EXECUTION COPY CONTRIBUTION AND FORMATION AGREEMENT AMONG SUPERIOR ESSEX INC. ESSEX GROUP, INC. NEXANS NEXANS PARTICIPATIONS NEXANS WIRESContribution Agreement |
|
|
You are currently viewing: This Contribution Agreement involves
SUPERIOR ESSEX INC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
|
|
|
|
Exhibit 2.3
EXECUTION COPY
CONTRIBUTION AND FORMATION AGREEMENT
AMONG
SUPERIOR ESSEX INC.
ESSEX GROUP, INC.
NEXANS
NEXANS PARTICIPATIONS
NEXANS WIRES
and
LACROIX & KRESS GMBH
Dated as of July 27, 2005
TABLE OF CONTENTS
i
ii
LIST OF EXHIBITS
iii
iv
THIS CONTRIBUTION AND FORMATION AGREEMENT, dated as of July 27, 2005, is made and entered into by and between Superior Essex Inc., a Delaware corporation (“ Superior ”), Essex Group, Inc., a Michigan corporation (“ Essex ”), Nexans, a French société anonyme (“ Nexans ”), Nexans Participations, a French société anonyme (“ Participations ”), Nexans Wires, a French société par actions simplifiée (“ Nexans Wires ”), and Lacroix & Kress GmbH, a private limited company organized under the laws of Germany (“ L&K ”).
WHEREAS, Nexans and Essex desire to enter into a joint venture for the purpose of manufacturing, developing, selling and distributing winding wire, enamel, varnishes and related products;
WHEREAS, the joint venture will be conducted through a société par actions simplifée formed under the laws of France (the “ JV Holding Company ”) and one or more Subsidiaries (the JV Holding Company and the Subsidiaries thereof being referred to as the “ Joint Venture ”); and
WHEREAS, the parties are entering into this Agreement to set forth their agreement as to the creation of the Joint Venture, the contribution of certain businesses and assets to the Joint Venture, and the conditions to such contributions;
NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE
I
1.1 Certain Definitions . As used in this Agreement, the following terms shall have the respective meanings set forth below:
“ Adjusted EBITDA ” shall mean EBITDA, as adjusted by adding, without duplication, (1) pre-tax Nexans Facility Restructuring Costs in an amount no greater than the Nexans Facility Restructuring Cost Limit, (2) actual pre-tax external costs of measures taken at the level of the Joint Venture to facilitate compliance by Superior with the Sarbanes-Oxley Act of 2002 in an amount not to exceed €250,000 per year, (3) any amounts paid by the Joint Venture pursuant to Section 4.7, (4) any fees payable by the Joint Venture under the Management Services Agreement (or otherwise paid to Essex or one of its Affiliates for similar services) over €1,000,000 per year (without taking into account any reimbursement of external costs paid in accordance with the Management Services Agreement), and (5) the Purchase Accounting Adjustment Amount. The foregoing amounts shall be added back to EBITDA in the period or periods during which and to the extent they are charged against net income of the Joint Venture. For the avoidance of doubt, any charges that are added to net income in the calculation of EBITDA shall not be added a second time in the calculation of Adjusted EBITDA.
“ Affiliates ” shall mean with respect to any Person, any Person directly or indirectly Controlling, Controlled by, or under common Control with such other Person at any time during the period for which the determination of affiliation is being made.
“ Agreement ” shall mean this Contribution and Formation Agreement, the Schedules, and the Exhibits hereto, as the same may be amended or supplemented from time to time in accordance with the terms hereof.
“ Ancillary Documents ” shall mean, collectively, the contracts and documents set forth on Exhibit 1.1.1 , and the documents to be delivered pursuant to Section 2.5.
“ Applicable Benefit Laws ” means all Laws applicable to the Nexans German Benefit Plan or Essex Benefit Plan, as the case may be.
“ Bramsche Real Estate Agreement ” shall mean the real estate transfer and lease agreements in the form attached hereto as Exhibit 1.1.2 .
“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in New York City or Paris, France are authorized or obligated by law or executive order to close.
“ Business Plan ” shall mean the business plan for the Joint Venture attached as Exhibit 1.1.3 .
“ Cash Consideration ” shall mean an amount equal to (a) €16.54 million plus (b) €34.8 million, plus (c) €11.3 million, less (d) Nexans Closing Indebtedness (if any) to be paid to Nexans or its Affiliates at Closing pursuant to Section 2.3.3 (net of any amounts to be paid by Nexans or its Affiliates at Closing pursuant to Section 2.3.4).
“ Charter Documents ” shall mean collectively, with respect to each Entity, as applicable, the articles of incorporation, memorandum and articles of association, bylaws or similar constituent documents of such Entity.
“ Chauny Lease ” shall mean the lease in the form attached hereto as Exhibit 1.1.4 , which in no circumstance shall have a term ending prior to October 1, 2009.
“ Chauny Option ” shall mean the option to purchase real property in the form attached hereto as Exhibit 1.1.5 .
“ Competition Laws ” means all Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening or competition through merger or acquisition or restraint of trade.
“ Confidentiality Agreement ” shall mean the Master Confidentiality Agreement among Essex, Nexans, the JV Holding Company and the other parties thereto in the form attached hereto as Exhibit 1.1.6 .
2
“ Contracts ” shall mean all binding contracts, leases and subleases, purchase orders, quotations and pricing arrangements under which a Person sells products, notes, mortgages, indentures or other agreements other than Employee Benefit Plans.
“ Control ” as used with respect to any Entity, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management policies of such Entity through the ownership of voting securities or by Contract, including, without limitation, through the beneficial ownership of more than 50% of the voting securities of such Entity.
“ Copper Scrap Agreement ” shall mean the agreement for the purchase of copper scrap among Nexans Wires, Flytex and SCCC in the form attached hereto as Exhibit 1.1.7 .
“ Copper Wirerod Agreement ” shall mean the long term contract for copper wirerod delivery between SCCC, SLC, L&K, Flytex, German Newco and Essex UK in the form attached hereto as Exhibit 1.1.8 .
“ Credit Facility ” shall mean an Agreement for the Sale of Receivables of the Joint Venture providing, at the Closing, immediately available funds equal to or greater than €35,000,000.
“ EBITDA ” shall mean the consolidated earnings before interest, income tax, depreciation and amortization calculated from the US GAAP consolidated financial statements of the Joint Venture in accordance with Exhibit 1.1.9 .
“ Employment Agreement ” means any employment Contract, consulting Contract, termination or severance Contract, salary continuation Contract, or other Contract regarding the terms and conditions of employment or payment of compensation, or of a consulting or independent contract relationship in respect to any current or former officer, employee, consultant or independent contractor.
“ Employee Benefit Plan ” means, with respect to a Nexans Entity or an Essex Entity, as applicable, each plan, fund, program, agreement, arrangement or scheme, including each plan, fund, program, agreement, arrangement or scheme maintained or required to be maintained under applicable Laws, that is at any time sponsored or maintained or required to be sponsored or maintained by such Person or to which such Person makes or has made, or has or has had an obligation to make, contributions providing benefits to the current and former employees, directors, managers, officers, consultants, independent contractors, contingent workers or leased employees of such Person used in the conduct of the Nexans WW Business or the Essex WW Business, as applicable, or the dependents of any of them (whether written or oral).
“ Entity ” shall mean any corporation, firm, unincorporated organization, association, partnership, limited partnership, limited liability company, limited liability partnership, business trust, joint stock company, joint venture organization, entity or business.
“ Encumbrances ” shall mean liens, charges, encumbrances, pledges, security interests, options, or any other similar restrictions or third party rights.
3
“ Environmental Laws ” means all Laws relating to pollution or protection of health, safety or the environment.
“ Essex Benefit Plans ” shall mean each Employee Benefit Plan covering an employee involved in the Essex WW Business which is sponsored or maintained by an Essex Entity or to which an Essex Entity makes or has made, or has or has had an obligation to make, contributions (other than contributions to public pension, health insurance and other social systems of general application that are mandatory by law or national collective bargaining agreements).
“ Essex Capital Employed ” shall mean the book value of the assets of Essex UK, the Essex UK Subsidiary and Essex Pension Trustee less the liabilities (other than Essex Closing Indebtedness) of Essex UK, the Essex UK Subsidiary and Essex Pension Trustee, less (i) the difference between (a) €3 million and (b) any impairment charge recorded after December 31, 2004 but prior to the Closing Date (which shall be deemed to have occurred on July 1, 2005 for purpose of calculating the Essex Capital Employed), and (ii) the pension funding deficit described on Schedule 3.2.17 (to the extent not reserved in the Essex Closing Balance Sheet) determined as of the Closing Date from the Essex Closing Balance Sheet.
“ Essex Closing Balance Sheet ” shall mean the unaudited consolidated balance sheet of Essex UK and the Essex UK Subsidiary as of the Closing Date (after giving effect to the transactions that will take place on the Closing Date pursuant to this Agreement), to be prepared in accordance with UK GAAP applied on a basis consistent with the principles used in the December 31, 2004 and June 30, 2005 balance sheet included in the Essex Financial Statements.
“ Essex Closing Indebtedness ” shall mean any indebtedness of Essex WW Entities, other than the Essex UK Debt, with respect to (a) borrowed money, (b) notes payable and (c) capital leases, installment sale Contracts or other Contracts relating to the deferred and unpaid purchase price of assets, including any interest accrued thereon and prepayment or similar penalties and expenses as of the Closing Date. For the avoidance of doubt, Essex Closing Indebtedness shall not include (i) any trade accounts payable owed to unaffiliated third parties, incurred in the ordinary course of business, or (ii) any Essex Permitted Affiliate Payable, which is treated as an account payable for purposes of Essex Capital Employed.
“ Essex Entities ” shall mean, collectively, the Essex Parties and their Subsidiaries. Each Essex Party and each its Subsidiaries is sometimes referred to individually herein as an “Essex Entity.”
“ Essex Excluded Assets ” shall mean the assets, properties and rights listed on Schedule 1.1.1 .
“ Essex Financial Statements ” shall mean (i) the unaudited consolidated balance sheet of Essex UK and the Essex UK Subsidiary as of December 31, 2004 and related statement of income for the year then ended, and (ii) the unaudited consolidated balance sheet of Essex UK and the Essex UK Subsidiary as of June 30, 2005, and related statement of income for the six (6) month period then ended.
4
“ Essex Intellectual Property ” shall mean any Essex Owned Intellectual Property and any Essex Licensed Intellectual Property.
“ Essex Leased Real Property ” shall mean each parcel of real property used in the Essex WW Business which is not owned by an Essex Entity (together with all fixtures and improvements thereon).
“ Essex Licensed Intellectual Property ” shall mean any Intellectual Property that is licensed by an unrelated third party to an Essex Entity or any Affiliate thereof and used or useable in the Essex WW Business, including, as applicable, the Essex Licensed Software.
“ Essex Licensed Software ” shall mean all Software (other than Essex Proprietary Software) used by an Essex Entity in connection with the Essex WW Business.
“ Essex Netherlands ” shall mean a partnership organized or to be organized under the laws of the Netherlands as a direct or indirect wholly-owned Subsidiary of Essex.
“ Essex Owned Intellectual Property ” shall mean any Intellectual Property that is owned by an Essex Entity or any Affiliate thereof and used or useable in the Essex WW Business including, as applicable, the Essex Proprietary Software.
“ Essex Owned Real Property ” shall mean each parcel of real property which an Essex Entity owns (together with all fixtures and improvements thereon) and is used in the operation of the Essex WW Business.
“ Essex Parties ” shall mean, collectively, Superior, Essex, and Essex Netherlands, once it becomes a party to this Agreement.
“ Essex Pension Trustee ” means Essex Pension Trustees Limited, a private limited company organized under the laws of England and Wales, and registered under number 3527717 in the Register of Companies for England and Wales .
“ Essex Pension Trustee Shares ” means all of the issued and outstanding Shares of capital stock of Essex Pension Trustee.
“ Essex Permitted Affiliate Payable ” shall mean trade accounts payable owed by an Essex WW Entity to an Affiliate, incurred in the ordinary course of business, to the extent the invoice date thereon is less than 60 days before the Closing Date, and in a maximum aggregate amount of €100,000.
“ Essex Proprietary Software ” shall mean all Software owned by an Essex Entity and used in the operation of the Essex WW Business.
“ Essex Real Property ” shall mean the Essex Owned Real Property and the Essex Leased Real Property.
5
“ Essex Registered Intellectual Property ” shall mean all of the Registered Intellectual Property owned by, filed in the name of, or licensed to an Essex Entity and used in the Essex WW Business.
“ Essex Software ” shall mean the Essex Licensed Software and the Essex Proprietary Software.
“ Essex UK ” means Essex International Ltd., a company organized under the laws of England and Wales.
“ Essex UK Debt ” shall mean all amounts owed by Essex UK to Essex other than any Essex Permitted Affiliate Payable.
“ Essex UK Shares ” means all of the issued and outstanding shares of capital stock of Essex UK.
“ Essex UK Subsidiary ” means Temple Electrical Company Limited.
“ Essex WW Assets ” shall mean all of the assets, properties and rights (whether tangible or intangible) of the Essex Entities used in the Essex WW Business. For the avoidance of doubt, Essex WW Assets shall not include any assets of Essex located in North America.
“ Essex WW Business ” shall mean the manufacture, distribution and sale of magnet wire and related products by any Essex Entity through facilities in Europe.
“ Essex WW Contract ” shall mean any Contract related to the Essex WW Business to which an Essex Entity is a party.
“ Essex WW Customers ” shall any mean customer of the Essex WW Business that accounted for more than £75,000 of all sales of Essex WW Business during the twelve (12)-month period ended December 31, 2004 and any customer of the Essex WW Business that is expected to account for more than £75,000 of all sales of the Essex WW Business during the six (6) month period that will end June 30, 2005.
“ Essex WW Entities ” shall mean, collectively, Essex UK, Essex Pension Trustee and their respective Subsidiaries.
“ Essex WW Suppliers ” shall mean any supplier of goods or services to the Essex WW Business which were paid in the aggregate more than £ 75,000 during the twelve (12)-month period ended December 31, 2004 and any supplier of goods or services to the Essex WW Business to which Essex expects to pay in the aggregate more than £ 75,000 during the six (6)-month period that will end June 30, 2005.
“ Flytex ” means Nexans Winding Wire S.A.S. (formerly Flytex), a French société par actions simplifiée.
“ Flytex Shares ” shall mean all of the issued and outstanding shares of capital stock of Flytex.
6
“ French GAAP ” means French generally accepted accounting principles applied on a basis consistent with the audited consolidated financial statements of Nexans as of and for the year ended December 31, 2004 in accordance with Regulation 99-02 of the French National Accounting Council (Conseil national de la comptabilité).
“ French Predrawn Copper Wires Agreement ” shall mean the agreement for the purchase of predrawn copper wires between Nexans Wires and Flytex in the form attached hereto as Exhibit 1.1.11 .
“ French Services Agreement ” shall mean the agreement for services between Nexans Wires and Flytex substantially in the form attached hereto as Exhibit 1.1.12 .
“ French Winding Wires Division ” shall mean the division of Nexans Wires engaged in the business of manufacturing, selling and distributing magnet wire, enamels, varnishes and related products.
“ German Newco ” shall mean Lacroix & Kress Winding Wires GmbH, a German private limited company.
“ German Newco Shares ” shall mean all of the issued and outstanding shares of capital stock of German Newco.
“ German Predrawn Copper Wires Agreement ” shall mean the agreement for the purchase of predrawn copper wires between L&K and German Newco in the form attached hereto as Exhibit 1.1.13 .
“ German Services Agreement ” shall mean the agreement for services between L&K and German Newco substantially in the form attached hereto as Exhibit 1.1.14 .
“ German Winding Wires Division ” shall mean the division of L&K engaged in the business of manufacturing, selling and distributing magnet wire, enamels, varnishes and related products.
“ Governmental Entity ” shall mean any governmental or regulatory authority, court, agency, commission, body or analogous similar entity.
“ Hazardous Materials ” means (i) any pollutant, chemical or substance, (ii) any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical or chemical compound, or (iii) any hazardous substance, material or waste, whether solid, liquid or gas, in each case that is subject to regulation, control or remediation under any Environmental Laws, including without limitation, any quantity of friable asbestos, urea formaldehyde, polychlorinated biphenyls, radon gas, crude oil or any fraction thereof, all forms of natural gas, petroleum products or by-products or derivatives.
“ Hi-Wire ” means Hi-Wire Limited, a company organized under the laws of England and Wales.
7
“ Hi-Wire Shares ” shall mean all of the issued and outstanding shares of capital stock of Hi-Wire.
“ Indemnified Parties ” shall mean either the Essex/JV Indemnified Parties or the Nexans/JV Indemnified Parties, as applicable.
“ Independent Expert ” means an independent expert designated pursuant to Section 8.11.6.
“ Initial Net Equity Value ” shall mean an amount equal to € 39,700,000, as adjusted pursuant to Section 2.7.
“ Intellectual Property ” shall mean any or all of the following and all rights, arising out of or associated therewith: (a) all patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof throughout the world; (b) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know-how, technology, technical data and customer lists, and all documentation relating to any of the foregoing throughout the world; (c) all copyrights, copyright registrations and applications therefor, and all other rights corresponding thereto throughout the world; (d) all industrial designs and any registrations and applications therefor throughout the world; (e) all internet uniform resource locators, domain names, trade names, logos, slogans, designs, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (f) all databases and data collections and all rights therein throughout the world; (g) all moral and economic rights of authors and inventors, however denominated, throughout the world; and (h) any similar or equivalent rights to any of the foregoing anywhere in the world.
“ IP License Agreements ” shall mean the following agreements:
(i) Nexans Trademark License Agreement from Nexans to the JV Holding Company (for brand) in the form attached hereto as Exhibit 1.1.15(a) .
(ii) Essex Trademark License Agreement from Essex to the JV Holding Company (for product) in the form attached hereto as Exhibit 1.1.15(b) .
(iii) Superior Trademark License Agreement from Superior to the JV Holding Company (for brand) in the form attached hereto as Exhibit 1.1.15(c) .
(iv) Trademark License Agreement (Canada) from the JV Holding Company to Nexans Canada, Inc. (for product) in the form attached hereto as Exhibit 1.1.15(d) .
(v) L&K Patent License Agreement from L&K to the JV Holding Company in the form attached hereto as Exhibit 1.1.15(e) .
(vi) Patent License Agreement (China) from the JV Holding Company to Nexans Tiajin Magnet Wires & Cables Co. Limited in the form attached hereto as
8
Exhibit 1.1.15(f) .
(vii) Patent License Agreement (Canada) from the JV Holding Company to Nexans Canada, Inc. in the form attached hereto as Exhibit 1.1.15(g) .
(viii) Patent License Agreement from German Newco to Nexans Canada, Inc. in the form attached hereto as Exhibit 1.1.15(h) .
(ix) Patent Cross-License Agreement between the JV Holding Company and Essex Technologies in the form attached hereto as Exhibit 1.1.15(i) .
(x) R&D Services Agreement between Nexans and the JV Holding Company in the form attached hereto as Exhibit 1.1.15(j) .
(xi) Trademark Assignment Agreement from Nexans to the JV Holding Company in the form attached hereto as Exhibit 1.1.15(k) .
(xii) Intellectual Property Assignment Agreement from Nexans to the JV Holding Company in the form attached hereto as Exhibit 1.1.15(l) .
(xiii) GRA Termination Agreement between Nexans, Superior, the JV Holding Company, Flytex, German Newco, Nexans Portugal and Hi-wire, in the form attached hereto as Exhibit 1.1.15(m) .
“ Joint Venture ” shall mean the JV Holding Company and its Subsidiaries.
“ Knowledge ” or any similar phrase shall mean, with respect to Essex, the actual knowledge (without any duty of inquiry) of Stephen Carter, David Aldridge, Denys Gounot, Barbara Blackford, Mary Love Sullenberger, Allison Brantley, David Siegel, James Cassella, Greg Desautels, Tracye Gilleland, John Swindell, John Pye and David Cummings, and, with respect to Nexans, the actual knowledge (without any duty of inquiry) of Michel Mayoud (Managing Director Winding Wires Europe Activity), Renaud Fauvarque (Controller Winding Wires Europe Activity), Jean-Claude Bardy (Sales Director Winding Wires Europe Activity), Pierre-Yve Le Tiec (Industrial Director & Plant Manager Chauny (Nexans Winding Wires)), Edouard de Chalendar (Plant Manager Mâcon (Nexans Winding Wires)), Willy Schaumburg (General Manager Lacroix & Kress Winding Wires GmbH), Gerry Wolfe (President, Nexans Portugal & General Manager, Business Unit for fine wires), Valery Mercier (Managing Director Varnish Activity), Frederic Vincent, Jean-Pierre Reichenbach, Vincent Pouillard, Patrick Noonan, Magali Valat, Nicole Mansell, Geraldine Caillet, and Christian Velten - Jameson.
“ Laws ” shall mean all laws, statutes, common law, rules, codes, regulations, restrictions, ordinances, orders, decrees, approvals, directives, judgments, rulings, injunctions, writs, awards and decrees of, or issued or entered by, all Governmental Entities.
“ Licenses ” shall mean all notifications, licenses, permits (including environmental, construction and operation permits), franchises, certificates, approvals,
9
exemptions, classifications, registrations and other similar documents and authorizations issued by any Governmental Entity, and applications therefor.
“ Management Services Agreement ” shall mean the agreement for management services between Superior and the JV Holding Company in the form attached hereto as Exhibit 1.1.18 .
“ Material Adverse Effect ” shall mean, (i) with respect to the Nexans WW Business, any state of facts, change, event, effect or occurrence (when taken together with all other states of fact, changes, events, effects or occurrences) that is reasonably likely to result in a reduction in the projected Adjusted EBITDA of the Nexans WW Business as contained in the Business Plan of more than 20% in the 18 month period from July 1, 2005 to December 31, 2006 (determined without taking into account insurance recoveries or other non-recurring revenues resulting from such state(s) of facts, change(s), event(s), effect(s) or occurrence(s)); or (ii) with respect to the Essex WW Business, any state of facts, change, event, effect or occurrence (when taken together with all other states of fact, changes, events, effects or occurrences) that is reasonably likely to result in a reduction in the projected Adjusted EBITDA of the Essex WW Business as contained in the Business Plan of more than €500,000 in the 18 month period from July 1, 2005 to December 31, 2006 (determined without taking into account insurance recoveries or other non-recurring revenues resulting from such state(s) of facts, change(s), event(s), effect(s) or occurrence(s)).
“ Nexans Benefit Plans ” shall mean each Employee Benefit Plan covering an employee involved in the Nexans WW Business which is sponsored or maintained by a Nexans Entity or to which a Nexans Entity makes or has made, or has or has had an obligation to make, contributions (other than contributions to public pension, health insurance and other social systems of general application that are mandatory by law or national collective bargaining agreements).
“ Nexans Capital Employed ” shall mean the book value of the assets of Flytex, German Newco, Hi-Wire and Nexans Portugal and their respective Subsidiaries (after reflecting an asset impairment charge of €20 million, of which €10 million shall be deemed to be recorded on the Closing Date and €10 million shall be deemed to be recorded as of July 1, 2005, with any resulting change in depreciation charges being applied pro rata among all fixed assets of the Nexans WW Business in accordance with their net book value prior to such deemed impairment charge) less the liabilities (other than Nexans Closing Indebtedness) of the Nexans WW Entities and their respective Subsidiaries, determined as of the Closing Date from the Nexans Closing Balance Sheet. Notwithstanding the foregoing, any indebtedness owed by Nexans or one of its Affiliates (other than a Nexans WW Entity) to a Nexans WW Entity as of the Closing Date, which is to be paid on the Closing Date pursuant to Section 2.3.4, shall not be considered assets of Flytex, German Newco, Hi-Wire or Nexans Portugal for purposes of calculating the Nexans Capital Employed.
“ Nexans Closing Balance Sheet ” shall mean the unaudited, combined balance sheet of the Flytex, German Newco, Hi-Wire, Nexans Portugal and their respective Subsidiaries as of the Closing Date (after giving effect to the transactions that will take place on the Closing Date pursuant to this Agreement), to be prepared in accordance with French GAAP, applied on a
10
basis consistent with the principles applied in the Nexans Statement of Capital Employed as of December 31, 2004 and June 30, 2005, with actual numbers instead of estimated numbers.
“ Nexans Closing Indebtedness ” shall mean any indebtedness of the Nexans WW Entities with respect to (a) borrowed money, (b) notes payable, (c) capital leases, installment sale Contracts or other Contracts relating to the deferred and unpaid purchase price of assets and (d) any financial liabilities ( dettes financières ), including any interest accrued thereon and prepayment or similar penalties and expenses as of the Closing Date, except for (i) the indebtedness under Nexans Portugal’s loans from the Portuguese Agency for Investment, the Institute for Support of Small and Medium Enterprises, and Banco Commercial Português, S.A. and (ii) indebtedness under the Subordinated Promissory Note. For the avoidance of doubt, Nexans Closing Indebtedness shall not include (i) any trade accounts payable owed to unaffiliated third parties, incurred in the ordinary course of business, or (ii) any Nexans Permitted Affiliate Payable, which is treated as an account payable for purposes of Nexans Capital Employed.
“ Nexans Entities ” shall mean, collectively, the Nexans Parties, Flytex, German Newco, Hi-Wire, Nexans Portugal and their Subsidiaries. Each Nexans Party and each of Flytex, German Newco, Hi-Wire and Nexans Portugal is sometimes referred to individually herein as a “Nexans Entity”.
“ Nexans Excluded Assets ” shall mean the assets, properties and rights listed on Schedule 1.1.2 .
“ Nexans Extended Management Committee ” means the committee consisting of the senior management of the Nexans WW Business, the members of which are listed the Schedule 1.1.3 .
“ Nexans Facility ” means the winding wire and related facilities at: Chauny, France; Macon, France; Bramsche, Germany; Arolsen, Germany; Normanton, United Kingdom; Viano do Castelo, Portugal and the varnish facility at Meyzieu, France.
“ Nexans Facility Restructuring Costs ” means the actual pre-tax restructuring costs reflected (including through addition to reserves) in the US GAAP consolidated income statement of the Joint Venture, in connection with the closing or downsizing of a Nexans Facility. Such costs shall include costs incurred in connection with a sale or other similar disposition of such Nexans Facility, and shall be offset by any gain or increased by any loss from such sale or disposition. For the purposes of the foregoing, in the event of any restructuring of the U.K. distribution business of the Joint Venture (whether originally part of the Nexans WW Business or the Essex WW Business), half of the cost of the restructuring shall be deemed to be Nexans Facility Restructuring Costs, whether or not they relate to a Nexans Facility.
“ Nexans Facility Restructuring Cost Limit ” means, for any period the greater of:
(i) the excess, if any, of (A) €10,000,000, plus the amount of the Restructuring Reserves, less any such restructuring costs actually charged against the Restructuring Reserve (or any other reserve established in the opening US GAAP
11
consolidated balance sheet of the Joint Venture), over (B) the amount of Nexans Facility Restructuring Costs added to Adjusted EBITDA in all prior periods, and
(ii) the amount by which the Nexans Facility Restructuring Costs for such period cause the aggregate Nexans Facility Restructuring Costs for the financial year in which such period occurs to exceed €1,000,000.
“ Nexans Financial Statements ” shall mean the Nexans Statements of Capital Employed and Nexans Statements of Operating Income.
“ Nexans German Benefit Plans ” shall mean the Nexans Benefit Plan covering employees involved in the Nexans WW Business in Germany.
“ Nexans Intellectual Property ” shall mean any Nexans Owned Intellectual Property and any Nexans Licensed Intellectual Property.
“ Nexans Leased Real Property ” shall mean each parcel of real property used in the Nexans WW Business which is not owned by a Nexans Entity (together with all fixtures and improvements thereon).
“ Nexans Licensed Intellectual Property ” shall mean any Intellectual Property that is licensed by an unrelated third party to a Nexans Entity or any Affiliate thereof and used or useable in the Nexans WW Business, including, as applicable, the Nexans Licensed Software.
“ Nexans Licensed Software ” means all Software (other than Nexans Proprietary Software) used by a Nexans Entity in connection with the Nexans WW Business.
“ Nexans Material Required Consent ” means each Nexans Required Consent listed in Exhibit 1.1.19 hereto.
“ Nexans Owned Intellectual Property ” shall mean any Intellectual Property that is owned by a Nexans Entity or any Affiliate thereof and used or useable in the Nexans WW Business, including, as applicable, the Nexans Proprietary Software.
“ Nexans Owned Real Property ” shall mean each parcel of real property which a Nexans Entity owns (together with all fixtures and improvements thereon) and is used in the operation of the Nexans WW Business including, for the avoidance of doubt, all heritable building rights, but excluding real property leased pursuant to the Normanton Lease, Chauny Lease and the Bramsche Real Estate Agreement.
“ Nexans Parties ” shall mean, collectively, Nexans, Participations, Nexans Wires, and L&K.
“ Nexans Permitted Affiliate Payable ” shall mean (i) trade accounts payable for products and services (A) of a type contemplated by the Ancillary Documents and (B) in amounts for all goods and services (other than the sale of copper rod or bare wire) not to exceed €1 million, and (C) provided that the account payable for the sale of copper rod or bare wire shall not exceed €3 million, such account payable for the sale of copper to have a payment term of one
12
year from the Closing Date, or (ii) accounts payable in an amount not to exceed €100,000 arising under the Agency Agreement dated July 1, 2002 (as amended), between Nexans Wires and Nexans Iberia SL, in each case owed by a Nexans WW Entity to an Affiliate, to the extent the invoice date thereon is less than 60 days before the Closing Date.
“ Nexans Portugal ” means Nexans Portugal Fios Esmaltados, Unipessoal, Limitada, a company organized under the laws of Portugal.
“ Nexans Portugal Shares ” shall mean all of the issued and outstanding shares of capital stock of Nexans Portugal.
“ Nexans Proprietary Software ” shall mean all Software owned by a Nexans Entity and used in the operation of the Nexans WW Business.
“ Nexans Real Property ” shall mean the Nexans Owned Real Property, the Nexans Leased Real Property and the real property that is leased (or licensed in the case of Normanton) to the Nexans WW Business pursuant to the Bramsche Real Estate Agreement, the Chauny Lease and the Normanton Lease (together with all fixtures and improvements thereon).
“ Nexans Registered Intellectual Property ” shall mean all of the Registered Intellectual Property owned by, filed in the name of, or licensed to a Nexans Entity and used in the Nexans WW Business.
“ Nexans Software ” shall mean the Nexans Licensed Software and the Nexans Proprietary Software.
“ Nexans Statement of Capital Employed ” shall mean each of the unaudited, pro forma combined statements of capital employed as of December 31, 2004 and June 30, 2005, respectively, for the Nexans WW Business, with the attached annexes and notes, as set forth in Exhibit 1.1.20 .
“ Nexans Statement of Operating Income ” shall mean each of the unaudited, pro forma combined statements of operating income for the year ended December 31, 2004 and for the three months ended June 30, 2005, respectively, with the attached annexes and notes and set forth as Exhibit 1.1.21 .
“ Nexans WW Assets ” shall mean all of the assets, properties and rights (whether tangible or intangible) of the Nexans Entities used in the Nexans WW Business.
“ Nexans WW Business ” shall mean the manufacture, distribution and sale of magnet wire, varnishes, enamels and related products by any Nexans Entity through facilities in Europe.
“ Nexans WW Contract ” shall mean any Contract related to the Nexans WW Business to which a Nexans Entity is a party.
“ Nexans WW Customer ” shall mean any customer of the Nexans WW Business that accounted for more than €500,000 of sales of the Nexans WW Business during the twelve
13
(12)-month period ended December 31, 2004 and any customer of the Nexans WW Business that is expected to account for more than €500,000 of sales of the Nexans WW Business during the six (6) month period that will end June 30, 2005.
“ Nexans WW Entities ” shall mean, collectively, Flytex, German Newco, Nexans Portugal and Hi-Wire and their respective Subsidiaries.
“ Nexans WW Suppliers ” shall mean any supplier of goods or services to the Nexans WW Business which were paid in the aggregate more than €500,000 during the twelve (12)-month period ended December 31, 2004 and any supplier of goods or services to the Nexans WW Business which were paid in the aggregate more than €500,000 during the six- (6) month period ended June 30, 2005.
“ Normanton Lease ” shall mean the license in the form attached hereto as Exhibit 1.1.22 .
“ Permitted Encumbrances ” shall mean, as to any Person, (i) mechanics’, carriers’, workers’, materialmen’s, warehousemen’s and other similar liens arising or incurred in the ordinary course of business for sums not yet due and payable or which liens are being contested by such Person in good faith, and (ii) liens for Taxes not yet due and payable or which are being contested in good faith by such Person.
“ Person ” shall mean any natural person or Entity.
“ Production Asset ” shall mean any (i) product line and customer contracts constituting a part thereof, or (ii) manufacturing facility or plant, or (iii) any other group of related assets used in production and sufficient to permit production of marketable goods and services on an autonomous basis without other production assets.
“ Purchase Accounting Adjustment Amount ” shall mean, for any period, any charge recorded in the US GAAP consolidated income statement of the Joint Venture for the write-down of the carrying value of the copper component of inventory that is included in the assets on the Nexans Closing Balance Sheet, but only to the extent that the aggregate amount of such charges after the Closing Date is less than or equal to the excess of (i) the book value of such copper component of inventory in the US GAAP opening balance sheet of the Joint Venture, over (ii) the book value of such copper component of inventory in the Nexans Closing Balance Sheet.
“ Registered Intellectual Property ” means all: (a) patents and patent applications (including provisional applications); (b) registered trademarks and service marks, applications to register trademarks and service marks, intent-to-use applications, or other registrations or applications related to trademarks and service marks; (c) registered copyrights and applications for copyright registration; (d) domain name registrations; and (e) any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded with any federal, state, local or foreign Governmental Entity or other public body.
14
“ Restructuring Reserve ” means the reserve for restructuring costs at Nexans Facilities reflected in the liabilities in the Nexans Closing Balance Sheet, which reserve was approximately €2 million as of December 21, 2004 and has been and will be reduced to the extent used prior to the Closing.
“ SCCC ” means Société de Coulée Continue de Cuivre, a French société par actions simplifiée.
“Shareholders Agreement ” shall mean the Shareholders Agreement to be entered into at Closing by and among Superior, Essex Netherlands, Nexans, Participations and the JV Holding Company, in the form set forth in Exhibit 1.1.25 .
“ SLC ” means Société Lensoise de Cuivre, a French société par actious simplifée.
“ Software ” shall mean any computer software program, together with any error corrections, updates, modifications, or enhancements thereto, in both machine-readable form and human-readable form, including all comments and any procedural code.
“ Subsidiary ” shall mean, as to any Person, any Entity (i) of which such Person, directly or indirectly, owns securities or other equity interests representing fifty percent (50%) or more of the aggregate voting power or (ii) of which such Person possesses the right to elect fifty percent (50%) or more of the directors or Persons holding similar positions.
“ Superior Credit Agreement ” means the Credit Agreement, dated November 10, 2003, between Superior Essex Communications LLC, Essex Group, Inc., the Financial Institutions party thereto from time to time, Fleet Capital Corporation, General Electric Capital Corporation, Fleet Securities, Inc. and GECC Capital Markets Group, Inc., as amended or supplemented from time to time.
“ Superior Indenture ” means the Indenture, dated as of April 14, 2004, between Superior Essex Communications LLC, Essex Group, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as Trustee, as amended or supplemented from time to time.
“ Taxes ” shall mean all income, profits, franchise, license, trade, gross receipts, alternative or add-on minimum, environmental, customs duty, capital stock, severance, documentary, stamp, registration, payroll, sales, use, employment, unemployment, disability, property, net worth, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all surcharges, interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions.
“ Total Outstanding Shares ” shall mean, from time to time, the number of shares of capital stock of the JV Holding Company issued and outstanding.
“ Transfer Taxes ” shall mean all sales, use, value added, documentary, stamp, registration or similar Taxes that may be imposed in connection with the transfers contemplated
15
by this Agreement, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions.
“ UK GAAP ” means United Kingdom generally accepted accounting principles, applied on a basis consistent with the unaudited consolidated financial statements of Essex UK as of and for the year ended December 31, 2004, in accordance with applicable requirements of the relevant bodies governing accounting standards in the United Kingdom.
“ UK Services Agreement ” shall mean the agreement for services between Hi-Wire and Tri-Wire Limited substantially in the form attached hereto as Exhibit 1.1.26 .
“ US GAAP ” means United States generally accepted accounting principles, applied during the relevant period on a basis consistent with the consolidated financial statements included by Superior in its periodic reports filed with the U.S. Securities and Exchange Commission.
1.2 Other Defined Terms . Each of the following terms is defined in the Section set forth opposite such term:
16
1.3 Other Definitional Provisions .
(a) The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.
(c) The terms “Euros” and “€” shall mean the common currency of the European Union.
(d) References herein to a specific Section, Exhibit or Schedule shall refer, respectively, to Sections, Exhibits or Schedules of this Agreement, unless the express context otherwise requires.
(e) The words “include,” “includes,” and “including” when used in this Agreement, shall be deemed to be followed by the words “without limitation.”
(f) Any reference herein to any Law or to any Ancillary Document involving the parties hereto or their Subsidiaries, shall be deemed to include a reference to any such law, rule, regulation, order or other act or any such document, in each case as it may be amended or supplemented from time to time. Reference to any Law in any representation or warranty made herein shall be deemed to be a reference to such Law as in
17
effect on the date as of which such representation or warranty is given unless another date or time period is referred to or specified. Reference to any Law in the indemnification provisions of Article VII of this Agreement shall be to such law as in effect on the relevant date or dates up to the Closing Date.
1.4 US GAAP Financial Statements .
(a) The JV Holding Company shall prepare consolidated annual and quarterly financial statements for the Joint Venture in accordance with US GAAP (in addition to any other financial statements required by applicable Law). The annual US GAAP financial statements shall be audited by an independent accounting firm of recognized international standing (which may be the independent auditor of Superior). Certain of the accounting terms used in this Agreement, the Shareholders Agreement and the Subordinated Note are to be determined in accordance with US GAAP.
(b) Certain principles and practices to be initially applied in the preparation of the Joint Venture’s consolidated financial statements under US GAAP are described in Exhibit 1.4 hereto. Exhibit 1.4 is intended to reflect selected accounting principles and practices, but the parties understand and agree that it does not constitute an exhaustive list of all accounting principles and practices that may be material to the preparation of such financial statements. Essex agrees to provide to Nexans prompt notice of any change in the application of US GAAP by Superior (whether as a result of a change in generally applicable accounting principles or in the principles or practices applied by Superior, and whether or not reflected on Exhibit 1.4) that would, when applied to the consolidated financial statements of the Joint Venture, have an impact on the determination of amounts under this Agreement, the Shareholders Agreement and/or the Subordinated Note. The parties shall negotiate in good faith with a view to adapting the terms of this Agreement, the Shareholders Agreement or the Subordinated Note, as applicable, so as to maintain the economic rights and obligations of the parties hereunder and thereunder; provided that for any period beginning after the close of the 2006 financial year, such an adaptation shall only be required if the Joint Venture changes the accounting principles that it applies (but not (i) as a result of a mandatory change in United States generally accepted accounting principles or (ii) if the Joint Venture changes its practices under then existing accounting principles). If the parties are unable to agree whether an adaptation is required pursuant to this Section 1.4(b), or are unable to agree on the terms of such adaptation, in each case within thirty days of the date on which Essex is required to provide the notice referred to above, either party may request that the matter be finally determined by an Independent Expert in accordance with Section 8.11.6.
ARTICLE
II
2.1 Pre-Closing Transactions .
2.1.1 Essex Contributions to Essex Netherlands . Prior to the Closing, Essex shall create Essex Netherlands (if not in existence), cause Essex Netherlands to become a party to this Agreement by an accession agreement in form and substance reasonably satisfactory
18
to Nexans, and contribute the Essex UK Shares, the Essex Pension Trustee Shares and the Essex UK Debt to Essex Netherlands.
2.1.2 JV Holding Company.
(a) The JV Holding Company is a société par actions simplifiée, all of the shares of which are owned, as of the date hereof, by Participations. Nexans shall ensure that the JV Holding Company shall not have, prior to the sale to Essex Netherlands contemplated in Section 2.1.2(b), and Essex shall ensure that the JV Holding Company shall not incur, after such sale and prior to the Closing, any assets, liabilities or obligations of any nature other than those incident to its formation, the amount of its shareholders’ equity of €56,542 and those liabilities resulting from the transactions described in this Article II.
(b) Prior to the Closing, Essex Netherlands shall purchase from Nexans, and Nexans shall sell to Essex Netherlands, 51% of the outstanding share capital of the JV Holding Company for a price of €28,836.42.
(c) Prior to the Closing, the parties shall cause the JV Holding Company to, and shall cause the by-laws of the JV Holding Company to be amended from time to time to, comply at all times with the provisions of this Agreement. Prior to the Closing, the JV Holding Company shall file with the US Internal Revenue Service such elections and consents as are necessary to cause the JV Holding Company to be treated as a partnership for U.S. income tax purposes.
2.1.3 Partial Repayment of Essex UK Debt . Prior to the Closing, Essex Netherlands shall cause such amount of the Essex UK Debt to be forgiven or repaid as shall be necessary to cause the remaining amount of the Essex UK Debt to equal € 9,000,000.
2.1.4 Chauny Lease . Prior to the Closing, Flytex and Nexans Wires shall enter into the Chauny Lease.
2.2 Transactions to be completed at Closing . On the terms and subject to the conditions set forth herein, the following transactions shall occur at the Closing.
2.2.1 Essex Netherlands Subscription . The shareholders of the JV Holding Company shall approve a capital increase of the JV Holding Company to which Essex Netherlands will subscribe in the amount of €23.8 million (including issue premium). In connection with such capital increase, the JV Holding Company shall issue new shares to Essex Netherlands, so that Essex Netherlands will hold 59% of the issued and outstanding share capital of the JV Holding Company (after taking into account the capital increase to be subscribed to by Participations pursuant to Section 2.2.4). Essex Netherlands shall pay for its shares of the JV Holding Company in cash to a special account of the JV Holding Company that will be used by the JV Holding Company to make the contribution payments required under Sections 2.2.3 and 2.2.7, respectively.
2.2.2 Purchase by JV Holding Company of Essex UK and Essex Pension Trustee . The JV Holding Company shall purchase from Essex Netherlands and Essex Netherlands shall sell to the JV Holding Company for €2 in cash all of its right, title and interest
19
in and to the Essex UK Shares and the Essex Pension Trustee Shares, free and clear of all Encumbrances. Following such purchase and sale, the Joint Venture will own all of the Essex WW Assets, other than the Essex Excluded Assets.
2.2.3 JV Holding Company Subscription for Stock in Essex UK . The JV Holding Company shall contribute €9,000,000 to Essex UK in exchange for additional shares of capital stock in Essex UK. Essex UK shall use such additional funds to repay the remaining outstanding balance of the Essex UK Debt.
2.2.4 Nexans Subscription . The shareholders of the JV Holding Company shall approve a capital increase of the JV Holding Company to which Participations shall subscribe, in an amount of €16.54 million (including issue premium). In connection with such capital increase, the JV Holding Company shall issue new shares to Participations, so that Participations will hold 41% of the issued and outstanding share capital of the JV Holding Company. Participations shall pay for its shares of the JV Holding Company in cash to a special account of the JV Holding Company that will be used by the JV Holding Company to make the payments required under Section 2.2.7.
2.2.5 Borrowing under Credit Facility . The parties shall cause the JV Holding Company to enter into the Credit Facility. The parties shall cause the JV Holding Company to borrow €20 million under the Credit Facility (including by way of sale of receivables by the JV Holding Company or its Subsidiaries) in funds immediately available at Closing.
2.2.6 Subscription of Subordinated Note . Nexans shall subscribe for a promissory note in the principal amount of €11,300,000 in the form attached hereto as Exhibit 2.2.6 (the “ Subordinated Note ”), by paying €11.3 million in cash in immediately available funds to German Newco, and German Newco shall issue the Subordinated Note to Nexans, and the JV Holding Company shall execute the Subordinated Note as guarantor.
2.2.7 Purchase by the JV Holding Company of Nexans Assets . The JV Holding Company shall purchase from Nexans, Participations, Nexans Wires and L&K, as applicable, and Nexans, Participations, Nexans Wires and L&K shall sell to the JV Holding Company, for the Cash Consideration, (i) all of its right, title and interest in and to the Flytex Shares, free and clear of all Encumbrances, (ii) all of its right, title and interest in and to the German Newco Shares, free and clear of all Encumbrances, (iii) all of its right, title and interest in and to the real property described on Exhibit 2.2.7 , free and clear of all indebtedness and Encumbrances (and the JV Holding Company hereby instructs L&K to transfer such real property directly to German Newco after the shares of German Newco have been transferred to the JV Holding Company), (iv) all of its right, title and interest in and to the Hi-Wire Shares, free and clear of all Encumbrances, (v) all of its right, title and interest in and to the Nexans Portugal Shares, free and clear of all Encumbrances and (vi) all of the right, title and interest of each Nexans Entity in and to the Nexans Owned Intellectual Property and the Nexans Licensed Intellectual Property, free and clear of all Encumbrances, except to the extent owned by the Nexans WW Entities and except for the items listed on Schedule 3.1.21 . Following such purchase and sale, the Joint Venture will own all of the Nexans WW Assets, other than the Nexans Excluded Assets.
20
2.2.8 Ancillary Documents . Essex and Nexans shall enter into, or cause their Affiliates to enter into (as applicable), the Ancillary Documents to which they are party.
2.3 Closing and Other Indebtedness; Affiliate Payables .
2.3.1 Essex Closing Indebtedness; Affiliate Payables . At or prior to the Closing, to the extent not repaid pursuant to Sections 2.1.3, Essex shall cause (a) all of the Essex Closing Indebtedness to be repaid in full or otherwise extinguished and (b) all payables and other amounts owed by an Essex WW Entity to an Affiliate, other than Essex Permitted Affiliate Payables, to be repaid in full or otherwise extinguished.
2.3.2 Nexans Closing Indebtedness; Affiliate Payables . At or prior to the Closing, Nexans shall cause (a) all of the Nexans Closing Indebtedness to be repaid in full or otherwise extinguished (except Nexans Closing Indebtedness referred to in Section 2.3.3) and (b) all payables and other amounts owed by a Nexans WW Entity to an Affiliate, other than Nexans Permitted Affiliate Payables, to be repaid in full or otherwise extinguished.
2.3.3 Nexans Intercompany Closing Indebtedness . Immediately following the completion of the purchase and sale contemplated in Section 2.2.7, the parties shall cause the JV Holding Company or its Subsidiaries to repay to Nexans or its Affiliates an amount of Nexans Closing Indebtedness owed to Nexans or its Affiliates not to exceed €62 million. Nexans shall notify Essex at least one Business Day prior to the Closing Date of the amount of such indebtedness to be repaid and the party to which such repayment is to be made.
2.3.4 Payment of Amounts Owed to Nexans WW Entities . In the event that Nexans or any of its Affiliates (other than a Nexans WW Entity) is the borrower under any indebtedness owed to a Nexans WW Entity (whether under any cash pooling arrangement or otherwise), Nexans or such Affiliate shall pay such indebtedness on the Closing Date, simultaneously with the payment of the Nexans Closing Indebtedness referred to in Section 2.3.3.
2.4 Closing . The consummation of the transactions contemplated hereby (the “ Closing ”) shall take place at Paul, Hastings, Janofsky & Walker LLP, 30, avenue de Messine 75008, Paris, France, or at such other location or locations as the parties hereto may otherwise agree, on (a) August 31, 2005, subject to the satisfaction or waiver of the conditions set forth in Article VI hereof, or (b) if such conditions are not satisfied or waived on August 31, 2005, on the last day of the calendar month in which such conditions are satisfied or waived, or (c) at such other time and place as the parties may mutually agree. The date on which the Closing occurs is referred to herein as the “ Closing Date .”
2.5 Closing Deliveries .
(a) At the Closing, the Essex Parties, as applicable, shall deliver to the JV Holding Company or Nexans, as applicable,
(i) a certificate executed by a duly authorized officer of Essex as to compliance with the conditions set forth in Sections 5.3.1 and 5.3.2 hereof;
21
(ii) the Ancillary Documents to which it is contemplated that an Essex Party will be a party;
(iii) a written instrument signed by Essex Netherlands, Participations and the JV Holding Company to the effect that the JV Holding Company has received and acknowledges having notice of the provisions of the Shareholders Agreement, that transfers of shares of the JV Holding Company made in accordance with the Shareholders Agreement have received the consent of Essex Netherlands and Participations (which consent may not be revoked without the approval of both of them), and that capital increases effected in accordance with the Shareholders Agreement have received the consent of Essex Netherlands and Participations (which consent may not be revoked without the approval of both of them);
(iv) stock transfer forms and other conveyance documents necessary to transfer the Essex UK Shares to the JV Holding Company; and
(v) all other documents required to be entered into by an Essex Party pursuant hereto or reasonably requested by Nexans to consummate the transactions contemplated hereby.
(b) At the Closing, the Nexans Parties, as applicable, shall deliver to the JV Holding Company or Essex, as applicable,
(i) a certificate executed by a duly authorized officer of Nexans as to compliance with the conditions set forth in Sections 5.2.1 and 5.2.2 hereof;
(ii) such deeds, instruments of assignment, certificates of title and other conveyance documents as are reasonably requested by Essex in order to effectuate the conveyance, transfer and assignment to (A) German Newco of the real property described on Exhibit 2.2.7 ; and (B) the JV Holding Company of the Nexans Registered Intellectual Property included in the Nexans Owned Intellectual Property required to be transferred pursuant to Section 2.2.7.
(iii) the Ancillary Documents to which it is contemplated that a Nexans Party will be a party;
(iv) a written instrument signed by Essex Netherlands, Participations and the JV Holding Company to the effect that the JV Holding Company has received and acknowledges having notice of the provisions of the Shareholders Agreement, that transfers of shares of the JV Holding Company made in accordance with the Shareholders Agreement have received the consent of Essex Netherlands and Participations (which consent may not be revoked without the approval of both of them), and that capital increases effected in accordance with the Shareholders Agreement have received the consent of Essex Netherlands and Participations (which consent may not be revoked without the approval of both of them); and
22
(v) all other documents required to be entered into by a Nexans Party pursuant hereto or reasonably requested by Essex to consummate the transactions contemplated hereby.
(c) At the Closing, the parties shall cause the JV Holding Company and its Subsidiaries to deliver to the applicable Essex Entities or Nexans Entities the following:
(i) the Subordinated Note;
(ii) the Cash Consideration;
(iii) the Ancillary Documents to which it is contemplated that it will be a party;
(iv) the Credit Facility;
(v) a written instrument signed by Essex Netherlands, Participations and the JV Holding Company to the effect that the JV Holding Company has received and acknowledges having notice of the provisions of the Shareholders Agreement, that transfers of shares of the JV Holding Company made in accordance with the Shareholders Agreement have received the consent of Essex Netherlands and Participations (which consent may not be revoked without the approval of both of them), and that capital increases effected in accordance with the Shareholders Agreement have received the consent of Essex Netherlands and Participations (which consent may not be revoked without the approval of both of them);
(vi) stock transfer forms and other conveyance documents necessary to transfer the Hi-Wire Shares, the Flytex Shares, the Nexans Portugal Shares and the German Newco Shares to the JV Holding Company; and
(vii) all other documents required to be entered into by the JV Holding Company pursuant hereto or reasonably requested by Essex or Nexans to consummate the transactions contemplated hereby.
2.6 Capital Employed .
2.6.1 As soon as practicable, but in no event later than fifty (50) days following the Closing Date, Essex shall cause the JV Holding Company to deliver to each of Essex and Nexans the Essex Closing Balance Sheet and the Nexans Closing Balance Sheet, together with statements of Essex Capital Employed and Nexans Capital Employed.
2.6.2 After the delivery of the documents set forth in Section 2.6.1, Essex and Nexans shall each have thirty (30) days to review them. Essex and Nexans shall each, and Essex shall cause the JV Holding Company to, provide the others and their authorized representatives reasonable access during normal business hours to all of their and their Subsidiaries’ respective books, records and employees and agents having relevant information concerning the statements of Nexans Capital Employed and the Essex Capital Employed, as well
23
as the related balance sheets from which they are derived. Unless Essex or Nexans delivers written notice to the JV Holding Company and to Essex or Nexans, as the case may be, on or prior to such thirtieth (30th) day, describing any objections with respect to items of Essex Capital Employed or Nexans Capital Employed with reasonable particularity, Essex and Nexans shall be deemed to have accepted and agreed to the Nexans Capital Employed and the Essex Capital Employed, respectively. In addition, any item included in the determination of the Nexans Capital Employed or the Essex Capital Employed which is not objected to by either Essex or Nexans shall be deemed to be accepted by Essex and Nexans (the “ Resolved Items ”) and any amounts included within a Resolved Item shall be deemed to be final, binding, and conclusive. If Essex or Nexans notifies the JV Holding Company of its objections to the Nexans Capital Employed or the Essex Capital Employed, as applicable, Essex, Nexans and the JV Holding Company shall, within twenty-one (21) days (or such longer period as the parties may agree) following such notice (the “ Resolution Period ”), attempt to resolve their differences, and any written resolution by them as to any disputed amounts shall be final, binding, and conclusive.
2.6.3 Any amounts remaining in dispute at the conclusion of the Resolution Period (“ Unresolved Items ”) shall be submitted to the London office of BDO Seidman LLP (such firm being referred to as the “ CPA Firm ”), or, if such firm shall be unable or unwilling to serve in such capacity or if the parties shall otherwise mutually agree, such other internationally recognized firm of independent accounts mutually agreed by Essex and Nexans (and, in such case, such firm shall be deemed to be the CPA Firm), within ten (10) days after the expiration of the Resolution Period. All fees and expenses relating to the work, if any, to be performed by the CPA Firm shall be borne by Essex and Nexans equally. The CPA Firm’s determination of the Unresolved Items shall be made within thirty (30) days after the submission of the Unresolved Items to the CPA Firm, and, together with a calculation of the Essex Capital Employed and Nexans Capital Employed based upon the amount of Resolved Items and CPA Firm’s determinations of the Unresolved Items, shall be set forth in a written statement delivered to Essex, Nexans and the JV Holding Company by the CPA Firm and shall be final, binding, and conclusive on the parties for all purposes.
2.6.4 Within five (5) Business Days following either (i) an agreement by Essex and Nexans as to the Nexans Capital Employed and the Essex Capital Employed or (ii) the CPA Firm’s determination of the Unresolved Items, the following payments shall be made:
(a) If the Essex Capital Employed is greater than €10,500,000, Nexans shall pay to Essex €400,000 and the JV Holding Company shall issue to Essex a promissory note substantially in the form attached hereto as Exhibit 2.6.4 (a “ Capital Employed Note ”), in an aggregate principal amount equal to the lesser of (i) €500,000, and (ii) the amount by which the Essex Capital Employed exceeds €10,500,000. If the Essex Capital Employed is between €9,500,000 and €10,500,000, Nexans shall pay to Essex an amount equal to forty percent (40%) of the difference between the Essex Capital Employed and €9,500,000. If the Essex Capital Employed is less than €8,500,000, Essex shall pay to Nexans an amount equal to forty percent (40%) of the difference between the Essex Capital Employed and €8,500,000; and
24
(b) If the Nexans Capital Employed is greater than €71,000,000, Superior or Essex shall pay to Participations €4,200,000 and the JV Holding Company shall issue to Participations a Capital Employed Note, in an aggregate principal amount equal to the lesser of (i) €2,000,000, and (ii) the amount by which the Nexans Capital Employed exceeds €71,000,000. If the Nexans Capital Employed is between €64,000,000 and €71,000,000, Essex shall pay to Participations an amount equal to sixty percent (60%) of the difference between the Nexans Capital Employed and €64,000,000. If the Nexans Capital Employed is less than €60,000,000, Nexans shall pay to Essex an amount equal to sixty percent (60%) of the difference between the Nexans Capital Employed and €60,000,000.
2.6.5 Any amounts owed by a Party pursuant to this Section 2.6 shall be netted against any amounts owed to such Party pursuant to this Section 2.6. In the event that Essex is required to make a net payment to Participations, such payment shall be made in consideration of the sale by Participations to Essex of shares of the JV Holding Company representing 1% of the share capital of the JV Holding Company. If Essex is not required to make such a net payment, Essex shall purchase from Nexans Participations, for €1,000, shares of the JV Holding Company representing 1% of the share capital of the JV Holding Company. Following such transactions, Essex shall hold 60% of the JV Holding Company and Participations shall hold 40% of the JV Holding Company.
2.7 Additional Adjustments .
2.7.1 If the Joint Venture’s Adjusted EBITDA for the year ended December 31, 2006 is equal to or greater than the applicable 2006 EBITDA Target (as defined below), (a) the purchase price of the shares sold pursuant to Section 2.6.5 shall be increased by 60% of the related Equity Adjustment Amount (as defined below) (the “ Additional Cash Consideration ”), and paid by Superior or Essex to Nexans within five Business Days following completion of the audited financial statements of the Joint Venture for the year ended December 31, 2006 and (b) the Initial Net Equity Value shall be increased by such Equity Adjustment Amount for purposes of calculating the Put Price and Call Price (as such terms are defined in the Shareholders Agreement).
The “ 2006 EBITDA Targets ” and the corresponding “ Equity Adjustment Amounts ” shall be as set forth in the table below.
In the event that there is a sale or disposal (or acquisition) of Production Assets (whether directly or indirectly through the sale, disposal or acquisition of a Person that owns Production Assets) which would, or is reasonably likely to, result in a reduction (or increase) in projected Adjusted EBITDA (as set forth in the Business Plan) for the year ended December 31, 2006, then the 2006 EBITDA Targets shall be adjusted to reflect the projected percentage decrease (or increase) in Adjusted EBITDA resulting from the sale (or acquisition), so as to maintain the economic rights
25
and obligations of the parties, such adjustment to be determined by agreement by the parties or, failing such agreement, by the Independent Expert pursuant to Section 8.11.6.
2.7.2 The Initial Net Equity Value shall be increased, for purposes of calculating the Put Price and Call Price, by the amount by which the Nexans Capital Employed (as finally determined pursuant to Section 2.6) exceeds €64,000,000 (up to a maximum of €71,000,000) or decreased by the amount by which the Nexans Capital Employed (as finally determined pursuant to Section 2.6) is less than €60,000,000.
2.7.3 The Initial Net Equity Value shall be decreased, for purposes of calculating the Put Price and Call Price, by the amount by which the Essex Capital Employed (as finally determined pursuant to Section 2.6) is less than €8,500,000 and increased by the amount by which the Essex Capital Employed (as finally determined pursuant to Section 2.6) is greater than €9,500,000 (up to a maximum of €10,500,000).
2.8 Payments . All payments required under this Article II or any other provision hereof shall, unless otherwise expressly provided herein, be made in cash by wire transfer of immediately available funds to such bank account as shall be designated in writing by the Person to which the applicable payment is due.
ARTICLE
III
3.1 Representations and Warranties of Nexans . Nexans hereby represents and warrants to the Essex Parties as of the date hereof and as of the Closing that:
3.1.1 Organization.
(a) Each Nexans Entity is an Entity duly formed and validly existing under the Laws of its jurisdiction of organization and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Nexans has heretofore made available to Essex true, correct and complete copies of the Charter Documents of each Nexans WW Entity as currently in effect. Nexans has heretofore made available to Essex the corporate record books of each Nexans WW Entity with respect to actions taken by its shareholders and board of directors since January 1, 2003 (or since formation for any Entity formed after January 1, 2003). On June 17, 2005, Flytex was converted to a société par actions simplifiée.
(b) Schedule 3.1.1(b) sets forth each Entity in which a Nexans WW Entity owns, directly or indirectly, any capital stock or other equity, security or interest.
(c) Schedule 3.1.1(c) accurately and completely sets forth the capital structure of each Nexans WW Entity by listing thereon the number of shares of capital stock of such Nexans WW Entity, in the case of Hi-Wire, which are authorized and which are issued and outstanding and the number of shares of capital stock of such Nexans WW Entity owned by each shareholder, partner or other equity holder thereof. Participations owns all of the Hi-Wire Shares and Nexans Portugal Shares, free and clear of all Encumbrances. Participations
26
owns all of the Flytex Shares, free and clear of all Encumbrances. L&K owns all of the German Newco Shares, free and clear of all Encumbrances. There are no outstanding options, warrants, conversion rights, subscriptions or other rights entitling any Person to acquire or receive, or requiring any Nexans WW Entity to issue, any shares of its capital stock or securities convertible into, or exchangeable for, such shares of capital stock.
3.1.2 Authorization. Each of the Nexans Entities has full corporate power and authority to execute (and, to the extent applicable, to deliver) this Agreement and the Ancillary Documents to which it is a party, as applicable, and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution (and, to the extent applicable, delivery) by each Nexans Entity of this Agreement and the Ancillary Documents to which it is a party, as applicable, and the performance by each Nexans Entity of its obligations hereunder and thereunder and the consummation of the transactions provided for herein and therein have been duly and validly authorized by all necessary corporate action on the part of each Nexans Entity. This Agreement has been, and the Ancillary Documents shall be as of the Closing Date, duly executed (and, to the extent applicable, delivered) by each Nexans Entity, as applicable, and do or shall, as the case may be, constitute the valid and binding agreements of each Nexans Entity, enforceable against it in accordance with their respective terms.
3.1.3 Absence of Restrictions and Conflicts . The execution, delivery (where applicable) and performance by each Nexans Entity of this Agreement and the Ancillary Documents, as applicable, the consummation of the transactions contemplated hereby and thereby and the fulfillment of and compliance with the terms and conditions hereof and thereof do not or shall not (as the case may be), with the passing of time or the giving of notice or both, (a) contravene or conflict with any term or provision of the Charter Documents of such Nexans Entity, (b) except as indicated on Schedule 3.1.3 , violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, permit the acceleration of any obligation under or create in any party the right to terminate, modify or cancel any Contract to which such Nexans Entity is a party, (c) contravene or conflict with any judgment, decree or order of any Governmental Entity to which such Nexans Entity is a party or by which such Nexans Entity or any of its properties are bound, (d) contravene or conflict with any Law or arbitration award applicable to such Nexans Entity, or the Nexans WW Business, or (e) result in the creation or imposition of any Encumbrance or any asset, property or right of such Nexans Entity.
3.1.4 Required Consents . Schedule 3.1.4 sets forth each consent, approval, notification, waiver, authorization, order or filing (each, a “ Nexans Required Consent ” and collectively, the “ Nexans Required Consents ”) under any Law, License, or Contract to which a Nexans Entity is a party that is necessary for the execution, delivery (where applicable) and performance of this Agreement or the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby in order to avoid a breach or violation of, or giving rise to any right of termination, cancellation or acceleration of any right or obligation or to a loss of any benefit under any such Law, License, or Contract.
27
3.1.5 Real Property .
(a) Schedule 3.1.5(a)(i) sets forth a list of all Nexans Owned Real Property and the name of the Nexans Entity which is the owner thereof. Except as set forth on Schedule 3.1.5.(a)(ii) , the applicable Nexans Entity has good and marketable, indefeasible title to the Nexans Real Property (other than Nexans Leased Real Property).
(b) Schedule 3.1.5(b) sets forth a true and correct list of all Nexans Leased Real Property. The leases with respect thereto are in full force and effect and are valid, binding and enforceable against the parties thereto in accordance with their respective terms.
(c) Except as set forth on Schedule 3.1.5(c) , and except further to the extent that any violation could not, individually or in the aggregate, reasonably be considered to be material, no portion of the Nexans Real Property, or any building or improvement located thereon, violates any Law, including Environmental Laws and Laws relating to zoning, building or land use. Except for the Permitted Encumbrances or any matters contemplated in the Ancillary Documents, no Nexans Real Property is subject to (i) any Encumbrances, (ii) any governmental decree or order (or, to the Knowledge of Nexans, threatened or proposed order) that materially limits or restricts the use of the Nexans Real Property or (iii) any rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever.
(d) Except as set forth on Schedule 3.1.5(d) , the improvements and fixtures on the Nexans Real Property are in good operating condition, ordinary wear and tear excepted, and are regularly maintained and repaired and are adequate and suitable for the purposes for which they are presently being used. Except as set forth on Schedule 3.1.5(d) , none of the buildings and improvements owned or utilized by the Nexans Entities in the operation of the Nexans WW Business are constructed of, or contain as a component part thereof, any material that releases any substance, whether gaseous, liquid or solid, in amounts that are prohibited by applicable Law by reason of such substance being injurious or hazardous to the health of any individual who may from time to time be in or about such buildings or improvements. There is no condemnation, expropriation or similar proceeding pending or, to the Knowledge of Nexans, threatened against any of the Nexans Real Property or any improvement thereon. The Nexans Real Property and any real property to be utilized by virtue of the Ancillary Documents constitutes all of the real property utilized in the operation of the Nexans WW Business. The buildings and structures included in the Nexans Real Property and real property utilized by virtue of the Ancillary Documents have access either directly or by virtue of the Ancillary Documents to (a) public roads or valid easements over private streets or private property for adequate ingress to and egress from all such buildings and structures, (b) water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other public utilities, as is necessary for the conduct of the Nexans WW Business.
3.1.6 Personal Property . Except as set forth on Schedule 3.1.6 and equipment not in service but being used for spare parts, all equipment and other items of tangible personal property and assets owned, held or leased, and used in the Nexans WW Business (the “ Nexans Personal Property ”) (a) are in good operating condition, ordinary wear and tear excepted, and are regularly maintained and repaired, and (b) were acquired and are
28
usable in the regular and ordinary course of business. Except as set forth on Schedule 3.1.6(a) , all of the Nexans Personal Property is in the possession of the Nexans WW Entities and is located at the Nexans Real Property. No Person other than a Nexans WW Entity owns any Nexans Personal Property that is necessary to the operation of the Nexans WW Business, except for leased items that are subject to personal property leases. Schedule 3.1.6(b) sets forth a true, correct and complete list and general description of each item of Nexans Personal Property having an original cost of more than €100,000.
3.1.7 Sufficiency of Assets; Title to Assets .
(a) Except as set forth on Schedule 3.1.7(a) and except for the Nexans’ Excluded Assets, the Nexans WW Assets constitute all of the assets (whether real, personal or mixed and whether tangible or intangible) used in connection with and necessary to permit the Nexans Entities to conduct, the operations of the Nexans WW Business in accordance with their past practices.
(b) The Nexans Entities have good and marketable title to or, in the case of the Nexans Leased Real Property or leased personal property, valid leasehold interests in, the Nexans WW Assets, free and clear of all Encumbrances except Permitted Encumbrances.
(c) As of the Closing, the Joint Venture will have good and marketable title to or, in the case of the Nexans Leased Real Property or leased personal property, valid leasehold interests in, the Nexans WW Assets (other than the Nexans’ Excluded Assets), free and clear of all Encumbrances except Permitted Encumbrances. Except for the Nexans Excluded Assets or as set forth on Schedule 3.1.7(c) , as of the Closing, the Nexans WW Assets will constitute all of the assets (whether real, personal or mixed and whether tangible or intangible) used to conduct operations or necessary to permit the Joint Venture to continue to conduct the operations of the Nexans WW Business in accordance with past practices.
3.1.8 Inventory . Except as set forth in Schedule 3.1.8 , the inventory included in the Nexans WW Assets (a) was acquired for the operation of the Nexans WW Business in the ordinary course consistent with past practice, (b) is of a quality and quantity usable or saleable in the ordinary course of business, except to the extent of reserves in relation thereto included in the Nexans Closing Balance Sheet (taken on an aggregate basis), and (c) is valued on the books and records of the Nexans Parties at the lower of cost or market with the cost determined under the last-in-first-out inventory valuation method consistent with past practice.
3.1.9 Financial Statements . Except as set forth on Schedule 3.1.9(a) or the notes to the Nexans Financial Statements, the Nexans Financial Statements are in conformity with French GAAP (consistently applied), and except to the extent of adjustments made from local accounting standards to French GAAP, are in accordance with, the books and records of the Nexans Entities, which books and records have been maintained on a basis consistent with the past practice of the Nexans Entities. Except as set forth in the notes thereto,
29
the Nexans Statements of Capital Employed and the Nexans Statements of Operating Income fairly present the financial condition and results of operations of the Nexans WW Business as of the dates or for the periods set forth therein, with the exception of financial liabilities (dettes financières) and equity in the case of the Nexans Statement of Capital Employed. Since June 30, 2005, there has been no change in any accounting (or tax accounting) policies, practices or procedures of the Nexans Entities with respect to the Nexans WW Business. Each Nexans WW Entity maintains accurate books and records reflecting its assets and liabilities and maintains internal accounting controls as described in the Chairman’s report to the general shareholders’ meeting of Nexans publicly available on www.nexans.com, provided that the Nexans Parties make no representation as to whether such controls would be considered “effective” within the meaning of the rules and regulations of the Securities and Exchange Commission and the Public Company Accounting Oversight Board under Section 404 of the Sarbanes-Oxley Act of 2002.
3.1.10 No Undisclosed Liabilities . There are no liabilities related to the Nexans WW Business that would be required in accordance with French GAAP to be reflected in a combined, pro forma balance sheet of the Nexans WW Business as of June 30, 2005 (or the notes thereto), except for:
(a) liabilities and obligations properly reflected or provided for in the Nexans Statement of Capital Employed as of June 30, 2005 (including, for the avoidance of doubt, the notes and annexes thereto) subject to any qualifications made therein;
(b) financial liabilities (dettes financières); and
(c) liabilities and obligations incurred in the ordinary course of business, consistent with past practice.
3.1.11 Absence of Certain Changes .
(a) Since June 30, 2005, there has not been any Material Adverse Effect,
(b) Since June 30, 2005, there has not been any damage, destruction, loss or casualty to the Nexans WW Assets with a value in excess of €100,000, whether or not covered by insurance, or
(c) Except as set forth on Schedule 3.1.11 , since June 30, 2005, there has not been any action taken of the type described in Section 4.2.1, that, had such action occurred following the date hereof without Essex’s prior approval, would be in violation of such Section 4.2.1.
3.1.12 Legal Proceedings . Except as set forth on Schedule 3.1.12(a) and claims solely for damages less than €75,000, there is no suit, action, claim, arbitration, proceeding or investigation pending or, to the Knowledge of Nexans, threatened against a Nexans Entity with respect to the ownership of the Nexans WW Assets or the operation of the Nexans WW Business before any Governmental Entity. No suit, action, claim, proceeding or investigation pending or, to the Knowledge of Nexans, threatened against a Nexans Entity with respect to the ownership of the Nexans WW Assets or the operation of the Nexans WW Business
30
before any Governmental Entity (including any of those set forth on Schedule 3.1.12(a) ), if finally determined adversely, is reasonably likely, individually or in the aggregate, to have a material adverse effect on the financial condition, results of operations, or prospects of the Nexans WW Business. Except as set forth in Schedule 3.1.12(b) , no Nexans Entity is subject to any judgment, decree, injunction, rule or order of any court or arbitration panel related to the Nexans WW Business or the Nexans WW Assets.
3.1.13 Compliance with Law . Except as set forth in Schedule 3.1.13 , each Nexans Entity is (and has been at all times during the past three (3) years) in compliance with all Laws (including applicable Laws relating to zoning and the safety and health of employees) applicable to the ownership of the Nexans WW Assets or the operation of the Nexans WW Business. No Nexans Entity has been charged with, and no Nexans Entity has received any written notice that it is under investigation with respect to, and, to the Knowledge of Nexans, is not otherwise now under investigation with respect to, a violation of any Law applicable to the Nexans WW Business.
3.1.14 Contracts . Each correspondingly lettered section of Schedule 3.1.14(a) sets forth a true, correct and complete list of the following Nexans WW Contracts currently in force, or under which any Nexans Entity will have continuing liabilities and/or obligations after the Closing:
(a) bonds, debentures, notes, credit or loan agreements or loan commitments, mortgages, indentures, guarantees or other Contracts relating to the borrowing of money or the deferred purchase price of property or binding upon any properties or assets (real, personal or mixed, tangible or intangible) of the Nexans Entities;
(b) Nexans WW Contracts that were not entered into in the ordinary course of business consistent with past practice;
(c) leases relating to the Nexans Leased Real Property and all other Contracts involving the lease or use of any properties or assets (whether real, personal or mixed, tangible or intangible) involving an annual commitment or payment of more than €50,000 by a Nexans Entity;
(d) all Contracts related to the Nexans WW Business that (i) limit or restrict a Nexans WW Entity or any directors or employees of a Nexans WW Entity from engaging in any business or other activity in any jurisdiction, (ii) create or purport to create any exclusive or preferential relationship or arrangement, or (iii) otherwise restrict or limit a Nexans WW Entity’s ability to operate the Nexans WW Business;
(e) all Contracts for capital expenditures or the acquisition or construction of fixed assets requiring the payment by a Nexans Entity of an amount in excess of €100,000;
(f) all Contracts that provide for an increased payment or benefit, or accelerated vesting, upon the execution hereof or the Closing or in connection with the transactions contemplated hereby;
31
(g) all Contracts granting any Person an Encumbrance (other than a Permitted Encumbrance) on all or any part of any Nexans WW Assets;
(h) all Contracts granting to any Person an option or a first refusal, first-offer or similar preferential right to purchase or acquire any Nexans WW Assets;
(i) all Contracts with any agent, distributor or representative that is not terminable without penalty on thirty (30) days’ or less notice, and in respect of which at least €10,000 in commissions were paid by the Nexans WW Business in 2004;
(j) all Contracts for the granting or receiving of a license, sublicense or franchise or under which any Person is obligated to pay or has the right to receive a royalty, license fee, franchise fee or similar payment;
(k) all Contracts (i) with respect to Nexans Intellectual Property licensed or transferred to any Person (other than end user Licenses in the ordinary course of business) or (ii) pursuant to which any Person is licensing any Nexans Intellectual Property to a Nexans Entity;
(l) all Nexans WW Contracts providing for the indemnification or holding harmless by a Nexans Entity of any officer, director, employee or other Person;
(m) all joint venture or partnership Contracts related to the Nexans WW Business;
(n) all Contracts with Nexans WW Customers or Nexans WW Suppliers;
(o) all Contracts containing irrevocable powers of attorney empowering any Person to act on behalf of a Nexans WW Entity;
(p) any Contract entitling any Person to any profits, revenues or cash flows of a Nexans WW Entity or requiring payments or other distributions based on such profits, revenues or cash flows;
(q) all Contracts with any Governmental Entity;
(r) all Employment Agreements of a Nexans Entity with any member of the Nexans Extended Management Committee; and
(s) all existing Contracts, agreements and commitments (other than those of a type described in subsections (a) through (r) of this Section 3.1.14 or purchase or sale orders made in the ordinary course of business consistent with past practices and which are otherwise not required to be disclosed pursuant to subsection (a) through (r) above) to which a Nexans WW Entity is a party or by which its properties or assets are bound involving an
32
annual commitment or annual payment to or from a Nexans WW Entity of more than €100,000 individually.
True, correct and complete copies of all written Nexans WW Contracts listed, or required to be listed, on Schedule 3.1.14(a) have been made available to Essex or its advisors. The Nexans WW Contracts are valid, binding and enforceable in accordance with their respective terms with respect to the applicable Nexans Entity and, to the Knowledge of Nexans, each other party to such Nexans WW Contracts. There is no existing notified default or breach of the applicable Nexans Entity under any Nexans WW Contract (or, to the Knowledge of Nexans, any event or condition that, with notice or lapse of time or both could constitute a default or breach) and, to the Knowledge of Nexans, there is no such default (or event or condition that, with notice or lapse of time or both, could constitute a default or breach) with respect to any third party to any Nexans WW Contract. There is no material term, obligation, understanding or agreement that would modify any term of a written Nexans WW Contract or any right or obligation of a party thereunder which is not reflected on the face of such Nexans WW Contract. Except as set forth on Schedule 3.1.14(b) , to the Knowledge of Nexans, no Nexans WW Contract is a contract or agreement in which, in Nexans’ best estimate, the direct labor cost, direct materials cost, direct energy costs, direct transportation costs and external sales commissions (calculated on a basis consistent with past practice) incurred or to be incurred in connection therewith exceed the revenues derived or to be derived therefrom.
3.1.15 Tax Returns; Taxes . Except as set forth on Schedule 3.1.15 , (a) all Tax Returns with respect to the Nexans WW Business due to have been filed through the date hereof in accordance with all applicable Laws have been duly filed and are correct and complete in all material respects; (b) all Taxes, deposits and other payments with respect to the Nexans WW Business for which a Nexans Entity has liability (whether or not shown on any Tax Return) have been paid in full or will be accrued as liabilities for Taxes on the Nexans Closing Balance Sheet; (c) the amounts so paid, together with all amounts accrued as liabilities for Taxes (including Taxes accrued as currently payable but excluding any accrual to reflect timing differences between book and Tax income) on Nexans Financial Statements with respect to the Nexans WW Business, shall be adequate based on the tax rates and applicable Laws in effect to satisfy all liabilities for Taxes of the Nexans Entities with respect to the Nexans WW Business in any jurisdiction through the Closing Date, including Taxes accruable upon income earned through the Closing Date; (d) there are not now any extensions of time in effect with respect to the dates on which any Tax Returns with respect to the Nexans WW Business were or are due to be filed by a Nexans Entity; (e) all Tax deficiencies asserted as a result of any examination by a Governmental Entity of a Tax Return of a Nexans Entity with respect to the Nexans WW Business have been paid in full, accrued on Nexans Financial Statements or finally settled, and no issue has been raised in any such examination that, by application of the same or similar principles, reasonably could be expected to result in a proposed Tax deficiency for any other period not so examined; (f) no claims have been asserted and no proposals or deficiencies for any Taxes of a Nexans Entity with respect to the Nexans WW Business are being asserted, proposed or, to the Knowledge of Nexans, threatened, or expected to be assessed, and no audit or investigation of any Tax Return of a Nexans Entity with respect to the Nexans WW Business is currently underway, pending or threatened; (g) no claim has been made since January 1, 2003 against a Nexans Entity by any Governmental Entity in a jurisdiction where the applicable Nexans Entity does not file Tax Returns with respect to the Nexans WW Business that such
33
Nexans Entity is or may be subject to taxation with respect to the Nexans WW Business in such jurisdiction; (h) each Nexans Entity has withheld and paid all Taxes with respect to the Nexans WW Business required to have been paid by it in connection with amounts paid or owing to any employee, independent contractor, creditor or shareholder thereof or other third party; (i) there are no outstanding waivers or agreements between any Governmental Entity and a Nexans Entity or for the extension of time for the assessment of any Taxes or deficiency thereof with respect to the Nexans WW Business, nor are there any requests for rulings, outstanding subpoenas or requests for information, notice of proposed reassessment of any property owned or leased by a Nexans Entity or any other matter pending between a Nexans Entity and any Governmental Entity; (j) there are no Encumbrances for Taxes with respect to a Nexans Entity or the Nexans WW Assets other than Encumbrances for Taxes that are not yet due and payable, nor is there any such Lien that is pending or, to the Knowledge of Nexans, threatened; and (k) no Nexans Entity is a party to or bound by any Tax allocation or sharing agreement.
3.1.16 Directors, Employees and Independent Contractors . Schedule 3.1.16 contains a true, accurate and complete list as of the date hereof of (a) all of the members of the Nexans Extended Management Committee. Nexans has made available to Essex information relating to their position, annual rate of compensation and all emoluments (including any bonus, commission, premium, benefit in kind and incentive entitlement), date of hire, work location, length of service and employee benefit coverages selected or benefits provided, (b) all of the employees (whether full-time, part-time, fixed-term Employment Agreement, indefinite term Employment Agreement or otherwise) of each Nexans Entity involved in the Nexans WW Business as of the date hereof. Nexans has made available to Essex information relating to their position, category and classification, annual gross salary and other compensation and emoluments and employee benefit coverages selected or benefits provided, as the case may be, sabbatical leave, parental leave, long-term sick leave and (c) all of the independent contractors used by each Nexans Entity in connection with the operation of the Nexans WW Business to whom fees of more than €10,000 were paid in 2004, specifying the name of the independent contractor, type of labor, all fees and emoluments and benefits paid or provided to such independent contractor from January 1, 2005 through June 30, 2005. No Nexans Entities have made any binding commitments (other than as set forth in employment contracts or collective bargaining agreements) to any director, manager, employee, former employee, employee representative, consultant or independent contractor of a Nexans Entity in connection with the Nexans WW Business with respect to compensation, emoluments, benefits, promotion, retention, termination, severance or similar matters in connection with the transactions contemplated hereby or otherwise that would affect the annual rate of compensation and all emoluments as detailed in Schedule 3.1.16 .
3.1.17 Nexans Benefit Plans . Except for the Nexans German Benefit Plans and the UK Stakeholders Plan, there are no other Nexans Benefit Plans, except that Nexans WW Entities are required by law or national collective bargaining agreements to make payments to mandatory social security or similar programs in the jurisdictions in which they operate. The Nexans Entities have made all required contributions to public pension, health insurance and other social systems of general application that are mandatory by law or national collective bargaining agreements. The Nexans German Benefit Plans and the UK Stakeholders Plan are described in Schedule 3.1.17 and obligations in respect thereof through the Closing Date will be fully reserved in the Nexans Closing Balance Sheet.
34
3.1.18 Labor Relations . Except as set forth on Schedule 3.1.18:
(a) No Nexans Entity is and/or has been a signatory to a collective bargaining agreement or other agreement with or recognizes any trade union, labor organization or other group covering employees involved in the Nexans WW Business. To the Knowledge of Nexans, no request for recognition is threatened or pending.
(b) No walk out, strike, or work stoppage involving the employees of a Nexans Entity involved in the Nexans WW Business has occurred within the last 12 months or is in progress.
(c) No material claim, complaint, charge or investigation from any employ |
AGREEMENTS / CONTRACTS
CLAUSES
| Get Email Updates |
