Exhibit 10.1
Execution Version
ASSET PURCHASE AGREEMENT
dated as of August 27, 2004
By and Among
NEXANS MAGNET WIRE USA INC.,
as Seller,
NEXANS CANADA INC.,
NEXANS USA INC.
and
ESSEX GROUP, INC.,
as Purchaser
Table Of Contents
-----------------
Page
----
Table of Contents
ARTICLE I SALE OF THE PURCHASED ASSETS; PURCHASE PRICE..................................................1
Section 1.01 Sale of the Purchased Assets; Assumption of Assumed Liabilities........................1
Section 1.02 Purchase Price.........................................................................3
Section 1.03 Adjustment of Closing Payment..........................................................3
Section 1.04 Prorations for Certain Liabilities.....................................................4
ARTICLE II CLOSING.......................................................................................5
Section 2.01 Closing and Closing Date...............................................................5
Section 2.02 Seller's and Nexans' Deliveries........................................................5
Section 2.03 Purchaser's Deliveries.................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.....................................................7
Section 3.01 Corporate Organization and Authority...................................................7
Section 3.02 No Conflicts and Consent Requirements..................................................8
Section 3.03 Governmental Approvals and Filings.....................................................8
Section 3.04 Litigation and Claims..................................................................9
Section 3.05 Compliance with Laws and Orders........................................................9
Section 3.06 Purchased Inventory....................................................................9
Section 3.07 Purchased Contracts...................................................................10
Section 3.08 Brokers...............................................................................11
Section 3.09 Customers, Products and Warranties and Return Policies................................11
Section 3.10 Absence of Certain Changes or Events..................................................11
Section 3.11 Forward Copper Buy and Tolling Arrangements...........................................11
Section 3.12 Disclosure............................................................................11
Section 3.13 No Other Representations..............................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................................12
Section 4.01 Corporate Organization and Authority..................................................12
Section 4.02 Foreign Qualification.................................................................12
Section 4.03 No Conflicts and Consent Requirements.................................................12
Section 4.04 Governmental Approvals and Filings....................................................13
Section 4.05 Litigation and Claims.................................................................13
Section 4.06 Compliance with Laws and Orders.......................................................13
Section 4.07 Availability of Funds.................................................................13
Section 4.08 Purchaser's Investigation.............................................................14
Section 4.09 Brokers...............................................................................14
Section 4.10 Disclosure............................................................................14
Section 4.11 No Other Representations..............................................................14
ARTICLE V ADDITIONAL AGREEMENTS OF SELLER..............................................................14
Section 5.01 Notice................................................................................14
Section 5.02 Access to Books and Records of Business...............................................14
Section 5.03 No Solicitation.......................................................................15
-i-
Table Of Contents
-----------------
Page
----
Section 5.04 Conduct of the Business...............................................................15
Section 5.05 Delivery of Purchased Contracts.......................................................16
ARTICLE VI NONCOMPETITION...............................................................................16
Section 6.01 Covenant Not to Compete...............................................................16
Section 6.02 Covenant Not to Solicit...............................................................16
Section 6.03 Exceptions............................................................................16
Section 6.04 Reasonableness........................................................................18
ARTICLE VII ADDITIONAL MUTUAL AGREEMENTS.................................................................19
Section 7.01 Confidentiality.......................................................................19
Section 7.02 Post-Closing Purchases of Copper Rod by Purchaser.....................................19
Section 7.03 Efforts and Actions to Cause Closing to Occur.........................................19
Section 7.04 Certain Customer Arrangements.........................................................19
Section 7.05 Consents and Back-to-Back Arrangement.................................................20
Section 7.06 No Right to Nexans Name...............................................................22
Section 7.07 Public Announcements..................................................................22
Section 7.08 Updating Schedules....................................................................23
Section 7.09 Bulk Transfer Compliance..............................................................23
Section 7.10 Post Closing Payments.................................................................23
Section 7.11 Transition Services...................................................................23
Section 7.12 Further Assurances....................................................................23
Section 7.13 Stems and Reels.......................................................................24
Section 7.14 Customer Rebate Matters...............................................................24
Section 7.15 Removal of Raw Materials and Work in Process..........................................24
Section 7.16 Production Scheduling.................................................................24
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF PURCHASER.......................................................24
Section 8.01 Accuracy of Representations and Warranties............................................24
Section 8.02 Performance of Agreements.............................................................25
Section 8.03 Deliveries by Seller..................................................................25
Section 8.04 No Adverse Proceedings................................................................25
Section 8.05 Qualified Supplier Approvals under PPAP Contracts.....................................25
Section 8.06 Other Assurances......................................................................25
ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLER..........................................................26
Section 9.01 Accuracy of Representations and Warranties............................................26
Section 9.02 Performance of Agreements.............................................................26
Section 9.03 Deliveries by Purchaser...............................................................26
Section 9.04 No Adverse Proceedings................................................................26
Section 9.05 Qualified Supplier Approvals under PPAP Contracts.....................................26
Section 9.06 Other Assurances......................................................................27
ARTICLE X SURVIVAL AND INDEMNIFICATION.................................................................27
Section 10.01 Survival.............................................................................27
Section 10.02 Indemnification by Seller and Nexans.................................................27
-ii-
Table Of Contents
-----------------
Page
----
Section 10.03 Indemnification by Purchaser.........................................................27
Section 10.04 Method of Asserting Claims...........................................................28
Section 10.05 Continued Liability for Indemnity Claims.............................................31
Section 10.06 Limitations on Indemnification.......................................................31
Section 10.07 Exclusive Remedies...................................................................32
Section 10.08 Time Limits on Certain Claims........................................................32
Section 10.09 Specific Performance.................................................................32
Section 10.10 Adjustments to the Purchase Price....................................................32
Section 10.11 Set-off..............................................................................33
ARTICLE XI TERMINATION........................................................................................33
Section 11.01 General..............................................................................33
Section 11.02 Continuing Obligations on Termination................................................33
ARTICLE XII DEFINITIONS........................................................................................34
Section 12.01 Definitions..........................................................................34
Section 12.02 Interpretation.......................................................................38
ARTICLE XIII MISCELLANEOUS......................................................................................39
Section 13.01 Notices..............................................................................39
Section 13.02 Fees and Expenses....................................................................41
Section 13.03 Entire Agreement.....................................................................41
Section 13.04 Waiver; Remedies.....................................................................41
Section 13.05 Amendment............................................................................41
Section 13.06 Benefits and Binding Effect..........................................................41
Section 13.07 Captions.............................................................................42
Section 13.08 Exhibits and Schedules...............................................................42
Section 13.09 Governing Law........................................................................42
Section 13.10 Counterparts.........................................................................42
Section 13.11 Severability.........................................................................42
Section 13.12 No Third Party Beneficiary...........................................................42
Section 13.13 Currency.............................................................................42
-iii-
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 27th day of August, 2004 by and among NEXANS MAGNET WIRE USA
INC., a Missouri corporation ("Seller"), NEXANS CANADA INC., a corporation
organized under the federal laws of Canada ("Nexans Canada"), NEXANS USA INC., a
Delaware corporation ("Nexans US"; collectively with Nexans Canada, "Nexans")
and ESSEX GROUP, INC., a Michigan corporation ("Purchaser"). Capitalized terms
not otherwise defined herein shall have the meaning ascribed to such terms in
Article XII.
W I T N E S S E T H:
--------------------
WHEREAS, Seller is engaged in the business of manufacturing and selling
magnet wire and related products (the "Business") in the United States and
Mexico (the "Territory");
WHEREAS, Seller intends to close its manufacturing facility located in
La Grange, Kentucky;
WHEREAS, Seller is a wholly owned subsidiary of Nexans US, and Nexans
Canada owns a majority interest in Nexans US;
WHEREAS, Nexans will benefit from the transactions contemplated by this
Agreement; and
WHEREAS, Seller desires to sell, transfer, assign and deliver certain
of its assets to Purchaser, and Purchaser desires to purchase such assets of
Seller and to assume certain liabilities of Seller, all in accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
SALE OF THE PURCHASED ASSETS; PURCHASE PRICE
Section 1.01 Sale of the Purchased Assets; Assumption of Assumed
Liabilities.
(a) Asset Purchase.
(i) Purchased Assets. At the Closing, on the terms and subject
to the conditions set forth in this Agreement, Seller shall sell, transfer,
assign and deliver to Purchaser free and clear of all Liens, and Purchaser shall
purchase and acquire, all of Seller's right, title and interest in, to and under
only the following Assets of Seller (collectively, the "Purchased Assets"):
(A) Inventory. All of the Inventory of Seller in
existence on the date hereof and allocated to the Purchased Contracts
in accordance with the Inventory
Accounting Policies applied as of the date hereof (as of June 25, 2004,
the portion of such Inventory constituting finished goods is described
on Schedule 1.01(a)(i)(A)(1)), and any additions thereto on or before
the Closing Date, except for the Inventory listed on Schedule
1.01(a)(i)(A)(2) and Inventory which is sold or disposed of by Seller
on or before the Closing Date in the Ordinary Course of Business of
Seller (the "Purchased Inventory"); and
(B) Contracts. Except as set forth on Schedule
1.01(a)(i)(B)(1), all rights in, under and with respect to (i) the
Contracts between Seller and certain of its customers (including quotes
issued by Seller and purchase orders received from customers) in
existence on the date hereof and identified or described on Schedule
1.01(a)(i)(B)(2), (ii) any additions to such Contracts (including
purchase orders received from such customers pursuant to such existing
Contracts or releases under existing purchase orders relating to such
existing Contracts) on or before the Closing Date entered into in
accordance with Section 5.04(a), and (iii) that certain Fulfillment
Agreement by and between Seller and International Impulse, Inc. dated
December 22, 2003 (collectively, the "Purchased Contracts").
(ii) Excluded Assets. The Purchased Assets to be purchased and
sold hereunder, and the term "Purchased Assets" as used herein, shall not
include any other Assets of Seller.
(b) Assumed Liabilities.
(i) Assumed Liabilities. As partial consideration for the
consummation of the transactions contemplated hereby, at the Closing, on the
terms and subject to the conditions set forth in this Agreement, Purchaser shall
deliver to Seller the Assignment and Assumption Agreement pursuant to which
Purchaser shall assume and agree to thereafter perform when due and discharge in
accordance with their respective terms, the following liabilities and
obligations of Seller (the "Assumed Liabilities"):
(A) Contracts. All liabilities and obligations
arising under the Purchased Contracts that are first required to be
performed after the Closing and arise out of the written terms of such
Purchased Contracts as provided by Seller to Purchaser and the terms of
any customer purchase orders issued after the Closing under such
Purchased Contracts (including without limitation warranty obligations
relating to products supplied by Purchaser after Closing and Purchased
Inventory), but specifically excluding liabilities and obligations for
(1) subject to the provisions of Section 10.03(d), breaches of such
Purchased Contracts, if any, resulting from acts or omissions of Seller
or its Affiliates prior to the Closing and (2) product warranties or
liabilities for repair or replacement of, or refund for, damaged,
defective or returned products, parts or components sold prior to the
Closing. Purchaser will perform such obligations assumed by it under
this Section as if it were the original party to such Purchased
Contract.
(B) Straddle Period Liabilities. Any Straddle Period
Liabilities which relate to any time beginning with and subsequent to
the Closing as provided in Section 1.04 up to a maximum of $40,000.00.
-2-
(ii) Excluded Liabilities. Notwithstanding any provision in
this Agreement or any other writing to the contrary, Purchaser is assuming only
the Assumed Liabilities and is not assuming any other liability or obligation of
Seller of whatever nature, whether presently in existence or arising hereafter.
All such other liabilities and obligations shall be retained by and remain
obligations and liabilities of Seller (all such liabilities and obligations not
being assumed being herein referred to as the "Excluded Liabilities").
Section 1.02 Purchase Price.
(a) Purchase Price. In consideration of the consummation of the
transactions contemplated by this Agreement, Purchaser shall, in addition to
assuming the Assumed Liabilities, pay to Seller the amount of $11,568,219.00,
which equals the sum of (i) $9,108,219 allocated to the Purchased Inventory (the
"Provisional Inventory Value") and (ii) $2,460,000 (collectively, the "Closing
Payment"; the Closing Payment, together with any adjustment as provided in
Section 1.03, shall be referred to herein as the "Purchase Price").
(b) Payment of Closing Payment. At Closing, Purchaser shall pay the
Closing Payment to Seller via wire transfer of immediately available funds to
the account(s) designated in a writing delivered by Seller to Purchaser no later
than three (3) Business Days prior to the Closing Date.
Section 1.03 Adjustment of Closing Payment.
(a) Closing Statement. As soon as practical following the Closing Date
and in any event within thirty (30) days thereafter, Seller shall prepare and
deliver to Purchaser a statement setting forth the amount of the Purchased
Inventory Value as of the Closing Date (the "Closing Statement"). All
calculations of amounts on the Closing Statement shall be made in accordance
with the accounting policies set forth on Schedule 1.03 (the "Inventory
Accounting Policies").
(b) Physical Inventory. For the purpose of preparing the Closing
Statement, Seller shall conduct a physical inventory with respect to the
Purchased Inventory as of the Closing Date, which shall be performed and valued
in accordance with the Inventory Accounting Policies. Purchaser and its
accountants shall be entitled to observe such physical inventory.
(c) Dispute Regarding the Closing Statement. Seller shall, and Nexans
shall cause Seller to, provide Purchaser and its representatives and accountants
reasonable access to the books and records of Seller, including working papers
of its accountants, and to any of its employees, in connection with Purchaser's
review of the Closing Statement. If Purchaser disputes any items on the Closing
Statement, Purchaser must deliver written notice thereof to Seller within thirty
(30) days after receipt of the Closing Statement (the "Review Period"), which
written notice will specify in reasonable detail the rationale for such
disagreement and the amount in dispute. Seller and Purchaser will attempt in
good faith to reach an agreement as to any matters identified in such written
notice as being in dispute. If Purchaser and Seller are unable to resolve such
disputes within twenty (20) days after Purchaser delivers such written notice to
Seller, then those matters identified in such written notice that remain in
dispute will be finally and conclusively determined by an independent auditing
firm of recognized international standing (the "Accountant") selected by
Purchaser and Seller, which firm will not be the regular auditing firm of
Purchaser or Seller. Promptly, but not later than fifteen (15) days after its
-3-
acceptance of its appointment, the Accountant will determine (based solely on
written presentations by Seller, Purchaser and their respective independent
accountants and not by independent review) only those matters in dispute and
will render a written report as to the disputed matters and the resulting
calculation of the final Purchased Inventory Value, which report will thereupon
be conclusive and binding upon Purchaser and Seller. The fees and expenses of
the Accountant will be shared equally by Purchaser and Seller. If Purchaser
fails to notify Seller of any disputes in accordance with the aforementioned
procedures, the Closing Statement and the Purchased Inventory Value reflected
thereon will be conclusive and binding on Seller and Purchaser hereto upon the
expiration of the Review Period.
(d) Additional Payments.
(i) Adjustment to the Purchase Price. If the final Purchased
Inventory Value (as finally determined pursuant to Section 1.03(c)) is greater
than the Provisional Inventory Value, Purchaser shall, within five (5) Business
Days after such final determination is made, pay such excess amount to Seller by
wire transfer to an account designated in writing by Seller in immediately
available funds. If such final Purchased Inventory Value is less than the
Provisional Inventory Value, Seller shall, within five (5) Business Days after
such final determination is made, pay such shortfall amount to Purchaser by wire
transfer to an account designated in writing by Purchaser in immediately
available funds.
(ii) Payment of Nondisputed Amounts. Notwithstanding
anything herein to the contrary, any amounts which are owed by one party to
another party pending final resolution of the Purchased Inventory Value and
which are not in dispute between Seller and Purchaser shall be paid within five
(5) Business Days following the date on which such amounts not in dispute are
agreed upon.
(iii) Interest. Any payments made after the Closing
pursuant to this Section 1.03 as a result of an adjustment to the Purchase Price
hereunder shall bear interest from the Closing Date to the date of payment at
the Closing Date Interest Rate which interest shall be calculated on the basis
of a 365-day year.
Section 1.04 Prorations for Certain Liabilities.
Seller and Purchaser agree to prorate all liability for 2004 personal
property Taxes (the "Straddle Period Liabilities") owing with respect to the
Purchased Assets in accordance herewith. Seller shall pay all such Straddle
Period Liabilities on or with respect to the Purchased Assets to the extent such
Straddle Period Liabilities relate to any time period ending on or before the
Closing, and Purchaser shall pay all Straddle Period Liabilities on or with
respect to the Purchased Assets to the extent such Straddle Period Liabilities
relate to periods beginning with and subsequent to the Closing up to a maximum
of $40,000, with all amounts in excess thereof to be paid by Seller. The parties
each agree to make payment on a Straddle Period Liability within two Business
Days prior to such liability becoming past due and in the event a party fails to
do so, then any penalties associated with such late payment shall not be divided
between the parties but shall be the sole responsibility of the party failing to
pay timely.
-4-
ARTICLE II
CLOSING
-------
Section 2.01 Closing and Closing Date.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall be held at 10 a.m. North Carolina Time on September 7, 2004,
subject to the fulfillment or waiver of the conditions precedent referred to in
Articles VIII and IX or on such other date as the parties hereto may mutually
agree. The date on which the Closing occurs is referred to herein as the
"Closing Date". The Closing shall be held at the offices of ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇
PLLC, at Bank of America Corporate Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other location as may be agreed to by
the parties hereto.
Section 2.02 Seller's and Nexans' Deliveries.
On or before Closing, Seller or Nexans, as applicable, shall deliver to
Purchaser the following documents or items which, except for any such document
the form of which is attached as an Exhibit hereto, shall be reasonably
satisfactory in form and content to Purchaser and its counsel:
(a) Secretary's Certificate. A certificate from each of Seller, Nexans
US and Nexans Canada in the form of Exhibit 2.02(a), executed on its behalf by
its Secretary or Assistant Secretary, dated the Closing Date, certifying the
following attachments:
(i) Good Standing Certificates. A good standing
certificate with respect to such party issued within ten (10) days prior to the
Closing Date by the appropriate official of the jurisdiction of incorporation of
such party.
(ii) Organizational Documents and Operating Documents.
Accurate and complete copies of the Organizational Document and the
Operating Document of such party.
(iii) Corporate Resolutions. Copies of resolutions of the
Board of Directors of such party authorizing the execution, delivery
and performance of this Agreement, all Related Agreements to which each
is a party, and all other documents, instruments, and certificates to
which each is a party contemplated hereby or thereby and the
consummation of transactions contemplated hereby and thereby.
(iv) Incumbency Certificate. An incumbency certificate
relating to the any duly authorized officer of such party, who will be
executing this Agreement, any Related Agreement or any other agreement
or instrument to be delivered pursuant to the terms hereof or thereof
(including the name, title and signature of each such officer).
(b) Bringdown Certificate. A certificate from Seller in the form of
Exhibit 2.02(b) executed on its behalf by its duly authorized executive officer,
dated the Closing Date, to the effect that Seller has fulfilled the conditions
specified in Sections 8.01 and 8.02 hereof.
-5-
(c) Instruments of Transfer. An instrument of assignment in the form of
Exhibit 2.02(c)(1) (the "Assignment and Assumption Agreement") and an instrument
of transfer in the form of Exhibit 2.02(c)(2) (the "▇▇▇▇ of Sale"), as is
reasonably necessary to convey fully and effectively to Purchaser the Purchased
Assets in accordance with the terms hereof.
(d) Related Agreements. All Related Agreements to which Seller is a
party executed by a duly authorized signatory of Seller.
(e) Purchased Contracts. Copies of the Purchased Contracts, together
with a certificate of a duly authorized officer of Seller, in the form of
Exhibit 2.02(e) and dated the date hereof, certifying to the knowledge of such
officer as to the accuracy and completeness of such copies of the Purchased
Contracts.
Section 2.03 Purchaser's Deliveries.
On or before Closing, Purchaser shall deliver to Seller the following
documents or items which, except any such documents the form of which is
attached as an Exhibit hereto, shall be reasonably satisfactory in form and
content to Seller and its counsel:
(a) Payment of the Closing Payment. Purchaser shall pay the Closing
Payment to Seller pursuant to Section 1.02(b) hereof.
(b) Secretary's Certificate. A certificate from Purchaser in the form
of Exhibit 2.03(b), executed on its behalf by its Secretary or Assistant
Secretary, dated the Closing Date, certifying the following attachments:
(i) Good Standing Certificate. A good standing
certificate with respect to Purchaser issued within ten (10) days prior to the
Closing Date by the appropriate official of the state of incorporation of
Purchaser.
(ii) Organizational Document and Operating Document. Accurate
and complete copies of the Organizational Document and the Operating
Document of Purchaser.
(iii) Corporate Resolutions. Copies of resolutions of the
Board of Directors (and, if legally required, the stockholders) of
Purchaser authorizing the execution, delivery and performance of this
Agreement, all Related Agreements to which Purchaser is a party, and
all other documents, instruments, and certificates contemplated hereby
or thereby to which Purchaser is a party and the consummation of the
transactions contemplated hereby.
(iv) Incumbency Certificates. An incumbency certificate of the
President or any duly authorized Vice President of Purchaser who will
be executing this Agreement, any Related Agreement or any other
document, instrument or certificate to be delivered pursuant to the
terms hereof or thereof (including the name, title and signature of
each such officer).
-6-
(c) Bringdown Certificate. A certificate in the form of Exhibit 2.03(c)
executed on behalf of Purchaser by its duly authorized executive officer, dated
the Closing Date, to the effect that Purchaser has fulfilled the conditions
specified in Sections 9.01 and 9.02.
(d) Assumptions. The Assignment and Assumption Agreement, pursuant to
which Purchaser assumes the Assumed Liabilities.
(e) Resale Exemption Certificates. A resale exemption certificate
issued to Purchaser by each of the following states: Alabama, Arizona,
California, Florida, Georgia, Illinois, Indiana, Kentucky, Missouri, New
Hampshire, New Jersey, Michigan, Minnesota, North Carolina, Ohio, Oklahoma,
Oregon, Pennsylvania, Tennessee, Texas and Wisconsin.
(f) Related Agreements. All Related Agreements to which Purchaser is a
party executed by a duly authorized signatory of Purchaser.
(g) Contracts Certificate. A certificate of a duly authorized officer
of Purchaser, in the form of Exhibit 2.02(e) and dated the date hereof,
confirming receipt of the Purchased Contracts.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Except as set forth in the attached Schedules prepared by Seller and
delivered to Purchaser simultaneously with the execution hereof, Seller
represents and warrants to Purchaser that all of the statements contained in
this Article III are true as of the date of this Agreement (or, if made as of a
specified date, as of such date). The inclusion of any information in any
Schedule or other document delivered by Seller pursuant to this Agreement shall
not be deemed to be an admission or evidence of the materiality of such item,
nor shall it establish a standard of materiality for any purpose whatsoever.
Section 3.01 Corporate Organization and Authority.
(a) Organization. Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Missouri, with full
corporate power and authority to conduct its business as now conducted and to
own, lease and use its Assets. Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is required in connection with Seller's ownership of the Purchased
Assets.
(b) Power and Authority. Each of Seller and Nexans has the power and
authority to enter into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Seller and Nexans and
the consummation of the transactions contemplated hereby by Seller and Nexans,
including the sale of the Purchased Assets and the execution and performance of
the Related Agreements to which Seller and Nexans are a party by Seller and
Nexans have been duly authorized by all requisite corporate action on the part
of Seller and Nexans. This Agreement constitutes, and the Related Agreements to
which Seller and Nexans are a party and the other instruments and documents to
be executed and delivered by
-7-
Seller and Nexans hereunder will, when executed and delivered, constitute the
legal, valid and binding obligations of each of Seller and Nexans, enforceable
against such party in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or similar Laws or general principles of equity.
Section 3.02 No Conflicts and Consent Requirements.
(a) The execution and delivery of this Agreement by Seller and Nexans
do not, and the execution and delivery by Seller and Nexans of the Related
Agreements to which each is a party, the performance by Seller and Nexans of
their respective obligations under this Agreement and such Related Agreements,
and the consummation of the transactions contemplated hereby and thereby will
not:
(i) conflict with or violate any provision of the
Organizational Document or Operating Document of Seller or Nexans;
(ii) conflict with, violate or breach any Law or Order
applicable to either of Seller or Nexans or to any of Seller's assets,
other than any such conflict, violation or breach which, individually
or in the aggregate with all other such conflicts, violations or
breaches, could not reasonably be expected to have an adverse effect on
the validity or enforceability of this Agreement or any Related
Agreement or Seller's or Nexans' ability to perform their respective
obligations thereunder, an adverse effect on the Purchased Assets or a
material adverse effect on Seller's business; or
(iii) except as set forth in the column on Schedule
1.01(a)(i)(B)(2) entitled "Assignment Restrictions" (i) conflict with or result
in a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, or (iii) result in the creation or imposition of
any Lien upon Seller or any of its Assets under any Purchased Contract to which
Seller is a party or by which any of its Assets are bound, except in each case
as could not reasonably be expected to have an adverse effect on the validity or
enforceability of this Agreement or any Related Agreement or Seller's or Nexans'
ability to perform their respective obligations hereunder thereunder, or an
adverse effect on the Purchased Assets.
(b) The column on Schedule 1.01(a)(i)(B)(2) entitled "Assignment
Restrictions" sets forth each action, consent, approval, notification, waiver,
authorization, order or filing under any Purchased Contract that, to the
Knowledge of Seller, is necessary to be made or obtained by Seller with respect
to the execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby 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 Contract.
Section 3.03 Governmental Approvals and Filings.
Neither the execution, delivery, or performance of this Agreement or
any Related Agreement to which it is a party by Seller or Nexans nor the
consummation of the transactions contemplated hereby or thereby will require the
consent of, filing with or notice to any Governmental Authority on the part of
Seller or Nexans.
-8-
Section 3.04 Litigation and Claims.
There is no Order, charge, complaint, action, suit, arbitration,
proceeding, hearing, or investigation pending against, or to the Knowledge of
Seller threatened against, the Purchased Assets or which, individually or in the
aggregate with all other such items, could reasonably be expected to have an
adverse effect on the ability of Seller or Nexans to enter into or perform its
obligations under this Agreement or any Related Agreement to which Seller or
Nexans is a party or to consummate the transactions contemplated hereby or
thereby.
Section 3.05 Compliance with Laws and Orders.
Neither Seller nor Nexans is in violation of or in default under any
Law or Order applicable to the Purchased Assets or the effect of which,
individually or in the aggregate with other such violations and defaults, could
reasonably be expected to have an adverse effect on the ability of either Seller
or Nexans to enter into or perform its obligations under this Agreement or any
Related Agreement to which it is a party or to consummate the transactions
contemplated hereby or thereby.
Section 3.06 Purchased Inventory.
All Purchased Inventory consists of a quality and quantity usable and
saleable in the Ordinary Course of Business of Seller under and pursuant to the
terms of the Purchased Contracts, subject to the reserve therefor established
pursuant to the Inventory Accounting Policies. Schedule 1.01(a)(i)(A)(1)
contains a description of the portion of Seller's Inventory constituting
finished goods which was in existence on June 25, 2004 and allocated to the
Purchased Contracts in accordance with Exhibit A attached to the Inventory
Accounting Policies, and Schedule 3.06(1) sets forth the estimated number of
weeks for which the portion of Seller's Inventory constituting finished goods
which was in existence on August 20, 2004 and allocated to the Purchased
Contracts in accordance with the Inventory Accounting Policies (applied as of
such date) is estimated to be sufficient to satisfy delivery obligations under
the Purchased Contracts (such estimation is based (a) the Inventory of Seller in
existence on August 24, 2004 and held for sale to customers under Purchased
Contracts and (b) Seller's sales to such customers during May, June and July of
2004). The values at which the Purchased Inventory is carried on the books and
records of Seller reflect Seller's historical inventory valuation policy of
stating such Inventory at the lower of cost (determined using the last-in,
first-out method) or market value. All of the Purchased Inventory is owned by
Seller and Seller has good title to the Purchased Inventory, free and clear of
all Liens except Permitted Liens. All Inventory of Seller in existence on August
24 2004 and allocated to the Purchased Contracts in accordance with the
Inventory Accounting Policies (applied as of such date) was located at Seller's
leased warehouses, customers and La Grange, Kentucky facility as described in
Schedule 3.06(2), and, as of the Closing Date, there will be no additional
locations where Purchased Inventory will be held. The column of Schedule
1.01(a)(i)(B)(2) entitled "Volume of thousands of LBS Jan-Jun 2004" contains an
accurate description of the volume of Product shipped to customers under the
Purchased Contracts during the period from January 1 to June 25, 2004.
-9-
Section 3.07 Purchased Contracts.
(a) Except for the Purchased Contracts, Seller is not a party to, bound
by or subject to any Contract for the sale of magnet wire products that have
been sourced more than fifty percent (50%) by products manufactured at Seller's
La Grange, Kentucky facility. Each Purchased Contract is a valid and binding
agreement of Seller and is in full force and effect against Seller, and, to the
Knowledge of Seller, against each other party thereto, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or similar Laws or general principles of equity. To the Knowledge of Seller, no
other party thereto is in default under the terms of any such Purchased
Contract, nor, to the Knowledge of Seller, has any event or circumstance (other
than the transaction described herein) occurred that, with notice or lapse of
time or both, would constitute a default thereunder. To the Knowledge of Seller
there is no pending or threatened bankruptcy, insolvency or similar proceeding
with respect to any party to any such Purchased Contract.
(b) Schedule 1.01(a)(i)(B)(2) sets forth (i) true and correct summaries
of the Purchased Contracts in existence on the date hereof, including the
outstanding purchase orders and releases relating to such Purchased Contracts,
and (ii) a sample purchase order or release issued by each of the customers
identified on such Schedule (other than for The Black & ▇▇▇▇▇▇ Corporation,
because documentation for purchases and supply of Products to such customer is
governed by that certain Supplier Managed Inventory Agreement referenced on
Schedule 1.01(a)(i)(B)(2) and delivered to Purchaser on the date hereof). The
Purchased Contracts to be delivered by Seller to Purchaser pursuant to Section
5.05 hereof shall not contain any material term (including, without limitation,
terms related to price, term, extension of term, expiration or termination,
warranty, limitation of liability or assignment or delegation, but excluding
quantity over which Seller has no ability to reject the related purchase order
or release) that is inconsistent with the terms identified or described on or
referenced in Schedule 1.01(a)(i)(B)(2). Simultaneously with the execution of
this Agreement, Seller has delivered to Purchaser true, correct and complete
copies of all Purchased Contracts (other than purchase orders and releases
relating to such Purchased Contracts, which will be made available to Purchaser
pursuant to Section 5.05).
(c) Except as described in Schedule 1.01(a)(i)(B)(2), none of the
Purchased Contracts:
(i) has a term (taking into account any renewal provided
for therein) that extends beyond December 31, 2004;
(ii) involves a forward copper buying arrangement or a
copper tolling arrangement; or
(iii) is currently being renegotiated.
(d) Except as described in Schedule 3.07(d), none of the Purchased
Contracts requires Seller to supply any product other than the Products.
-10-
(e) Schedule 3.07(e) sets forth a true and complete list of all rebate,
allowance, customer payment and other similar programs currently offered by
Seller in respect of any products sold under any of the Purchased Contracts.
(f) There are no prepaid items under the Purchased Contracts.
(g) No party to any of the Purchased Contracts has made, asserted or,
to the Knowledge of Seller, has any defense, setoff or counterclaim under the
Purchased Contract to which it is a party or has exercised any option granted to
it to cancel, terminate or shorten the term of such Purchased Contract, which
has not been resolved prior to the date hereof.
Section 3.08 Brokers.
No broker or other representative has acted on behalf of Seller or
Nexans in connection with the transactions contemplated hereby in such manner as
to give rise to any valid claim by any Person against Purchaser for a finder's
fee, brokerage commission or similar payment.
Section 3.09 Customers, Products and Warranties and Return
Policies.
(a) Nexans has no patents covering the Products subject to the
Purchased Contracts.
(b) Schedule 3.09(b) sets forth a summary of product returns for 2003
and 2004 year-to-date through August 20, 2004 for each customer identified in
the column on Schedule 1.01(a)(i)(B)(2) entitled "Customer."
Section 3.10 Absence of Certain Changes or Events.
Except as set forth on Schedule 3.10, since June 30, 2004, Seller has
operated its business related to the Purchased Assets in the Ordinary Course of
Business of Seller.
Section 3.11 Forward Copper Buy and Tolling Arrangements.
Schedule 7.04(a) sets forth an accurate and complete summary of the
material terms of all Forward Copper Buy Arrangements in effect on August 20,
2004, and attached to Schedule 7.04(b) is a copy of documents previously
executed in connection with the Mitsubishi Arrangement. Except as set forth on
Schedule 7.04(a) and Schedule 7.04(b), there are no Forward Copper Buy
Arrangements or Tolling Arrangements relating to the Purchased Contracts.
Section 3.12 Disclosure.
The representations and warranties of Seller contained in this
Agreement, the Schedules hereto and in any certificate or document to be
delivered by Seller at the Closing do not and will not contain any untrue
statement of a fact and do not and will not omit to state a fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
-11-
Section 3.13 No Other Representations.
Except for the representations and warranties expressly contained in
this Agreement, neither Seller nor any other Person acting on behalf of Seller
makes any representation or warranty, express or implied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller that all of the statements
contained in this Article IV are true as of the date of this Agreement (or, if
made as of a specified date, as of such date). The inclusion of any information
in any Schedule or other document delivered by Purchaser pursuant to this
Agreement shall not be deemed to be an admission or evidence of the materiality
of such item, nor shall it establish a standard of materiality for any purpose
whatsoever.
Section 4.01 Corporate Organization and Authority.
(a) Organization. Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan, with full
corporate power and authority to conduct its business as now conducted and to
own, lease and use its Assets.
(b) Power and Authority. Purchaser has the power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby by Purchaser, and the execution and performance
of the Related Agreements to which Purchaser is a party by Purchaser have been
duly authorized by all requisite corporate action on the part of Purchaser. This
Agreement constitutes, and the Related Agreements to which Purchaser is a party
and the other instruments and documents to be executed and delivered by
Purchaser hereunder will, when executed and delivered, constitute, the legal,
valid and binding obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or similar Laws or
general principles of equity.
Section 4.02 Foreign Qualification.
Purchaser is duly qualified or registered to do business as a foreign
corporation and is in good standing in all jurisdictions to the extent necessary
to carry out the transactions contemplated by this Agreement and the Related
Agreements to which Purchaser is a party.
Section 4.03 No Conflicts and Consent Requirements.
The execution and delivery of this Agreement by Purchaser do not, and
the execution and delivery by Purchaser of the Related Agreements to which
Purchaser is a party, the performance by Purchaser of its obligations under this
Agreement and such Related Agreements, and the consummation of the transactions
contemplated hereby and thereby will not:
-12-
(a) conflict with or violate any provision of the Organizational
Document or Operating Document of Purchaser;
(b) conflict with, violate or breach any Law or Order applicable to
Purchaser or any of its Assets, other than any such conflict, violation or
breach which, individually or in the aggregate with any other such conflicts,
violations or breaches, could not reasonably be expected to have an adverse
effect on the validity or enforceability of this Agreement or any Related
Agreement or Purchaser's ability to perform its obligations hereunder or
thereunder; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Purchaser to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
or (iv) result in the creation or imposition of any Lien upon Purchaser or any
of its Assets under, any Contract or License to which Purchaser is a party or by
which any of its Assets are bound, except as could not reasonably be expected to
have an adverse effect on the validity or enforceability of this Agreement or
any Related Agreement or Purchaser's ability to perform its obligations
hereunder or thereunder.
Section 4.04 Governmental Approvals and Filings.
Neither the execution, delivery, or performance of this Agreement or
any Related Agreement to which it is a party by Purchaser nor the consummation
of the transactions contemplated hereby or thereby will require the consent of,
filing with or notice to any Governmental Authority on the part of Purchaser.
Section 4.05 Litigation and Claims.
There is no Order, complaint, action, suit, arbitration, proceeding,
hearing, or investigation pending against, or to the knowledge of Purchaser,
threatened against Purchaser or its Assets which, individually or in the
aggregate with all other such items, could reasonably be expected to have an
adverse effect on the ability of Purchaser to enter into or perform its
obligations under this Agreement or any Related Agreement to which Purchaser is
a party or to consummate the transactions contemplated hereby or thereby.
Section 4.06 Compliance with Laws and Orders.
Purchaser is not in violation of or in default under any Law or Order
applicable to Purchaser the effect of which, individually or in the aggregate
with other such violations and defaults, could reasonably be expected to have an
adverse effect on the ability of Purchaser to enter into or perform its
obligations under this Agreement or any Related Agreement to which it is a party
or to consummate the transactions contemplated hereby or thereby.
Section 4.07 Availability of Funds.
Purchaser currently has access to sufficient available funds in cash or
cash equivalents and will at the Closing have sufficient immediately available
funds, in cash, to pay the Closing Payment and any other amounts payable
pursuant to this Agreement and to effect the transactions contemplated hereby.
-13-
Section 4.08 Purchaser's Investigation.
Purchaser has conducted its own independent investigation, review and
analysis of the Purchased Assets and the Assumed Liabilities, which
investigation, review and analysis was done by Purchaser and its Affiliates and,
to the extent Purchaser deemed appropriate, by Purchaser's representatives. In
entering into this Agreement, Purchaser acknowledges that it has relied solely
upon the aforementioned investigation, review and analysis and the specific
representations and warranties of Seller set forth in this Agreement and not on
any other factual representations or opinions of any of Seller or Nexans or any
of their representatives.
Section 4.09 Brokers.
No broker or other representative has acted on behalf of Purchaser in
connection with the transactions contemplated hereby in such manner as to give
rise to any valid claim by any Person against Seller for a finder's fee,
brokerage commission or similar payment.
Section 4.10 Disclosure.
The representations and warranties of Purchaser contained in this
Agreement, the Schedules hereto and in any certificate or document to be
delivered by Purchaser at the Closing do not and will not contain any untrue
statement of a fact and do not and will not omit to state a fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.11 No Other Representations.
Except for the representations and warranties expressly contained in
this Agreement, neither Purchaser nor any other Person acting on behalf of a
Purchaser makes any representation or warranty, express or implied.
ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
-------------------------------
Section 5.01 Notice.
Seller shall give prompt written notice to Purchaser of any material
adverse change to the Purchased Assets and any material violation of a Purchased
Contract or of any representation or warranty of Seller that is no longer true
in any material respect, and Seller shall give prompt written notice to
Purchaser of any material development affecting the ability of Seller to
consummate the transactions contemplated by this Agreement.
Section 5.02 Access to Books and Records of Business.
From the date hereof until the Closing Date or any earlier termination
of this Agreement, Seller shall give Purchaser and its officers, employees,
counsel, financial advisers, consultants, lenders and other representatives
access upon reasonable notice and during normal business
-14-
hours to the officers and employees of Seller and shall furnish Purchaser with
all such information concerning the Business as Purchaser may reasonably request
in order to review the legal, financial and business condition and affairs of
the Purchased Assets and the Assumed Liabilities so long as such access does not
unreasonably interfere with the operation of the Business or the use or
operation of the Purchased Assets.
Section 5.03 No Solicitation.
From the date hereof until Closing or the earlier termination of this
Agreement, neither Seller nor Nexans shall, directly or indirectly, through any
officer, director, employee, contractor, representative or agent of any of them
initiate, solicit or encourage, or enter into negotiations or discussions of any
type, directly or indirectly, enter into a confidentiality agreement, letter of
intent, or purchase agreement or other similar agreement with any Person other
than Purchaser, or provide any information with respect to the Purchased Assets
to any Person other than Purchaser, with respect to the acquisition of some or
all of the Purchased Assets, other than the sale of inventory in the Ordinary
Course of Business. Each of Seller and Nexans agrees to notify Purchaser orally
(within three (3) Business Days) and in writing (as promptly as practicable) of
any such proposal by a third party to do any of the foregoing which such Seller
or Nexans may receive relating to any of such matters.
Section 5.04 Conduct of the Business.
From the date of this Agreement until the Closing Date, (i) Seller
shall conduct and operate the Business with respect to the Purchased Assets in
the Ordinary Course of Business and use its reasonable commercial efforts to
preserve intact the Purchased Assets and (ii) Seller will not:
(a) without the consent of Purchaser, (i) enter into any new Purchased
Contract (other than a purchase order or release under any existing Purchased
Contract permitted under clause (iii) of this Section 5.04(a)), (ii) amend or
modify any Purchased Contract, unless such amendment or modification does not
contain any material term (including, without limitation, terms related to
price, quantity, term, extension of term, expiration or termination, warranty,
limitation of liability or assignment or delegation) which is inconsistent with
the terms of the existing Purchased Contract, or (iii) accept any purchase order
or release under any existing purchase order unless such purchase order or
release is related to an existing Purchased Contract and does not contain any
material term (including, without limitation, terms related to price, term,
extension of term, expiration or termination, warranty, limitation of liability
or assignment or delegation, but excluding quantity over which Seller has no
ability to reject the related purchase order or release) which is inconsistent
with the terms of the existing Purchased Contract;
(b) (i) take any action that would make any representation or warranty
of Seller under this Agreement inaccurate in any material respect at, or as of
any time prior to, the Closing Date or (ii) fail to take any commercially
reasonable action necessary to prevent any such representation or warranty from
being inaccurate in any material respect at any such time; or
(c) (i) take any action that would impair Seller's ability to perform
its obligations under this Agreement or any Related Agreement or (ii) fail to
take any commercially reasonable
-15-
action necessary to prevent any such impairment of Seller's ability to perform
its obligations under this Agreement or any Related Agreement.
Section 5.05 Delivery of Purchased Contracts.
Simultaneously with the Closing, Seller shall deliver to Purchaser
true, correct and complete copies of all Purchased Contracts (including
outstanding purchase orders or releases relating thereto) in existence on the
Closing Date.
ARTICLE VI
NONCOMPETITION
--------------
Section 6.01 Covenant Not to Compete.
Each of Seller and Nexans agrees that, for a period of three (3) years
from the Closing Date, it shall not, and shall cause its Affiliates not to,
directly or indirectly, either individually, in partnership, jointly, or in
conjunction with, or on behalf of, any Person, manufacture Products within the
Territory (the "Competitive Business").
Section 6.02 Covenant Not to Solicit.
Each of Seller and Nexans agrees that, for a period of two (2) years
from the Closing Date, it shall not, and shall cause its Affiliates not to,
directly or indirectly, either individually, in partnership, jointly, or in
conjunction with, or on behalf of, any Person:
(a) solicit or contact any customers who are parties to the Purchased
Contracts for the purpose of, or in any way related to, providing or supplying
Products within the Territory; or
(b) solicit, induce or encourage any customer who is a party to a
Purchased Contract to terminate, modify or diminish any sales made by Purchaser
to such customer under any Purchased Contract.
Section 6.03 Exceptions.
(a) The obligations of Seller and Nexans under Section 6.01 hereof are
subject to the following exceptions:
(i) Seller, Nexans or their Affiliates may acquire a passive
equity interest of less than five percent (5%) in an entity engaged in
the Competitive Business whose shares are listed on a securities
exchange or regularly quoted in the over-the-counter market.
(ii) Seller, Nexans or their Affiliates (the "Acquiror") may
acquire and operate any business (the "Acquired Business") falling
within the scope of the Competitive Business, but which is not
principally engaged in the Competitive Business, provided that such
Acquiror shall comply with the following terms and conditions: For
purposes of
-16-
this paragraph, "principally engaged in the Competitive Business" means
that more than thirty-five percent (35%) of the annual revenues of the
Acquired Business for its immediately preceding fiscal year are
generated from sales within the Territory by the Competing Portion.
Immediately following its acquisition of the Acquired Business, the
Acquiror shall offer to sell the portion of such Acquired Business
which is engaged in the Competitive Business (the "Competing Portion")
to Purchaser for cash at a price equal to the portion of the price
which such Acquiror paid for the Acquired Business that is allocable to
the Competing Portion as agreed upon by the parties to the acquisition
(the "Acquired Business Purchase Price"). During the ninety (90) day
period following the submission of such offer to Purchaser (the "Notice
Period"), Purchaser may notify the Acquiror in writing (the "Notice")
that Purchaser (a) is considering the purchase of the Competing
Portion, and (b) does or does not believe that the Acquired Business
Purchase Price reflects the fair market value of the Competing Portion
(the "Competing Portion Value"). If Purchaser does not provide the
Notice to the Acquiror during the Notice Period, any right of Purchaser
to acquire the Competing Portion shall terminate.
If the Notice states that Purchaser believes that the Acquired
Business Purchase Price reflects the Competing Portion Value, then such
Competing Portion Value shall be final. If the Notice states that
Purchaser does not believe that the Acquired Business Purchase Price
reflects Competing Portion Value and the parties cannot agree upon the
Competing Portion Value within a period of ten (10) days following the
delivery of the Notice to the Acquiror, Purchaser shall, at its sole
expense, immediately engage an investment banking firm of recognized
international standing to (A) calculate the Competing Portion Value
within a period of fifteen (15) days thereafter and (B) directly notify
both the Acquiror and Purchaser of its calculation of the Competing
Portion Value (the "First Appraisal Value"). The Competing Portion
Value shall be the First Appraisal Value, unless the Acquiror delivers
to Purchaser written notice of its objection to the First Appraisal
Value within ten (10) days of receipt thereof (the "Objection Notice"),
in which case, the Acquiror shall, at its sole expense, immediately
engage an investment banking firm of recognized international standing
to (C) calculate the Competing Portion Value within a period of fifteen
(15) days after delivery of the Objection Notice, and (D) directly
notify both the Acquiror and Purchaser of its calculation of the
Competing Portion Value (the "Second Appraisal Value"). If the
difference between the Second Appraisal Value and the First Appraisal
Value is (E) not greater than 10% of the larger of the two calculations
of the fair market value, then the Competing Portion Value shall be the
average of the First Appraisal Value and the Second Appraisal Value, or
(F) greater than 10% of the larger of the two calculations of the fair
market value and the parties cannot agree upon the Competing Portion
Value within a period of ten (10) days following the delivery of the
Second Appraisal Value, then the parties shall jointly commission an
independent investment banking firm of recognized international
standing (the "Third Party Appraiser") to conduct a third and final
calculation of the Competing Portion Value within fifteen (15) days.
The Third Party Appraiser shall directly notify both the Acquiror and
Purchaser of its calculation of the Competing Portion Value (the "Third
Appraisal Value"). In this case, (G) if the Competing Portion Value is
closer to the First Appraisal Value than the Second Appraisal Value,
then the Competing Portion Value shall equal the First Appraisal Value,
or (H) if the Competing Portion Value is closer to the Second Appraisal
Value than the First Appraisal Value, then the Competing Portion Value
shall equal the Second Appraisal Value Such determination of the
-17-
Competing Portion Value shall be final and binding on the parties. Each
party shall be responsible for its respective costs incurred in
connection with this Section 6.03(a)(ii), provided that the parties
shall share equally the fees and expenses of the Third Party Appraiser,
if applicable.
Upon final determination of the Competing Portion Value in
accordance with the terms of this Section 6.03(a)(ii), Purchaser shall
immediately notify the Acquiror in writing whether Purchaser agrees to
purchase the Competing Portion for the Competing Portion Value. If
Purchaser agrees to make such purchase, the closing shall occur within
thirty (30) days.
(b) Nothing in Section 6.02 hereof shall restrict any of Seller, Nexans
or any of their Affiliates from performing any warranty obligations with respect
to Products previously sold by Seller, Nexans or any of their Affiliates.
(c) Nothing in Section 6.02 hereof shall restrict resale by a
distributor or customer of Seller, Nexans or their Affiliates who is not an
Affiliate of Seller or Nexans.
(d) Nothing in this Article VI shall restrict any of Seller, Nexans or
any of their Affiliates from performing re-spooling or repackaging (but not
manufacturing of Products) operations in the Territory.
(e) Nothing in Section 6.02 hereof shall restrict any of Seller, Nexans
or any of their Affiliates from soliciting, contacting or contracting with any
Person for the sale of copper rod manufactured by, or tolling services and other
services performed by, the Montreal Facility.
(f) Nothing in this Article VI shall restrict any of Seller, Nexans or
any of their Affiliates from taking any action required or permitted pursuant to
Section 7.05 hereof.
Section 6.04 Reasonableness.
Each of Seller and Nexans have carefully considered the nature and
extent of the restrictions upon them and the rights and remedies conferred on
Purchaser in this Article VI, and each of Seller and Nexans hereby acknowledges
and agrees that:
(a) the restrictions and covenants contained in this Article VI, and
the rights and remedies conferred upon Purchaser, are necessary to protect the
goodwill and other value of the Purchased Assets and the benefits bargained for
by Purchaser in this Article VI;
(b) the restrictions placed upon each of Seller and Nexans under this
Article VI are fair and reasonable in time and territory, will not prevent them
from earning a livelihood, and place no greater restraint upon each of Seller
and Nexans than is reasonably necessary to secure the goodwill and other value
of the Purchased Assets, and the benefits bargained for by Purchaser under this
Agreement; and
(c) In the event that any provisions of this Article VI should be held
to be unenforceable for any reason, such provision or portion thereof shall be
modified in such a manner so as to make the provisions of this Article VI, as
modified, legal and enforceable to the fullest extent permitted under applicable
law.
-18-
ARTICLE VII
ADDITIONAL MUTUAL AGREEMENTS
----------------------------
Section 7.01 Confidentiality.
Each party hereto will, and will cause its officers, directors,
employees, agents, lenders, representatives, advisers and Affiliates to, comply
with all terms of that certain Confidentiality Letter Agreement dated December
12, 2003, between Nexans S.A. and Superior Essex, Inc. Following Closing, Nexans
shall and, shall cause its Affiliates to, and shall use reasonable commercial
efforts to cause their representatives to hold in strict confidence and not
utilize in their respective business information regarding the Purchased
Contracts and the quantity, quality and location of the Purchased Inventory,
except any disclosure that is required by law. Notwithstanding the foregoing,
following the Closing, the foregoing restrictions shall not apply to the use by
Purchaser of documents and information concerning the Purchased Assets and the
Assumed Liabilities furnished by Seller hereunder.
Section 7.02 Post-Closing Purchases of Copper Rod by Purchaser.
Purchaser shall complete the process to determine if Nexans Canada's
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ facility (the "Montreal Facility") qualifies for
purposes of serving as a supplier of copper rod to Purchaser and, if the
Montreal Facility does so qualify, shall add the Montreal Facility to its
approved list for copper rod suppliers.
Section 7.03 Efforts and Actions to Cause Closing to Occur.
Prior to the Closing, upon the terms and subject to the conditions of
this Agreement, Purchaser and Seller shall use their respective commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done and cooperate with each other in order to do, all things
necessary, proper or advisable (subject to any applicable Laws) to consummate
the Closing as promptly as practicable, including the preparation and filing of
all forms, registrations and notices required to be filed to consummate the
Closing and the other transactions contemplated hereby. Nothing contained in
this Agreement shall require Seller to pay any consideration to any other Person
from whom any such approvals, authorizations, consents, orders, licenses,
permits, qualifications, exemptions or waiver is requested.
Section 7.04 Certain Customer Arrangements.
(a) Customer Forward Copper Buy Arrangement. Schedule 7.04(a) sets
forth a list of all outstanding forward copper buying arrangements entered into
by Seller, Nexans Canada or any of their Affiliates (including any such
arrangements between Nexans Canada and one of its Affiliates) in relation to the
Purchased Contracts (each, a "Forward Copper Buy Arrangement") as of August 20,
2004. Purchaser acknowledges that prior to the Closing Seller shall utilize the
Forward Copper Buy Arrangements listed on Schedule 7.04(a) to deliver copper rod
(as raw materials) to Seller's La Grange, Kentucky facility and to deliver
finished products to customers listed thereon in respect of Purchased Contracts.
Within fifteen (15) days following the Closing,
-19-
Seller shall (a) determine the amount of pounds of copper utilized by Seller up
to and including the Closing Date in respect of each Forward Copper Buy
Arrangement, (b) determine the quantity of pounds of copper that remain
unutilized in respect of each such Forward Copper Buy Arrangement, (c) calculate
the value (positive or negative, in accordance with the terms of the Schedule
7.04(a)) of the unutilized quantity of copper by comparing the price of copper
under the related Forward Copper Buy Arrangement and the average monthly COMEX
price of copper for the thirty (30) days prior to the Closing Date, (d) deliver
to Purchaser an updated version of Schedule 7.04(a), prepared as of the Closing
Date, which calculates the total amount to be reimbursed to Purchaser in respect
of the unutilized quantity of copper for each Forward Copper Buy Arrangement,
and (e) pay such amount to Purchaser.
(b) Customer Tolling Arrangement. Schedule 7.04(b) sets forth a copy of
documents previously executed in connection with the Seller's business
relationship with Mitsubishi Electric Automotive of America (the "Mitsubishi
Arrangement"). If requested by Purchaser, Nexans Canada shall cause the Montreal
Facility to continue the Mitsubishi Arrangement on a case by case basis, on
terms agreeable to Purchaser and the Montreal Facility.
Section 7.05 Consents and Back-to-Back Arrangement.
To the extent that an attempted assignment or transfer of any Purchased
Contract to be transferred to and assumed by Purchaser pursuant to Sections
1.01(a)(i)(B) and 1.01(b)(i)(A) hereof without the consent, authorization or
approval of or from a Person (other than Seller or an Affiliate of Seller) that
is a party thereto would constitute a breach or violation thereof, this
Agreement shall not constitute a transfer or an assignment or attempted transfer
or assignment of any rights or obligations thereunder. Any such Purchased
Contracts which are Non-PPAP Contracts shall be governed by the Back-to-Back
Arrangement as provided below, and the consent, authorization or approval of the
customers under such Non-PPAP Contracts shall not be requested prior to Closing.
As soon as reasonably practicable after the date hereof, Seller and
Purchaser shall verbally notify any such Person that is a customer under a PPAP
Contract (a "PPAP Customer") about the transactions contemplated hereby, and
Seller shall use reasonable commercial efforts, with the cooperation of
Purchaser, to obtain the written consent, authorization or approval of such PPAP
Customer to such assignment or transfer. If such consent, authorization or
approval is obtained prior to the Closing, the rights and obligations under such
PPAP Contract shall be transferred and assigned by Seller to and assumed by
Purchaser pursuant to Sections 1.01(a)(i)(B) and 1.01(b)(i)(A) hereof. Seller
shall promptly furnish Purchaser copies of any consents, authorizations or
approvals obtained pursuant to this Section 7.05. If any such consent,
authorization or approval with respect to any such PPAP Contract shall not be
obtained prior to Closing and in the case of all Non-PPAP Contracts requiring
such consent, authorization or approval, Seller and Purchaser agree that (a)
Purchaser shall perform all obligations of Seller arising under each such
Purchased Contract that are required to be performed after the Closing as if
such Purchased Contract had been assigned to Purchaser pursuant to Sections
1.01(a)(i)(B) and 1.01(b)(i)(A) hereof, and (b) Seller shall take such
commercially reasonable actions as required to provide Purchaser with the
benefits intended to be transferred or assigned under such Purchased Contract,
including, without limitation, the enforcement for the benefit of Purchaser and
at Purchaser's expense of any and all rights of Seller against a third party to
such Purchased Contract arising out of the breach by such third party or
otherwise (collectively, the
-20-
"Back-to-Back Arrangement"). Notwithstanding anything contained herein to the
contrary, Purchaser hereby agrees to reimburse Seller and its Affiliates for all
costs incurred following Closing by any of them under or in respect of any such
Purchased Contract that is not transferred and assigned by Seller to Purchaser
pursuant to Sections 1.01(a)(i)(B) and 1.01(b)(i)(A) hereof and indemnify Seller
and its Affiliates from and against any Losses suffered or incurred following
Closing by any of them under any such Purchased Contract that is not transferred
and assigned by Seller to Purchaser pursuant to Sections 1.01(a)(i)(B) and
1.01(b)(i)(A) hereof (other than Losses caused by breaches of any such Purchased
Contract, if any, resulting from acts or omissions of Seller or its Affiliates
prior to the Closing and product warranties or liabilities for repair or
replacement of, or refund for, damaged, defective or returned products, parts or
components sold prior to the Closing), including, without limitation, any such
costs or Losses arising out of the failure of Purchaser to supply conforming
products to or for any customer under such Purchased Contract; provided that:
(a) such reimbursement and indemnity obligations of Purchaser
with respect to any such costs or Losses under or in respect of any
PPAP Contract shall be limited to an amount equal to fifty percent
(50%) thereof, and
(b) such reimbursement and indemnity obligations of Purchaser
with respect to any such costs or Losses under any Non-PPAP Contract
resulting from a breach or violation of such Non-PPAP Contract caused
by the delegation or subcontracting (or purported delegation or
subcontracting) of Seller's obligations under such Non-PPAP Contract
pursuant to the Back-to-Back Arrangement (collectively, the "Non-PPAP
Losses") shall be limited to an amount equal to seventy-five percent
(75%) of such Non-PPAP Losses. Notwithstanding the foregoing, the
limitation on the reimbursement and indemnity obligations of Purchaser
in this subparagraph (b) shall terminate at such time as twenty-five
percent (25%) of the Non-PPAP Losses and the Losses suffered or
incurred by all Seller Protected Parties described in Section 10.03(d)
hereof total $500,000.00 in the aggregate, and such limitation shall
not apply with respect to any Non-PPAP Losses caused by the failure of
Purchaser to supply conforming products to any customer under any
Purchased Contract.
Immediately following the verbal notification of the PPAP Customers by
Seller and Purchaser as provided above, Purchaser shall, with cooperation of
Seller, seek the approval of Purchaser as a qualified supplier of magnet wire
products to such PPAP Customers and shall use reasonable commercial efforts to
obtain such approval as soon as possible, including, without limitation,
providing sample magnet wire products to such PPAP Customers.
Following Closing, Purchaser and Seller shall cooperate and take all
commercially reasonable actions necessary to avoid or minimize any claim by or
dispute with a customer under a Purchased Contract arising out of or related to
(a) the assignment or attempted assignment or the delegation or purported
delegation to Purchaser of such Purchased Contract, or the (b) interpretation
and construction of the terms and conditions of such Purchased Contract (a
"Customer Dispute"). Notwithstanding anything in this Agreement to the contrary,
Purchaser and Seller shall jointly direct and control the defense or prosecution
of, and any negotiations and discussions regarding, a Customer Dispute. Each of
Seller and Purchaser shall cooperate with and assist the other in resolving any
Customer Dispute and shall not, without the prior written
-21-
consent of the other, settle any Customer Dispute or have any discussions with
or provide any information to any third party in connection therewith.
Following Closing, Seller may elect to sell products to any PPAP
Customer under a PPAP Contract that is subject to the Back-to-Back Arrangement
if, in connection with the joint efforts of Seller and Purchaser to resolve a
Customer Dispute involving a PPAP Customer as provided above, Seller and
Purchaser mutually determine that such sales of products to such PPAP Customer
are necessary or prudent in order to resolve such Customer Dispute or otherwise
minimize a claim by such PPAP Customer against Seller or its Affiliates. If such
determination is made, at the request of Seller, Purchaser shall sell to Seller
items out of Purchased Inventory at the price paid by Purchaser for such items
pursuant to this Agreement to enable Seller to make the foregoing sales to such
PPAP Customer. The rights and obligations under this paragraph shall continue
with respect to each such PPAP Contract until such time as the obligations
thereunder terminate.
Section 7.06 No Right to Nexans Name.
Purchaser hereby acknowledges that following the Closing, Purchaser
shall not have any rights in the name "Nexans" or any Nexans trademark or logo
except as provided below. Notwithstanding the foregoing, Purchaser shall have
the right to sell any Purchased Inventory and, for a period of 180 days
following the Closing, Purchaser shall have the right to use any acquired
packaging materials, spools, reels or labels, in each case bearing the "Nexans"
name or logo at the time of Closing. Purchaser shall indemnify and hold harmless
Seller and its Affiliates from and against any Losses which such parties incur
as a result of any third party claim arising from the use of such items after
the Closing; provided, however, Purchaser shall have no obligation for Losses
incurred by Seller and its Affiliates which are attributable to the acts or
omissions of such parties.
Section 7.07 Public Announcements.
Except as provided in Section 7.05 hereof regarding the verbal
notification to the PPAP Customers by Seller and Purchaser, neither Seller, on
the one hand, nor Purchaser, on the other hand, nor any of their respective
Affiliates shall issue or cause the publication of any press release or other
internal or external announcement with respect to this Agreement or the
transactions contemplated herein or in the Related Agreements prior to the
Closing Date; provided, that if, due to a change in circumstances, either party
is required by applicable Law to issue a press release or external announcement
with respect to this Agreement or the transactions contemplated herein or in the
Related Agreements prior to the Closing Date, then the parties shall cooperate
with each other to prepare a mutually agreeable press release or external
announcement that satisfies the requirements of such Law. On the Closing Date,
the parties hereto shall issue mutually agreeable press releases with respect to
the transactions contemplated hereby. In the event that either party is required
to include this Agreement with (or a summary of the terms of this Agreement or
the transactions contemplated herein or in the Related Agreements) in any filing
with any Governmental Authority or other public disclosure, then such party
shall request, and shall use commercially reasonable efforts to obtain,
confidential treatment of the Schedules to this Agreement.
-22-
Section 7.08 Updating Schedules.
Seller shall update the Schedules to this Agreement provided by Seller
after the date hereof and prior to Closing (the "Update Period") to reflect
factors, circumstances or events first arising or, in the case of
representations given to the Knowledge of Seller, becoming known to Seller
during the Update Period by providing Purchaser with written notice setting
forth the proposed update and specifying the Schedule or Schedules to be updated
thereby. For purposes of determining the extent of any indemnification
obligations of Seller and Nexans under Section 10.02(a) for the falsity or
incorrectness of any representation or warranty of Seller, in or pursuant to
this Agreement, (a) the Schedules delivered by Seller shall be deemed to include
only the information contained therein on the date of this Agreement and (b) in
the case of any update to such Schedules, as provided above, prior to the
Closing, such Schedules shall be deemed to include such updated information if
Purchaser has accepted such update in writing in its sole discretion.
Section 7.09 Bulk Transfer Compliance.
Seller and Purchaser hereby waive compliance with the provisions of
Article 6 of the Uniform Commercial Code, entitled "Uniform Commercial Code -
Bulk Transfers" or comparable Laws relating to bulk transfers as adopted in the
various jurisdictions in which the Purchased Assets are located, to the extent
applicable to the transactions contemplated hereby (collectively, the "Bulk
Transfer Laws").
Section 7.10 Post Closing Payments.
In the event that Seller receives any payments relating to the
Purchased Contracts involving obligations to be performed on or after the
Closing by Purchaser, Seller shall immediately pay all of such amounts to
Purchaser. In the event that Purchaser receives any payments relating to the
Purchased Contracts involving obligations that were performed prior to the
Closing, including without limitation, accounts receivable arising before
closing, Purchaser shall immediately pay all of such amounts to Seller.
Section 7.11 Transition Services.
Seller agrees to provide, or cause to be provided, certain transitional
services after the Closing pursuant to a Transition Services Agreement in the
form attached hereto as Exhibit 7.11 (the "Transition Services Agreement").
Section 7.12 Further Assurances.
In addition to such actions as Seller and Nexans may otherwise be
required to take under this Agreement or applicable Law in order to consummate
the transactions contemplated hereby, Seller and Nexans shall take such action,
shall furnish such information, and shall prepare, or cooperate in preparing,
and execute and deliver such certificates, agreements and other instruments as
Purchaser may reasonably request from time to time before, at or after the
Closing, with respect to compliance with the obligations of Purchaser, Seller or
Nexans in connection with the consummation of the transactions contemplated
hereby.
-23-
Section 7.13 Stems and Reels.
Within ninety (90) days following the Closing Date, Purchaser shall
return to Seller's La Grange, Kentucky facility all stems and reels on which any
raw materials or work in process is delivered to Purchaser.
Section 7.14 Customer Rebate Matters.
Seller and Purchaser hereby agree to allocate responsibility for, and
to perform Seller's obligations in respect of, the customer rebates identified
on Schedule 3.07(e) in the manner outlined on Schedule 3.07(e).
Section 7.15 Removal of Raw Materials and Work in Process.
Seller and Purchaser hereby agree that, following the Closing Date,
Seller shall deliver, or cause to be delivered, all raw materials or work in
process constituting Purchased Inventory from Seller's La Grange, Kentucky
facility to Purchaser in the manner and to the destinations chosen by Purchaser,
and Purchaser shall reimburse Seller for costs incurred by Seller relating
thereto; provided that the costs to package and transport the enamels
constituting Purchased Inventory from Seller's La Grange, Kentucky facility to a
location in Indiana shall not exceed $ 25,000. Purchaser shall remit such
reimbursement to Seller with ten (10) days following delivery of the related
invoice(s) to Purchaser.
Section 7.16 Production Scheduling.
Commencing on the date hereof, Seller and Purchaser shall cooperate to
adjust their respective production schedules in a commercially reasonable manner
to accommodate a smooth transition of the Purchased Contracts from Seller to
Purchaser on the Closing Date.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PURCHASER
--------------------------------------
The obligations of Purchaser to consummate the transactions provided
for herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that
Purchaser may, in its absolute discretion, waive one or more thereof in writing
in whole or in part; provided, however, that any change or effect that results
from the public announcement of the transactions contemplated herein shall not
constitute a failure by Seller or Nexans to satisfy any of the conditions set
forth in this Article VIII:
Section 8.01 Accuracy of Representations and Warranties.
The representations and warranties of Seller contained herein and in
any certificate delivered pursuant hereto shall be true in all material respects
(except with respect to representations and warranties that contain materiality
or material adverse effect qualifiers, which representations and warranties
shall be true and correct in all respects) on and as of the
-24-
date hereof and as of the Closing Date with the same force and effect as if made
on and as of such date and the facts, circumstances or events disclosed in any
update provided under Section 7.08 shall not indicate a material adverse change
in the Purchased Assets and the Assumed Liabilities, taken as a whole, since the
date hereof.
Section 8.02 Performance of Agreements.
Each of Seller and Nexans shall have performed in all material respects
all obligations and agreements, and complied in all material respects with all
covenants, contained in this Agreement, to be performed and complied with by it
at or prior to the Closing Date.
Section 8.03 Deliveries by Seller.
Seller and Nexans shall have delivered to Purchaser those items
required by Section 2.02.
Section 8.04 No Adverse Proceedings.
No action, suit or proceeding by or before any Governmental Authority
shall have been commenced, no investigation by any Governmental Authority shall
have been commenced, and no action, suit or proceeding by or before any
Governmental Authority shall have been threatened, against any of the parties to
this Agreement, or any of the principals, officers or directors of any of them,
wherein an unfavorable judgment, order, decree, stipulation or injunction would
(a) prevent consummation of any of the transactions contemplated by this
Agreement, (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such judgment, order, decree,
stipulation, injunction, or charge shall be in effect), (c) require the
divestiture of any portion of the Assets or capital stock of Purchaser or impose
any condition on the consummation of the transactions contemplated hereby, (d)
impair the value of the Purchased Assets to Purchaser or (e) impair the ability
of any party to perform its obligations under this Agreement or any Related
Agreement.
Section 8.05 Qualified Supplier Approvals under PPAP Contracts.
At least four (4) Critical PPAP Customers shall have commenced the
approval procedure pursuant to which Purchaser shall be evaluated and qualified
as a supplier of magnet wire products to such customers.
Section 8.06 Other Assurances.
Seller shall have delivered, and shall have caused its Affiliates to
deliver, to Purchaser such other and further certificates, assurances and
documents as Purchaser may reasonably request in order to evidence the accuracy
of the representations and warranties of Seller, the performance of covenants
and agreements to be performed by Seller pursuant hereto at or prior to the
Closing, and the fulfillment of the conditions to the obligations of Purchaser.
-25-
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
The obligations of Seller to consummate the transactions provided for
herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that
Seller may, in its absolute discretion, waive one or more thereof in writing in
whole or in part:
Section 9.01 Accuracy of Representations and Warranties.
The representations and warranties of Purchaser contained herein and in
any certificate delivered pursuant hereto shall be true in all material respects
(except with respect to representations and warranties that contain materiality
or material adverse effect qualifiers, which representations and warranties
shall be true and correct in all respects) on and as of the date hereof and as
of the Closing Date with the same force and effect as if made on and as of such
date.
Section 9.02 Performance of Agreements.
Purchaser shall have performed in all material respects all obligations
and agreements, and complied in all material respects with all covenants,
contained in this Agreement, to be performed and complied with by Purchaser at
or prior to the Closing Date.
Section 9.03 Deliveries by Purchaser.
Purchaser shall have delivered to Seller those items required by
Section 2.03.
Section 9.04 No Adverse Proceedings.
No action, suit or proceeding by or before any Governmental Authority
shall have been commenced, no investigation by any Governmental Authority shall
have been commenced, and no action, suit or proceeding by or before any
Governmental Authority shall have been threatened, against any of the parties to
this Agreement, or any of the principals, officers or directors of any of them,
wherein an unfavorable judgment, order, decree, stipulation or injunction would
(a) prevent consummation of any of the transactions contemplated by this
Agreement, (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such judgment, order, decree,
stipulation, injunction, or charge shall be in effect) or (c) impair the ability
of any party to perform its obligations under this Agreement or any Related
Agreement.
Section 9.05 Qualified Supplier Approvals under PPAP Contracts.
At least four (4) Critical PPAP Customers shall have commenced the
approval procedure pursuant to which Purchaser shall be evaluated and qualified
as a supplier of magnet wire products to such customers.
-26-
Section 9.06 Other Assurances.
Purchaser shall have delivered, and shall have caused its Affiliates to
deliver, to Seller such other and further certificates, assurances and documents
as Seller may reasonably request in order to evidence the accuracy of the
representations and warranties of Purchaser, the performance of covenants and
agreements to be performed by Purchaser pursuant hereto at or prior to the
Closing, and the fulfillment of the conditions to the obligations of Seller.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
----------------------------
Section 10.01 Survival.
Subject to Section 10.08 hereof, the parties hereto agree that their
respective representations, warranties, covenants and agreements contained in
this Agreement shall survive the Closing, notwithstanding any investigation at
any time by or on behalf of any other party hereto.
Section 10.02 Indemnification by Seller and Nexans.
Subject to the other provisions of this Article X, following the
Closing, Seller and Nexans shall, jointly and severally, indemnify and hold
harmless Purchaser and its officers, directors, employees, consultants, agents
and Affiliates (the "Purchaser Protected Parties") from and against any and all
Losses suffered or incurred by a Purchaser Protected Party as a result of or
arising out of:
(a) the falsity or incorrectness of or breach of any representation or
warranty of Seller in or pursuant to this Agreement; or
(b) the failure by Seller to perform any covenant or agreement of
Seller under this Agreement; or
(c) Seller's noncompliance with the Bulk Transfer Laws, except to the
extent arising out of Purchasers' failure to pay, perform and discharge the
Assumed Liabilities as and when due; or
(d) any Excluded Liability (other than, for the avoidance of doubt, any
Excluded Liability giving rise to costs or Losses for which Purchaser is
obligated to indemnify Seller and Seller Protected Parties pursuant to the terms
of Sections 7.05 and 10.03(d)).
Section 10.03 Indemnification by Purchaser.
Subject to the other provisions of this Article X, following the
Closing, Purchaser shall indemnify and hold harmless Seller, Nexans and their
respective officers, directors, employees, consultants, agents and Affiliates
(the "Seller Protected Parties") from and against any and all Losses suffered or
incurred by a Seller Protected Party as a result of or arising out of:
-27-
(a) the falsity or incorrectness of or breach of any representation or
warranty of Purchaser in this Agreement; or
(b) the failure by Purchaser to perform any covenant or agreement of
Purchaser under this Agreement; or
(c) any Assumed Liability; or
(d) any and all liabilities or obligations under any Purchased Contract
arising out of any transfer or assignment or purported transfer or assignment of
such Purchased Contract pursuant to this Agreement, excluding any claim arising
out of any transfer or assignment or purported transfer or assignment of such
Purchased Contract based on the failure to take any action required to be taken
under such Purchased Contract but not disclosed by Seller to Purchaser pursuant
to Section 3.02(b).
Section 10.04 Method of Asserting Claims.
All claims for indemnification by any Indemnified Party under this
Article X shall be asserted and resolved as follows:
(a) Third Party Claims. If any claim or demand in respect of which an
Indemnified Party might seek indemnity under this Article X is asserted against
such Indemnified Party by a Person other than Seller or Purchaser (a "Third
Party Claim"), the Indemnified Party shall give written notice and the
reasonable details thereof including copies of all relevant pleadings, documents
and information (collectively a "Third Party Claim Notice") to the Indemnifying
Party within a period of thirty (30) days following the assertion of the Third
Party Claim against the Indemnified Party (the "Third Party Claim Notice
Period"). The failure by the Indemnified Party to provide the Third Party Claim
Notice within the Third Party Claim Notice Period shall not impair the
Indemnified Party's rights hereunder except to the extent that the Indemnifying
Party demonstrates that the Indemnifying Party's ability to defend Third Party
Claim has been irreparably prejudiced by such failure of the Indemnified Party.
The Indemnifying Party shall notify the Indemnified Party within a period of
thirty (30) days after its receipt of the Third Party Claim Notice (the "Third
Party Claim Response Period"):
(i) whether the Indemnifying Party disputes its liability (or
the amount thereof) to the Indemnified Party under this Article X with respect
to such Third Party Claim; and
(ii) whether the Indemnifying Party desires, at its sole cost
and expense, to defend the Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Third Party Claim Response Period that the Indemnifying Party desires to defend
the Indemnified Party against the Third Party Claim (irrespective of the notice,
or the content thereof, required by Section 10.04(a)(i) above), then the
Indemnifying Party at its sole cost and expense shall defend, with counsel
reasonably satisfactory to the Indemnified Party, such Third Party Claim by all
appropriate proceedings, which proceedings will be vigorously and diligently
prosecuted to a final conclusion or will be settled at the discretion of the
Indemnifying Party; provided that any
-28-
settlement shall include a full release of the Indemnified Party; and provided
further, that solely in the event that the settlement is a non-monetary
settlement, then the consent of the Indemnified Party to such settlement shall
be required, which consent shall not be unreasonably withheld or delayed. The
Indemnified Party may, at its sole cost and expense, at any time prior to the
Indemnifying Party's delivery of the notice referred to in the last sentence of
the preceding paragraph, file any pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate to protect
its interests. Upon either the request by the Indemnifying Party or the election
by the Indemnified Party, the Indemnified Party, at its expense, shall cooperate
and participate in, but not control, any defense or settlement of any Third
Party Claim conducted by the Indemnifying Party pursuant to this Section 10.04.
If the Indemnifying Party fails to notify the Indemnified Party within
the Third Party Claim Response Period that the Indemnifying Party desires to
defend the Third Party Claim or if the Indemnifying Party gives such notice but
fails to prosecute vigorously and diligently or settle the Third Party Claim
(irrespective of the notice, or the content thereof, required by Section
10.04(a)(i) above), then the Indemnified Party shall be entitled to defend or
promote the Third Party Claim including any settlement thereof (with the consent
of the Indemnifying Party, which shall not be unreasonably withheld). The
Indemnifying Party will, at its sole cost and expense, cooperate in such
defense. Notwithstanding the foregoing provisions of this Section 10.04(a), if
the Indemnifying Party is determined not to be required to indemnify for such
Third Party Claim pursuant to the last paragraph of this Section 10.04(a) and
Section 10.04(c), the Indemnifying Party will not be required to bear the costs
and expenses of the Indemnified Party's defense or the Indemnifying Party's
participation therein pursuant to this paragraph.
If the Indemnifying Party notifies the Indemnified Party that it does
not dispute its liability (or the amount thereof) to the Indemnified Party with
respect to the Third Party Claim under this Article X or fails to notify the
Indemnified Party within the Third Party Claim Response Period whether the
Indemnifying Party disputes its liability (or the amount thereof) to the
Indemnified Party with respect to such Third Party Claim (irrespective of the
notice, or the content thereof, required by Section 10.04(a)(ii) above), the
Losses in the amount specified in the Third Party Claim Notice in the amount
finally determined will be conclusively deemed a liability of the Indemnifying
Party under this Article X, and the Indemnifying Party shall pay the amount of
such Losses to the Indemnified Party on demand following the final determination
of the amount thereof. If the Indemnifying Party notifies the Indemnified Party
within the Third Party Claim Response Period that the Indemnifying Party
disputes its liability to the Indemnified Party with respect to such Third Party
Claim (irrespective of the notice, or the content thereof, required by Section
10.04(a)(ii) above), the Indemnifying Party and the Indemnified Party will
proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within a period of thirty (30) days from the date
of such notice, either party may resort to litigation in accordance with Section
10.04(c).
(b) Other Claims. In the event any Indemnified Party should have a
claim under this Article X against any Indemnifying Party that does not involve
a Third Party Claim, the Indemnified Party shall promptly give written notice
and the reasonable details thereof, including copies of all relevant information
and documents (collectively, an "Indemnity Notice"), to the Indemnifying Party
within a period of thirty (30) days following the discovery of the claim by the
Indemnified Party (the "Claim Notice Period"). The failure by any Indemnified
Party to give
-29-
the Indemnity Notice within the Claim Notice Period shall not impair the
Indemnified Party's rights hereunder except to the extent that an Indemnifying
Party demonstrates that it has been irreparably prejudiced thereby. The
Indemnifying Party shall notify the Indemnified Party within a period of thirty
(30) days after the receipt of the Indemnity Notice by the Indemnifying Party
(the "Indemnity Response Period") whether the Indemnifying Party disputes its
liability to the Indemnified Party under this Article X with respect to such
claim. If the Indemnifying Party notifies the Indemnified Party that it does not
dispute the claim described in such Indemnity Notice or fails to notify the
Indemnified Party within the Indemnity Response Period whether the Indemnifying
Party disputes the claim described in such Indemnity Notice, the Losses in the
amount specified in the Indemnity Notice in the amount finally determined, will
be conclusively deemed to be a liability of the Indemnifying Party under this
Article X and the Indemnifying Party shall pay the amount of such Losses to the
Indemnified Party on demand following the final determination of the amount
thereof. If the Indemnifying Party notifies the Indemnified Party within the
Indemnity Response Period that the Indemnifying Party disputes its liability
with respect to such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within a period of thirty (30) days from the date
of such notice, either party may resort to litigation in accordance with Section
10.04(c).
(c) Resolution of Disputes. Any dispute submitted to litigation
pursuant to this Section 10.04 shall be finally and conclusively determined by
litigation in a court of competent jurisdiction. Each party to this Agreement
agrees that the state and federal courts located in the State of Delaware shall
have exclusive jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in connection
with Article X of this Agreement and, for such purposes, irrevocably submits to
the jurisdiction of such courts. Purchaser agrees that the process by which any
suit, action or proceeding is begun may be served on it by being given to
Purchaser in accordance with Section 13.01, and Seller agrees that the process
by which any suit, action or proceeding is begun may be served on it by being
given to Seller in accordance with Section 13.01. Notwithstanding the foregoing,
any dispute regarding the Closing Statement shall be resolved exclusively in the
manner provided in Section 1.03.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATION IN THIS SECTION
10.04(c).
-30-
Section 10.05 Continued Liability for Indemnity Claims.
The liability of any Indemnifying Party hereunder with respect to
claims hereunder shall continue for so long as any claims for indemnification
may be made hereunder pursuant to Section 10.08 and, with respect to any such
indemnification claims duly and timely made, thereafter until the Indemnifying
Party's liability therefor is finally determined and satisfied.
Section 10.06 Limitations on Indemnification.
(a) Certain Types of Damages. Neither Seller, Nexans nor Purchaser, as
the case may be, shall be required to provide indemnification under this Article
X only for actual Losses and shall not be required to provide indemnification
for any incidental, consequential or punitive damages or loss of profits or
income.
(b) Aggregate Threshold Amount. No amount of indemnity shall be payable
in the case of a claim by Purchaser under Section 10.02(a) unless, until and
only to the extent that Purchaser has suffered or incurred Losses as a result of
or arising out of the matters described in such section in excess of $100,000.00
in the aggregate.
(c) Inventory Claims. No amount of indemnity shall be payable in the
case of a claim made by Purchaser under Section 10.02(a) with respect to any
breach or violation of the representations set forth in Section 3.06 for Losses
in excess of the Purchased Inventory Value related to the item or items of
Purchased Inventory which are the subject of such claim.
(d) Ceiling Amount. In no event shall the aggregate liability of Seller
and Nexans (taken as a whole) under Section 10.02(a) exceed twenty percent (20%)
of the Purchase Price, provided that such aggregate liability (taken as a whole)
under Section 10.02(a) shall not exceed the Purchase Price with respect to any
Losses arising from a breach by Seller of its representation set forth in
Section 3.07(b) hereof.
(e) Third Party Payments. The indemnification amount which an
Indemnified Party shall be entitled to receive from any Indemnifying Party with
respect to any Losses pursuant to this Article X shall be reduced by and net of
any recovery with respect to such Losses actually received by such Indemnified
Party from third parties (including insurance proceeds, counterclaims,
warranties, subrogation actions and the like).
(f) Losses Under Purchased Contracts. Any indemnity by Purchaser under
Section 10.03(d) hereof in respect of any PPAP Contracts shall be limited to
fifty percent (50%) of Losses suffered or incurred by the Seller Protected
Parties. The indemnity obligations of Purchaser under Section 10.03(d) hereof
with respect to any Losses under any Non-PPAP Contract resulting from a breach
or violation of such Non-PPAP Contract caused by the transfer or assignment (or
purported transfer or assignment) of such Non-PPAP Contract pursuant to this
Agreement shall be limited to an amount equal to seventy-five percent (75%) of
such Losses. Notwithstanding the foregoing, the limitation on the indemnity
obligations of Purchaser in the foregoing sentence shall terminate at such time
as twenty-five percent (25%) of the Non-PPAP Losses and the Losses suffered or
incurred by all Seller Protected Parties described in Section 10.03(d) hereof
total $500,000.00 in the aggregate, and such limitation shall not apply
-31-
with respect to any such Losses described in Section 10.03(d) caused by the
failure of Purchaser to supply conforming products to any customer under any
Purchased Contract.
Section 10.07 Exclusive Remedies.
If the Closing occurs, the remedies provided in this Article X
constitute the sole and exclusive remedies available to each party hereto for
recoveries against another party hereto for breaches or failures to comply with
or nonfulfillments of the representations, warranties, covenants and agreements
in this Agreement or in the Exhibits and Schedules hereto, except that nothing
in this Agreement shall limit the right of any party to pursue any appropriate
remedy at equity including, without limitation, with respect to the covenants of
Seller and Nexans set forth in Sections 6.01 and 6.02 of this Agreement, and,
provided further, that nothing in this Agreement shall limit any remedy
available to any party based upon fraud of any other party in connection with
this Agreement.
Section 10.08 Time Limits on Certain Claims.
Notwithstanding anything in this Agreement to the contrary, a claim by
any Indemnified Party under this Article X with respect to the breach or
violation of a representation or warranty may be made only if asserted within
eighteen (18) months following the Closing Date with the exception that any
claim for a breach or violation of Seller's representation or warranty of good
title to the Purchased Inventory under Section 3.06 hereof, and any claim with
respect to the breach or violation of a covenant or agreement, shall expire upon
the expiration of the applicable statute of limitations under applicable Laws
relating thereto. Notwithstanding anything in this Agreement to the contrary,
any claim not made within the foregoing relevant time period shall expire and be
forever barred.
Section 10.09 Specific Performance.
Each of the parties hereto acknowledges that the rights of each other
party to consummate the transactions contemplated by this Agreement are special,
unique and of extraordinary character and that, in the event that a party
violates or fails and refuses to perform any covenant or agreement made by it in
this Agreement, then each other party may be without an adequate remedy at Law.
Each party agrees, therefore, that in the event it violates or fails and refuses
to perform any covenant or agreement made by it in this Agreement, each other
party may, in addition to any remedies hereunder for damages or other relief,
institute and prosecute an action in the court specified in Section 10.04(c)
hereof to enforce specific performance of such covenant or agreement or seek any
other equitable relief.
Section 10.10 Adjustments to the Purchase Price.
All amounts paid pursuant to this Article X by Seller to Purchaser or
by Purchaser to Seller, as the case may be, shall be treated by such parties as
an adjustment to the Purchase Price, to the extent permitted by Law.
-32-
Section 10.11 Set-off.
Purchaser and Seller shall each be entitled to set-off any amount or
right it may be entitled to hereunder against any amount, right or obligation
owed to the other party under this Agreement or any agreement entered into in
connection herewith.
ARTICLE XI
TERMINATION
-----------
Section 11.01 General.
This Agreement may be terminated and the Closing abandoned at any time
prior to the Closing:
(a) by mutual agreement of Purchaser and Seller;
(b) by Seller, if Seller is not in breach in any material respect of
any of its representations, warranties, covenants and agreements in this
Agreement and if the Closing has not occurred on or prior to September 11, 2004;
(c) by Purchaser, if Purchaser is not in breach in any material respect
of any of its representations, warranties, covenants and agreements in this
Agreement and if the Closing has not occurred on or prior to September 11, 2004;
(d) by Seller if Purchaser shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement that would give rise to the failure of a condition set forth in
Article IX, which breach cannot be or has not been cured within thirty (30) days
after the giving of written notice by Seller to Purchaser specifying such
breach; provided that Seller may not terminate this Agreement pursuant to this
Section 11.01(d) at any time when Seller is in material breach of this
Agreement; or
(e) by Purchaser if Seller or Nexans shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement that would give rise to the failure of a condition set forth in
Article VIII, which breach cannot be or has not been cured within thirty (30)
days after the giving of written notice by Purchaser to Seller specifying such
breach; provided that Purchaser may not terminate this Agreement pursuant to
this Section 11.01(e) at any time when Purchaser is in material breach of this
Agreement.
Section 11.02 Continuing Obligations on Termination.
The continuing liability of the parties to this Agreement with respect
to any breach or nonperformance of any representation, warranty, covenant or
agreement contained in this Agreement shall not be affected by such termination
or abandonment, unless this Agreement is terminated or abandoned by agreement of
the parties pursuant to Section 11.01(a) of this Agreement.
-33-
ARTICLE XII
DEFINITIONS
-----------
Section 12.01 Definitions.
As used in this Agreement, the following defined terms have the
meanings indicated below:
"Accountant" shall have the meaning set forth in Section 1.03(c).
"Acquiror" shall have the meaning set forth in Section 6.03(a)(ii).
"Acquired Business" shall have the meaning set forth in Section
6.03(a)(ii).
"Acquired Business Purchase Price" shall have the meaning set forth in
Section 6.03(a)(ii).
"Affiliate" shall mean any Person that directly, or indirectly,
controls or is controlled by or is under common control with the Person
specified. For purposes of this definition, control of a Person means the power,
direct or indirect, to direct or cause the direction of the management and
policies of such Person whether by Contract or otherwise and, in any event and
without limitation of the previous sentence, any Person owning fifty percent
(50%) or more of the voting securities of another Person shall be deemed to
control that Person.
"Agreement" shall have the meaning set forth in the introduction.
"Assets" of any Person means all assets, properties, rights and
privileges of every kind and nature (whether real, personal or mixed, whether
tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise, whether or not carried on the books and records of such Person, and
wherever located), including the goodwill related thereto, owned, licensed or
leased by such Person.
"Assumed Liabilities" shall have the meaning set forth in Section
1.01(b)(i).
"Assignment and Assumption Agreement" shall have the meaning set forth
in Section 2.02(c).
"Back-to-Back Arrangement" shall have the meaning set forth in Section
7.05.
"Bills of Sale" shall have the meaning set forth in Section 2.02(c).
"Bulk Transfer Laws" shall have the meaning set forth in Section 7.09.
"Business" shall have the meaning set forth in the recitals.
"Business Day" shall mean a day (other than Saturday or Sunday) on
which banks are generally open in the State of New York, USA for ordinary
business.
-34-
"Claim Notice Period" shall have the meaning set forth in Section
10.04(b).
"Closing" shall have the meaning set forth in Section 2.01.
"Closing Date" shall have the meaning set forth in Section 2.01.
"Closing Date Interest Rate" means the rate of interest (rounded
upwards, if necessary to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the three (3) month London interbank offered rate for deposits in
dollars at approximately 11:00 a.m. (London time) on the Closing Date plus 1.0%;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the average of all such rates (rounded
upwards, if necessary, to the nearest 1/100 of 1%) plus 1.0%. If for any reason
such rate is not available, the term "Closing Date Interest Rate" shall mean the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the three (3) month
London interbank offered rate for deposits in dollars at approximately 11:00
a.m. (London time) on the Closing Date plus 1.0%.
"Closing Payment" shall have the meaning set forth in Section 1.02(b).
"Closing Statement" shall have the meaning set forth in Section
1.03(a).
"Competing Portion" shall have the meaning set forth in Section
6.03(a)(ii).
"Competing Portion Value" shall have the meaning set forth in Section
6.03(a)(ii).
"Competitive Business" shall have the meaning set forth in Section
6.01.
"Contract" shall mean all written or oral contracts, agreements,
license agreements, sublicenses, assignments, purchase agreements, purchase
orders, sales orders, offers to sell, distribution agreements, rights to
discounts, and rights under any of the foregoing.
"Critical PPAP Customers" shall mean the following PPAP Customers: Borg
Warner, CME, Delphi, Fasco - ▇▇▇▇▇ Rapids, Mitsubishi - ▇▇▇▇▇, Toyota, Valeo and
Wabash Tech.
"Customer Dispute" shall have the meaning set forth in Section 7.05.
"Excluded Liabilities" shall have the meaning set forth in Section
1.01(b)(ii).
"First Appraisal Value" shall have the meaning set forth in Section
6.03(a)(ii).
"Forward Copper Buy Arrangement" shall have the meaning set forth in
Section 7.04(a).
"Governmental Authority" shall mean any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any other country or any domestic or foreign state, province, county,
city or other political subdivision.
"Indemnified Party" shall mean any Person claiming indemnification
under any provision of Article X.
-35-
"Indemnifying Party" shall mean any Person against whom a claim for
indemnification is being asserted under any provision of Article X.
"Indemnity Notice" shall have the meaning set forth in Section
10.04(b).
"Indemnity Response Period" shall have the meaning set forth in Section
10.04(b).
"Inventory" shall mean with respect to a Person all inventories of raw
materials (including, without limitation, raw materials in transit to such
Person and enamels in drums or bulk storage, but excluding packaging, reels,
oils and lubricants), work in process (to the extent spooled or on stems and
transportable) and finished goods used or held for use by such Person, including
consignment inventory.
"Inventory Accounting Policies" shall have the meaning set forth in
Section 1.03.
"Knowledge of Seller" shall each mean the actual (and not constructive
or imputed) knowledge of the following persons: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Vice President
and General Manager of Magnet Wire North America), ▇▇▇▇▇ ▇▇▇ (Chief Financial
Officer, Nexans North America), ▇▇▇▇▇ ▇▇▇▇ (Vice President and General Counsel,
Nexans North America) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (Directeur Juridique, Nexans) and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ (President, Nexans North America).
"Law" or "Laws" shall mean any and all laws, statutes, rules,
regulations, ordinances and other pronouncements having the effect of law of the
United States, any foreign country or any domestic or foreign state, province,
county, city, municipality or other political subdivision or of any Governmental
Authority.
"Licenses" shall mean all licenses, permits, certificates of authority,
certificates of approval, variances, authorizations, approvals, registrations,
franchises and similar consents granted or issued by any Governmental Authority
or third party.
"Liens" shall mean any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or any conditional sale Contract, title
retention Contract or other Contract to give any of the foregoing.
"Losses" shall mean any and all claims, damages, fines, costs, fees,
penalties, deficiencies, losses, judgments, amounts paid in settlement and
expenses (including interest, court costs, reasonable fees of attorneys,
accountants, consultants and other experts or other expenses of litigation or
other proceedings or of any claim, default or assessment).
"Mitsubishi Arrangement" shall have the meaning set forth in Section
7.04(b).
"Montreal Facility" shall have the meaning set forth in Section 7.02.
"Nexans," "Nexans US" and "Nexans Canada" shall each have the meaning
set forth in the introduction.
"Non -PPAP Contract" shall mean any Purchased Contract that is not a
PPAP Contract.
"Notice" shall have the meaning set forth in Section 6.03(a)(ii).
-36-
"Notice Period" shall have the meaning set forth in Section
6.03(a)(ii).
"Non-PPAP Losses" have the meaning set forth in Section 7.05.
"Objection Notice" shall have the meaning set forth in Section
6.03(a)(ii).
"Operating Document" shall mean with respect to any corporation, public
limited company, limited company, limited liability company, partnership, or
other legally authorized incorporated or unincorporated entity, the bylaws,
operating agreement, partnership agreement, or other applicable documents
relating to the operation, governance or management of such entity.
"Order" shall mean any writ, judgment, decree, injunction or similar
order, directive or other requirement of any Governmental Authority (in each
such case whether preliminary or final).
"Ordinary Course of Business" shall mean the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Organizational Document" shall mean with respect to any corporation,
public limited company, limited company, limited liability company, partnership,
or other legally authorized incorporated or unincorporated entity, the articles
of incorporation, certificate of incorporation, articles of organization,
articles of association or other applicable organizational or charter documents
relating to the creation of such entity.
"Permitted Lien" shall mean (i) any Lien for taxes not yet due, and
(ii) any statutory Lien arising in the Ordinary Course of Business by operation
of Law with respect to a liability that is not yet due or delinquent.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, limited liability company,
joint venture, other business organization, trust, union, association or
Governmental Authority.
"PPAP Contract" shall mean the Purchased Contracts relating to the
customers of Seller for whom the column in Schedule 1.01(a)(i)(B)(2) entitled
"Other Contract Documentation (Other than Purchase Orders)" specifically states
that "PPAP in place" for such customer.
"PPAP Customer" shall the meaning set forth in Section 7.05.
"Products" shall mean enamel insulated only, single strand round and
square copper and aluminum magnet wire, in sizes ranging from 2-32 awg.
"Provisional Inventory Value" shall have the meaning set forth in
Section 1.02(a).
"Purchase Price" shall have the meaning set forth in Section 1.02(a).
"Purchase Price" shall have the meaning set forth in Section 1.02(a).
"Purchased Assets" shall have the meaning set forth in Section
1.01(a)(i).
-37-
"Purchased Contracts" shall have the meaning set forth in Section
1.01(a)(i)(B).
"Purchased Inventory" shall have the meaning set forth in Section
1.01(a)(i)(A).
"Purchased Inventory Value" shall mean the book value of the Purchased
Inventory of Seller as of the Closing Date determined in accordance with the
Inventory Accounting Policies.
"Purchaser" shall have the meaning set forth in the introduction.
"Purchaser Protected Parties" shall have the meaning set forth in
Section 10.02.
"Related Agreements" shall mean the Transitional Services Agreement.
"Review Period" shall have the meaning set forth in Section 1.03(c).
"Second Appraisal Value" shall have the meaning set forth in Section
6.03(a)(ii).
"Seller" shall have the meaning set forth in the introduction.
"Seller Protected Parties" shall have the meaning set forth in Section
10.03.
"Straddle Period Liabilities" shall have the meaning set forth in
Section 1.04.
"Territory" shall have the meaning set forth in the introduction.
"Third Appraisal Value" shall have the meaning set forth in Section
6.03(a)(ii).
"Third Party Appraiser" shall have the meaning set forth in Section
6.03(a)(ii).
"Third Party Claim" shall have the meaning set forth in Section
10.04(a).
"Third Party Claim Notice" shall have the meaning set forth in Section
10.04(a).
"Third Party Claim Notice Period" shall have the meaning set forth in
Section 10.04(a).
"Third Party Claim Response Period" shall have the meaning set forth in
Section 10.04(a).
"Transition Services Agreements" shall have the meaning set forth in
Section 7.11.
"Tolling Arrangement" shall mean the copper tolling arrangements
entered into by Seller, Nexans Canada or any of their Affiliates (including any
such arrangements between Nexans Canada and one of its Affiliates) in relation
to the Purchased Contracts.
"Update Period" shall have the meaning set forth in Section 7.08.
Section 12.02 Interpretation.
(a) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
-38-
(b) Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof," "herein," "hereto" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, recitals, paragraph, exhibit and schedule references are to
the articles, sections, recitals, paragraphs, exhibits and schedules of this
Agreement unless otherwise specified.
(d) The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term, and words
denoting any gender shall include all genders. Where a word or phrase is defined
herein, each of its other grammatical forms shall have a corresponding meaning.
(e) A reference to any party or to any party to any other Contract or
document shall include such party's successors and permitted assigns. A
reference to a Contract shall include all amendments and modifications thereto.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-enactment
thereof, any legislative provision substituted therefore and all rules,
regulations and statutory instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
ARTICLE XIII
MISCELLANEOUS
-------------
Section 13.01 Notices.
All notices, requests and other communications hereunder shall be in
writing and will be deemed to have been duly given (a) when personally
delivered, (b) when sent by telefax to a party at the number listed below for
such party, (c) three (3) days after the day on which the same has been
delivered prepaid to a national (only in the case of notices within the
continental United States) or an international courier service or (d) five (5)
days after the deposit in the United States mail, registered or certified,
return receipt requested, postage prepaid, in each case addressed to the party
to whom such notice is to be given at the following address for such party:
If to Purchaser: Essex Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
and Chief Financial
-39-
Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: Essex Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President,
General Counsel and
Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller or Nexans Canada Inc.
Nexans: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: Nexans
▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Facsimile No.: 011 331 56 69 86 36
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Directeur Juridique
With copy to: Nexans Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, General
Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 28202-4003
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
Section 13.02 Fees and Expenses.
Subject to the provisions of Sections 1.03(c) and 6.03(a)(ii) with
respect to the fees paid to the Accountant and the Third Party Appraiser,
respectively, Seller, Nexans and Purchaser shall each bear their own expenses in
connection with the negotiation and preparation of this Agreement, all documents
and instruments contemplated hereby, the Related Agreements and the consummation
of the transactions contemplated hereby, including the fees and expenses of
their respective counsel, accountants, investment bankers and consultants;
provided that Purchaser shall pay for any sales and transfer taxes payable as a
result of the transactions contemplated hereby (including the transfer of the
Purchased Assets by Seller to Purchaser).
Section 13.03 Entire Agreement.
This Agreement supersedes all prior discussions and agreements among
the parties with respect to the subject matter hereof and together with the
Exhibits and Schedules hereto contains the sole and entire agreement among the
parties hereto with respect to the subject matter hereof.
Section 13.04 Waiver; Remedies.
Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition. No waiver by any party of any term
or condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.
Section 13.05 Amendment.
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.
Section 13.06 Benefits and Binding Effect.
Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent of the
other parties hereto and any attempt to do so will be void, except that
Purchaser may transfer or assign its rights hereunder or under any agreement
entered into in connection herewith to any Person which acquires all or
substantially all of Purchaser's magnet wire business in the United States,
provided that such person specifically assumes all obligations of Purchaser
hereunder, but no such transfer or assignment
-41-
shall relieve Purchaser of its obligations hereunder or thereunder. Subject to
the preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns.
Section 13.07 Captions.
The captions used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
Section 13.08 Exhibits and Schedules.
All Exhibits and Schedules referred to in this Agreement, all
attachments to Exhibits or Schedules, and any other attachment to this Agreement
are hereby incorporated by reference into this Agreement and hereby are made a
part of this Agreement as if set out in full herein.
Section 13.09 Governing Law.
This Agreement shall be governed by and construed in accordance with
the Laws of the State of Delaware applicable to a contract executed and
performed in such State, without giving effect to the conflicts of laws
principles thereof.
Section 13.10 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
Section 13.11 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 13.12 No Third Party Beneficiary.
Except as expressly provided herein, this Agreement shall not confer
any rights or remedies upon any person or entity other than the parties hereto
and their respective successors and permitted assigns.
Section 13.13 Currency.
All payments due or contemplated hereunder shall be calculated and paid
in the currency of the United States of America.
-42-
[Remainder of Page Intentionally Left Blank.]
-43-
IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the date first above written.
SELLER:
-------
NEXANS MAGNET WIRE USA INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
NEXANS:
-------
NEXANS CANADA INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
NEXANS USA INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PURCHASER:
----------
ESSEX GROUP, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
-44-
Schedules and Exhibits
----------------------
Schedule 1.01(a)(i)(A)(1) Purchased Inventory
Schedule 1.01(a)(i)(A)(2) Excluded Inventory
Schedule 1.01(a)(i)(B)(1) Excluded Contracts
Schedule 1.01(a)(i)(B)(2) Purchased Contracts (Summaries and Sample Purchase
Orders / Releases)
Schedule 1.03 Inventory Accounting Policies and June 25, 2004
Inventory
Schedule 3.06(1) Estimate of Customer Inventory as of August 24, 2004
Schedule 3.06(2) Location of Inventory as of August 24, 2004
Schedule 3.07(d) Products under Purchased Contracts
Schedule 3.07(e) Customer Rebate Programs
Schedule 3.09(b) Product Returns Under Purchased Contracts
Schedule 3.10 Absence of Certain Changes
Schedule 7.04(a) Forward Copper Buy Arrangements as of August 20, 2004
Schedule 7.04(b) Mitsubishi Arrangement
Exhibit 2.02(a) Seller's Secretary's Certificate
Exhibit 2.02(b) Seller's Bringdown Certificate
Exhibit 2.02(c)(1) Assignment and Assumption Agreement
Exhibit 2.02(c)(2) ▇▇▇▇ of Sale
Exhibit 2.02(e) Certificate for Delivery and Receipt of Purchased
Contracts
Exhibit 2.03(b) Purchaser's Secretary's Certificate
Exhibit 2.03(c) Purchaser's Bringdown Certificate
Exhibit 7.11 Transition Services Agreement