in the Purchased Intellectual Property or Purchased Technology and developed, licensed, distributed or otherwise exploited by or for any U.S. Seller in a manner that requires the contribution or disclosure of any portion or source code of such Software to any Person, including into the Open Source community. No U.S. Seller has licensed or provided to any third Person, or otherwise permitted any third Person to access or use, any source code or related documentation for any Software included in the Purchased Intellectual Property or Purchased Technology and

 

 

developed by or for any U.S. Seller. No U.S. Seller is a party to any source code escrow Contract or any other Contract (or a party to any Contract obligating any U.S. Seller to enter into a source code escrow Contract or other Contract) requiring the deposit of source code or related materials for any such Software.

(l)        All necessary registration, maintenance, renewal and other relevant filing fees in connection with any of the Purchased Intellectual Property owned by any U.S. Seller that has been issued or registered or is the subject of a pending application have been timely paid, and all necessary documents, certificates and other relevant filings in connection with such Purchased Intellectual Property have been timely filed, with the relevant Governmental Bodies in the United States or foreign jurisdictions, as the case may be, for the purpose of maintaining such Purchased Intellectual Property and all issuances, registrations and applications therefor. There are no annuities, payments, fees, responses to office actions or other filings necessary to be made with respect to any such Purchased Intellectual Property and having a due date within ninety (90) days after the date of this Agreement.

(a)        Schedule 5.12(a) sets forth, by reference to the applicable subsection of this Section 5.12(a) , all of the following Contracts to which any U.S. Seller is a party or by which any U.S. Seller, the Purchased Assets or the Israeli Purchased Assets are bound (collectively, the “ Material Contracts ”):

(i)        Contracts with any current or former officer, director, stockholder or Affiliate of any U.S. Seller;

(ii)       Contracts with any labor union or association representing any Employee of any U.S. Seller;

(iii)      Contracts for the sale of any of the assets of any Seller other than in the Ordinary Course of Business or for the grant to any Person of any preferential rights to purchase any of its assets;

(iv)      Contracts for joint ventures, strategic alliances, partnerships, licensing arrangements, or sharing of profits or proprietary information;

(v)       Contracts containing covenants of any U.S. Seller not to compete in any line of business or with any Person in any geographical area or not to solicit or hire

any Person with respect to employment or covenants of any other Person not to compete with any U.S. Seller in any line of business or in any geographical area or not to solicit or hire any Person with respect to employment;

(vi)      Contracts relating to the acquisition (by merger, purchase of stock or assets or otherwise) by any U.S. Seller of any operating business or material assets or the capital stock of any other Person;

 

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                               (vii)     Contracts relating to the incurrence, assumption or guarantee of any Indebtedness or imposing a Lien on any of the assets of any U.S. Seller, including indentures, guarantees, loan or credit agreements, sale and leaseback agreements, purchase money obligations incurred in connection with the acquisition of property, mortgages, pledge agreements, security agreements, or conditional sale or title retention agreements;

(viii)    all Contracts providing for payments by or to any U.S. Seller in excess of $10,000 in any fiscal year or $50,000 in the aggregate during the term thereof;

(ix)      all Contracts obligating any U.S. Seller to provide or obtain products or services (A) for a period of one (1) year or more, (B) requiring any U.S. Seller to purchase or sell a stated portion of its requirements or outputs or (C) in which any U.S. Seller has granted “most favored nation” pricing provisions or exclusive marketing or distribution rights relating to any product or service or territory or has agreed to purchase a minimum quantity of goods or services or has agreed to purchase goods or services exclusively from a certain Person;

(x)       Contracts under which any U.S. Seller has made advances or loans to any other Person;

(xi)      Contracts providing for severance, retention, change in control or other similar payments;

(xii)     Contracts for the employment of any individual on a full-time, part-time or consulting or other basis providing annual compensation in excess of $50,000;

(xiii)    material management Contracts and Contracts with independent contractors or consultants (or similar arrangements) that are not cancelable without penalty or further payment and without more than thirty (30) days’ notice;

(xiv)    outstanding Contracts of guaranty, surety or indemnification, direct or indirect, by any U.S. Seller;

(xv)     royalty agreement with terms providing for payments to or from any U.S. Seller in excess of $10,000 in any year; and

(xvi)    Contracts that are otherwise material to any U.S. Seller or the Business.

(b)       Each of the Material Contracts is in full force and effect and is the legal, valid and binding obligation of the U.S. Seller party thereto (or Parent with respect to any Material Contract relating to the Israeli Purchased Assets) and of the other parties thereto, enforceable against each of them in accordance with its terms and, upon consummation of the transactions contemplated by this Agreement, shall, except as otherwise stated in Schedule 5.3(a) or 5.3(b) , continue in full force and effect without penalty or other adverse consequence. No U.S. Seller is in material default under any Material Contract, nor, to the Knowledge of Sellers, is any other party to any Material Contract in breach of or default thereunder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material breach or default by any U.S. Seller or any other party thereunder. No party to any of the Material Contracts has exercised any termination rights with respect thereto, and no such party has given notice of any significant dispute with respect to any Material Contract. U.S. Sellers have, and will transfer to Purchaser at the Closing, good and valid title to the Material Contracts, free and clear of all Liens other than Permitted Exceptions. U.S. Sellers have delivered to Purchaser true, correct and complete copies of all of the Material Contracts, together with all amendments, modifications or supplements thereto.

 

 

 

(c)       All Contracts of the Business were entered into in the Ordinary Course of Business.

(a)        Schedule 5.13(a) sets forth a complete and correct list of: (i) all “employee benefit plans”, as defined in Section 3(3) of ERISA, (ii) all employment, consulting and other compensation arrangements, and (iii) all other employee benefit arrangements or payroll practices, including bonus plans, consulting or other compensation agreements, including, incentive, equity or equity-based compensation, deferred compensation, stock purchase, change in control, tax gross up, severance, pension, leave of absence, vacation, salary continuation, welfare benefit, disability, life insurance, educational assistance, dependent care, section 125 of the Code (“ Cafeteria Plan ”) plans, policies or agreements, as to which U.S. Seller has any obligation or liability, contingent or otherwise (the “ Employee Benefit Plans ”). None of the Employee Benefit Plans is subject to Title IV of ERISA or section 412 of the Code, is a multiemployer plan as defined in Section 3(37) of ERISA (“ Multiemployer Plan ”), or is subject to Sections 4063 or 4064 of ERISA (“ Multiple Employer Plan ”).

(b)       Set forth on Schedule 5.13(b) are: (i) the names and titles of all Employees, all of whom work for U.S. Sellers in connection with the Business, together with the location of their employment; (ii) the date each Employee was hired by U.S. Sellers; (iii) the rate of annual remuneration or the rate of hourly pay or the rate of weekly pay of each Employee as of the date hereof and any commissions and bonuses paid since the latter of the Balance Sheet Date and the initial date of employment of the Employee; (iv) particulars of all other material terms and conditions of employment or engagement of such Employee, including benefits and positions held; and (v) all accrued vacation, overtime and sick leave for each Employee as of the date hereof. Except as set forth on Schedule 5.13(b) , Sellers are not a party to any written or oral contracts of employment with any of the Employees of the U.S. Sellers that are not terminable on the giving of reasonable notice in accordance with applicable Laws.

(c)       Correct and complete copies of the following documents, with respect to each of the Employee Benefit Plans, have been made available or delivered to Purchaser by U.S. Sellers, to the extent applicable: (i) any plans, all amendments thereto and related trust documents, and amendments thereto; (ii) the most recent Forms 5500 and all schedules thereto; (iii) the most recent IRS determination letter; (iv) the most recent summary plan descriptions;

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(v) written communications to employees relating to the Employee Benefit Plans; and (vi) written descriptions of all non-written agreements relating to the Employee Benefit Plans.

(d)       Each Employee Benefit Plan is in compliance in all material respects with its terms and the applicable provisions of ERISA, the Code and all other applicable Laws, except in each case where the failure to be in compliance would not have a Material Adverse Effect.

(e)       Each of the Employee Benefit Plans intended to qualify under section 401(a) of the Code (“ Qualified Plans ”) other than those Qualified Plans which are IRS preapproved master or prototype plans, has received a determination from the IRS that it is so qualified and the trusts maintained thereto are exempt from federal income taxation under section 501 of the Code, and to the Knowledge of Sellers nothing has occurred with respect to the operation of any such plan which could cause the loss of such qualification or exemption or the imposition of any liability, penalty or tax under ERISA or the Code.

(f)        There are no pending Legal Proceedings which have been asserted or instituted against or relating to any of the Employee Benefit Plans, the assets of any such plans or any U.S. Seller, or the plan administrator or any fiduciary of the Employee Benefit Plans with respect to the operation of such plans (other than routine, uncontested benefit claims), and, to the Knowledge of Sellers, there are no facts or circumstances which could reasonably be expected to form the basis for any such Legal Proceeding.

(g)       Except as set forth on Schedule 5.13(g) , neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment becoming due to any Employee or satisfies any prerequisite (whether exclusive or non-exclusive) to any payment or benefit to any Employee, (ii) increase any benefits under any Employee Benefit Plans or (iii) result in the acceleration of the time of payment, vesting or funding of any such benefits under any Employee Benefit Plans.

(a)       No U.S. Seller is a party to any labor or collective bargaining agreement and there are no labor or collective bargaining agreements which pertain to Employees of any U.S. Seller. No Employees are represented by any labor organization. No labor organization or group of Employees of any U.S. Seller has made a pending demand for recognition, and there are no representation proceedings or petitions seeking a representation proceeding presently pending or, to the Knowledge of Sellers, threatened to be brought or filed, with the National Labor Relations Board or other labor relations tribunal. There is no organizing activity involving any U.S. Seller pending or, to the Knowledge of Sellers, threatened by any labor organization or group of Employees.

(b)       There are no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii) material grievances or other labor disputes pending or, to the Knowledge of Sellers, threatened against or involving any U.S. Seller involving any Employee. There are no

 

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unfair labor practice charges, grievances or complaints pending or, to the Knowledge of Sellers, threatened by or on behalf of any Employee or Former Employee.

(c)       There are no complaints, charges or claims against any U.S. Seller pending or, to Knowledge of Sellers, threatened that could be brought or filed, with any Governmental Body or based on, arising out of, in connection with or otherwise relating to the employment or termination of employment or failure to employ by any U.S. Seller, of any individual. Each U.S. Seller is in compliance with all Laws relating to the employment of labor, including all such Laws relating to wages, hours, WARN and any similar state or local “mass layoff” or “plant closing” Law, collective bargaining, discrimination, civil rights, safety and health, workers’ compensation and the collection and payment of withholding and/or social security taxes and any similar tax except for immaterial non-compliance. There has been no “mass layoff” or “plant closing” (as defined by WARN) with respect to any U.S. Seller within the six months prior to Closing.

5.15      Litigation . Except as set forth in Schedule 5.15 , there is no Legal Proceeding pending or, to the Knowledge of Sellers, threatened against any U.S. Seller (or to the Knowledge of Sellers, pending or threatened, against any of the officers, directors or key Employees of any U.S. Seller with respect to their business activities on behalf of such U.S. Seller), or to which any U.S. Seller is otherwise a party, before any Governmental Body; nor to the Knowledge of Sellers is there any reasonable basis for any such Legal Proceeding. Except as set forth on Schedule 5.15 , no U.S. Seller is subject to any Order, and no U.S. Seller is in breach or violation of any Order. Except as set forth on Schedule 5.15 , no U.S. Seller is engaged in any legal action to recover monies due it or for damages sustained by it. There are no Legal Proceedings pending or, to the Knowledge of Sellers, threatened against any U.S. Seller or to which any Seller is otherwise a party relating to this Agreement or any Seller Document or the transactions contemplated hereby or thereby.

(a)       Each U.S. Seller is in compliance in all material respects with all Laws applicable to its operations or assets or the Business. No U.S. Seller has received any written or other notice of or been charged with the violation of any Laws. To the Knowledge of Sellers, no U.S. Seller is under investigation with respect to the violation of any Laws and there are no facts or circumstances which could form the basis for any such violation.

(b)        Schedule 5.16(b) contains a list of all Permits which are required for the operation of the Business as presently conducted (“ Seller Permits ”), other than those the failure of which to possess is immaterial. U.S. Sellers have not received any notice from any Governmental Body regarding the absence of any Permits in addition to the Seller Permits. U.S. Sellers currently have all Seller Permits, other than those the failure of which to possess is immaterial. No U.S. Seller is in default or violation, and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation, in any material respect of any term, condition or provision of any Seller Permit and, to the Knowledge of Sellers, there are no facts or circumstances which could form the basis for any such default or violation. There are no Legal Proceedings pending or, to the Knowledge of Sellers, threatened,

 

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relating to the suspension, revocation or modification of any of the Seller Permits. None of the Seller Permits will be impaired or in any way affected by the consummation of the transactions contemplated by this Agreement.

5.17      Environmental Matters . Notwithstanding anything to the contrary elsewhere in this Agreement, the representations and warranties set forth in this Section 5.17 are the exclusive representations and warranties of Sellers concerning any and all matters related to or arising under Environmental Laws. Except as set forth on Schedule 5.17 and to the Knowledge of Sellers with respect to Environmental Laws in effect as of the date hereof and as of the Closing Date:

(a)       Sellers, with respect to the Business, are in compliance with Environmental Laws, which compliance includes obtaining, maintaining and complying with all necessary Environmental Permits, except for noncompliance that could not reasonably be expected to result in any Seller or the Business incurring material Environmental Costs and Liabilities; Schedule 5.17(a) contains a list of all Environmental Permits that are required for the operation of the Business as presently conducted, other than those the failure of which to possess is immaterial;

(b)       Sellers have not received any written notice from any Governmental Body or other Person, that alleges that any of them with respect to the Business is in material violation of or potentially materially liable under any Environmental Law and none of Sellers or the Owned Property or Leased Real Property are the subject of any pending or threatened claims, investigations, orders, injunctions, or judgments pursuant to Environmental Law, including any Remedial Action, relating to the Business, the Owned Property, the Leased Real Property or real property formerly owned, leased or operated by any Seller, except such that would not reasonably be expected to result in any Seller or the Business incurring material Environmental Costs and Liabilities;

(c)       there have been no Releases of Hazardous Materials by Sellers onto any Owned Property or Leased Real Property except for such Releases that have not given rise to, or could not reasonably be expected to result in any Seller or the Business incurring material Environmental Costs and Liabilities;

(d)       there are no current facts, circumstances or conditions arising out of or relating to the operations of any Seller or the Business, or any Owned Property or Leased Real Property or any real property formerly owned, leased or operated by any Seller including any real property to which the Business has arranged for the disposal or treatment of Hazardous Substances that could reasonably be expected to result in any Seller incurring material Environmental Costs and Liabilities;

(e)       Sellers and the Business have provided or otherwise made available to Purchaser true and complete copies of all material, final and non-privileged environmental, health or safety assessments, audits, studies, reports, analyses, results of investigations or similar reports to the extent they are in Sellers’ or the Business’ possession, custody or control

 

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with respect to Sellers, the Business and real property currently owned, leased or operated or to any pending or any unresolved claim or liability; and

(f)        the transactions contemplated by this Agreement do not require the prior consent or pre-approval of any Governmental Body with jurisdiction over any Seller, the Business or third party regarding Environmental Laws or Environmental Permits.

5.18      Insurance . Each U.S. Seller has insurance policies in full force and effect (a) for such amounts as are sufficient for all requirements of Law and all agreements to which such U.S. Seller is a party or by which it is bound and (b) which are in such amounts, with such deductibles and against such risks and losses, as a reasonable for the business, assets and properties of such U.S. Seller. Set forth in Schedule 5.18 is a list of all insurance policies and all fidelity bonds held by or applicable to any U.S. Seller setting forth, in respect of each such policy, the policy name, policy number, carrier, term, type and amount of coverage and annual premium, whether the policies may be terminated upon consummation of the transactions contemplated hereby and if and to what extent events being notified to the insurer after the Closing Date are generally excluded from the scope of the respective policy. Except as set forth on Schedule 5.18 , no event relating to any U.S. Seller has occurred which could reasonably be expected to result in a retroactive upward adjustment in premiums under any such insurance policies or which could reasonably be expected to result in a prospective upward adjustment in such premiums. Excluding insurance policies that have expired and been replaced in the Ordinary Course of Business, no insurance policy has been cancelled within the last two (2) years and, to the Knowledge of Sellers, no threat has been made to cancel any insurance policy of any U.S. Seller during such period. No event has occurred, including the failure by any U.S. Seller to give any notice or information, or any U.S. Seller giving any inaccurate or erroneous notice or information, which limits or impairs the rights of such U.S. Seller under any such insurance policies.

 

 

 

 

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(a)       All accounts and notes receivable of each U.S. Seller have arisen from bona fide transactions in the Ordinary Course of Business and are payable on ordinary trade terms. All accounts and notes receivable of U.S. Sellers reflected on the Balance Sheet are good and collectible at the aggregate recorded amounts thereof, net of any applicable reserve for returns or doubtful accounts reflected thereon, which reserves are adequate and were calculated in a manner consistent with past practice and in accordance with GAAP consistently applied. To the Knowledge of Sellers, all accounts and notes receivable arising after the Balance Sheet Date are good and collectible at the aggregate recorded amounts thereof, net of any applicable reserve for returns or doubtful accounts, which reserves are adequate and were calculated in a manner consistent with past practice and in accordance with GAAP consistently applied. To the Knowledge of Sellers, none of the accounts or the notes receivable of any U.S. Seller (i) are subject to any setoffs or counterclaims or (ii) represent obligations for goods sold on consignment, on approval or on sale-or-return basis or subject to any other repurchase or return arrangement.

(b)       All accounts payable of U.S. Sellers reflected in the Balance Sheet or arising after the date thereof are the result of bona fide transactions in the Ordinary Course of Business and have been paid or are not yet due and payable.

(c)       The Inventories of U.S. Sellers are in good and marketable condition, and are saleable in the Ordinary Course of Business. The Inventories of U.S. Sellers set forth in the Balance Sheet were valued at the lower of cost (on a moving average FIFO basis) or market and were properly stated therein in accordance with GAAP consistently applied. Adequate reserves have been reflected in the Balance Sheet for obsolete, excess, damaged, slow-moving or otherwise unusable inventory, which reserves were calculated in a manner consistent with past practice and in accordance with GAAP consistently applied.

5.20      Related Party Transactions . Except as set forth on Schedule 5.20 , to the Knowledge of Sellers, no employee, officer, director, stockholder, partner or member of any U.S. Seller, any member of his or her immediate family or any of their respective Affiliates (“ Related Persons ”) (i) owes any amount to any U.S. Seller nor does any U.S. Seller owe any amount to, or has any U.S. Seller committed to make any loan or extend or guarantee credit to or for the benefit of, any Related Person, (ii) is involved in any business arrangement or other relationship with any U.S. Seller (whether written or oral), (iii) owns any property or right, tangible or intangible, that is used or held for use by any U.S. Seller in the Business, (iv) has any claim or cause of action against any U.S. Seller or (v) owns any direct or indirect interest of any kind in, or controls or is a director, officer, employee or partner of, or consultant to, or lender to or borrower from or has the right to participate in the profits of, any Person which is a competitor, supplier, customer, landlord, tenant, creditor or debtor of any U.S. Seller.

(a)       Except as set forth on Schedule 5.21 , each product manufactured, sold or delivered by any U.S. Seller in conducting the Business has been in conformity with all express

 

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warranties and all applicable Laws. No U.S. Seller has sold any products or delivered any services that included an express written warranty for a period of longer than one (1) year. In the last three (3) years, all customers of the Business, in the aggregate, have returned (on net basis) less than two (2) percent (as a percentage of sales) of the finished goods.

(b)       No Seller has received notice of any material liability arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product designed, manufactured, assembled, repaired, maintained, delivered, sold or installed, or services rendered, by or on behalf of such U.S. Seller. To the Knowledge of Sellers, no U.S. Seller has committed any act or failed to commit any act which would result in, and there has been no occurrence which would give rise to or form the basis of, any product liability or liability for breach of warranty (whether covered by insurance or not) on the part of any U.S. Seller with respect to products designed, manufactured, assembled, repaired, maintained, delivered, sold or installed or services rendered by or on behalf of any U.S. Seller.

(a)        Schedule 5.22(a) sets forth a list of the ten (10) largest customers and the ten (10) largest suppliers of each U.S. Seller, as measured by the dollar amount of purchases therefrom or thereby, during the fiscal year ended December 31, 2007, showing the approximate total sales by such U.S. Seller to each such customer and the approximate total purchases by such U.S. Seller from each such supplier, during such period.

(b)       All sales made by Trading Company are made directly to Global Wire USA and not to any U.S. customer of the Business. Schedule 5.22(b) sets forth the name of each U.S. customer of the Business that has purchased wire manufactured in Israel during the fiscal year ending December 31, 2007 or at any