**Exhibit 2.3**

 

EXECUTION COPY

 

 

CONTRIBUTIONAND FORMATION AGREEMENT

 

AMONG

 

SUPERIOR ESSEXINC.

 

ESSEX GROUP,INC.

 

NEXANS

 

NEXANSPARTICIPATIONS

 

NEXANS WIRES

 

and

 

LACROIX &KRESS GMBH

 

Dated as ofJuly 27, 2005

 

 

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TABLE OFCONTENTS

 
| ARTICLE I   |   | DEFINITIONS                                                           |   |
|-------------|--------|-----------------------------------------------------------------------|--------|
| 1.1         |   | Certain Definitions                                                   |   |
| 1.2         |   | Other Defined Terms                                                   |   |
| 1.3         |   | Other Definitional Provisions                                         |   |
| 1.4         |   | US GAAP Financial Statements                                          |   |
|        |   |                                                                  |   |
| ARTICLE II  |   | CONTRIBUTIONS AND CLOSING TRANSACTIONS                                |   |
| 2.1         |   | Pre-Closing Transactions                                              |   |
| 2.2         |   | Transactions to be completed at Closing                               |   |
| 2.3         |   | Closing and Other Indebtedness; Affiliate  Payables                   |   |
| 2.4         |   | Closing                                                               |   |
| 2.5         |   | Closing Deliveries                                                    |   |
| 2.6         |   | Capital  Employed                                                     |   |
| 2.7         |   | Additional Adjustments                                                |   |
| 2.8         |   | Payments                                                              |   |
|        |   |                                                                  |   |
| ARTICLE III |   | REPRESENTATIONS AND WARRANTIES                                        |   |
| 3.1         |   | Representations and Warranties of Nexans                              |   |
| 3.2         |   | Representations and Warranties of the Essex  Parties                  |   |
|        |   |                                                                  |   |
| ARTICLE IV  |   | CERTAIN COVENANTS AND AGREEMENTS OF THE PARTIES                       |   |
| 4.1         |   | Access and Information                                                |   |
| 4.2         |   | Conduct of Business                                                   |   |
| 4.3         |   | Registrations, Filings and Consents                                   |   |
| 4.4         |   | Taxes                                                                 |   |
| 4.5         |   | Control of Operations                                                 |   |
| 4.6         |   | Further Assurances                                                    |   |
| 4.7         |   | Nexans Italy                                                          |   |
| 4.8         |   | Non-Assertion of Claims                                               |   |
| 4.9         |   | Certain Intercompany Payables                                         |   |
| 4.10        |   | French Spinoff/German Restructuring                                   |   |
| 4.11        |   | Product Liability Insurance                                           |   |
| 4.12        |   | Copper Obligations                                                    |   |
| 4.13        |   | Superior 8-K Requirement                                              |   |
| 4.14        |   | Employment Information                                                |   |
|        |   |                                                                  |   |
| ARTICLE V   |   | CONDITIONS TO CLOSING                                                 |   |
| 5.1         |   | Conditions to Each Party’s Obligation to  Effect the Transaction |   |

 

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| 5.2          |   | Conditions to Obligations of Essex                                 |   |
|--------------|--------|--------------------------------------------------------------------|--------|
| 5.3          |   | Conditions to Obligations of Nexans                                |   |
|         |   |                                                               |   |
| ARTICLE VI   |   | TERMINATION                                                        |   |
| 6.1          |   | Termination                                                        |   |
| 6.2          |   | Effect of Termination                                              |   |
|         |   |                                                               |   |
| ARTICLE VII  |   | SURVIVAL AND INDEMNIFICATION                                       |   |
| 7.1          |   | Survival of Representations, Warranties,  Covenants and Agreements |   |
| 7.2          |   | Indemnification by Nexans                                          |   |
| 7.3          |   | Indemnification by Essex                                           |   |
| 7.4          |   | Indemnification as Sole Remedy; Specific  Performance              |   |
| 7.5          |   | Method of Asserting Claims, Etc                                    |   |
| 7.6          |   | Calculation of Losses                                              |   |
| 7.7          |   | Assignment of Claims                                               |   |
| 7.8          |   | Mitigation                                                         |   |
| 7.9          |   | Consequential Damages                                              |   |
|         |   |                                                               |   |
| ARTICLE VIII |   | MISCELLANEOUS                                                      |   |
| 8.1          |   | Entire Agreement; Amendment and Waiver                             |   |
| 8.2          |   | Expenses                                                           |   |
| 8.3          |   | Public Disclosure                                                  |   |
| 8.4          |   | Assignment                                                         |   |
| 8.5          |   | Fulfillment of Obligations                                         |   |
| 8.6          |   | Third Party Beneficiaries                                          |   |
| 8.7          |   | Reserved                                                           |   |
| 8.8          |   | Section Headings                                                   |   |
| 8.9          |   | Notices                                                            |   |
| 8.10         |   | Governing Law                                                      |   |
| 8.11         |   | Dispute Resolution                                                 |   |
| 8.12         |   | Severability                                                       |   |
| 8.13         |   | Parent Guarantees                                                  |   |

 

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LIST OFEXHIBITS

 
| 1.1.1     | List of  Ancillary Documents                                   |
|-----------|----------------------------------------------------------------|
| 1.1.2     | Bramsche  Real Estate Agreement                                |
| 1.1.3     | Joint  Venture Business Plan                                   |
| 1.1.4     | Chauny Lease                                                   |
| 1.1.5     | Chauny  Option                                                 |
| 1.1.6     | Confidentiality  Agreement (Essex, Nexans, JV Holding Company) |
| 1.1.7     | Copper Scrap  Agreement                                        |
| 1.1.8     | Copper  Wirerod Agreement                                      |
| 1.1.9     | Calculation  of EBITDA                                         |
| 1.1.10    | Reserved                                                       |
| 1.1.11    | French  Predrawn Copper Wires Agreement                        |
| 1.1.12    | French  Services Agreement                                     |
| 1.1.13    | German  Predrawn Copper Wires Agreement                        |
| 1.1.14    | German  Services Agreement                                     |
| 1.1.15(a) | Nexans  Trademark License Agreement                            |
| 1.1.15(b) | Essex  Trademark License Agreement (product mark)              |
| 1.1.15(c) | Superior  Trademark License Agreement (“brand”)      |
| 1.1.15(d) | Trademark  License Agreement (Canada)                          |
| 1.1.15(e) | L&K  Patent License Agreement                              |
| 1.1.15(f) | Patent  License Agreement (China)                              |
| 1.1.15(g) | Patent  License Agreement (Canada)                             |
| 1.1.15(h) | Patent  License Agreement (Canada) – German Newco         |
| 1.1.15(i) | Patent  Cross-License Agreement                                |
| 1.1.15(j) | R&D  Services Agreement                                    |
| 1.1.15(k) | Trademark  Assignment Agreement                                |
| 1.1.15(l) | Intellectual  Property Assignment Agreement                    |
| 1.1.15(m) | GRA  Termination Agreement                                     |
| 1.1.16    | Reserved                                                       |
| 1.1.17    | Reserved                                                       |
| 1.1.18    | Management  Services Agreement                                 |
| 1.1.19    | Nexans  Material Required Consents                             |
| 1.1.20    | Nexans  Statement of Capital Employed                          |
| 1.1.21    | Nexans  Statement of Operating Income                          |
| 1.1.22    | Normanton  Lease                                               |
| 1.1.23    | Reserved                                                       |
| 1.1.24    | Reserved                                                       |
| 1.1.25    | Shareholders  Agreement (Essex, Nexans, JV Holding Company)    |
| 1.1.26    | UK Services  Agreement                                         |
| 1.4       | Accounting  Principles and Practices (U.S.)                    |
| 2.2.6     | Subordinated  Note (€11,300,000)                          |
| 2.2.7     | Purchased  Assets – Real Property                         |
| 2.6.4     | Capital  Employed Note                                         |
| 3.1.28    | French  Spin-Off Agreement                                     |
| 3.1.29    | German  Transfer Agreement                                     |

 

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| 4.7      | Equipment to  be Purchased                          |
|----------|-----------------------------------------------------|
| 5.1.3    | Credit  Facility                                    |
| 5.1.4(a) | Description  of Lender Consents                     |
| 5.1.4(b) | Description  of Bondholder Consents                 |
| 5.1.5    | Amended JV  Holding Company Charter Documents       |
| 5.2.6    | Resignations  – list of directors and managers |
| 5.2.8(a) | Form of  Evidence of Contract Termination           |
| 5.2.8(b) | List of  Contracts to be Terminated                 |
| 7.2.1    | Specific  Indemnification (Nexans)                  |

 

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THISCONTRIBUTION AND FORMATION AGREEMENT, dated as of July 27, 2005, is made andentered into by and between Superior Essex Inc., a Delaware corporation (“Superior”),Essex Group, Inc., a Michigan corporation (“Essex”), Nexans, a Frenchsociété anonyme (“Nexans”), Nexans Participations, a French sociétéanonyme (“Participations”), Nexans Wires, a French société par actionssimplifiée (“Nexans Wires”), and Lacroix & Kress GmbH, a privatelimited company organized under the laws of Germany (“L&K”).

 

WHEREAS,Nexans and Essex desire to enter into a joint venture for the purpose ofmanufacturing, developing, selling and distributing winding wire, enamel,varnishes and related products;

 

WHEREAS, thejoint venture will be conducted through a société par actions simplifée formedunder the laws of France (the “JV Holding Company”) and one or moreSubsidiaries (the JV Holding Company and the Subsidiaries thereof beingreferred to as the “Joint Venture”); and

 

WHEREAS, theparties are entering into this Agreement to set forth their agreement as to thecreation of the Joint Venture, the contribution of certain businesses and assetsto the Joint Venture, and the conditions to such contributions;

 

NOW,THEREFORE, in consideration of the premises and the mutual representations,warranties, covenants and undertakings contained herein, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:

 

ARTICLE IDEFINITIONS 

 

1.1                                 CertainDefinitions.  As used in thisAgreement, the following terms shall have the respective meanings set forthbelow:

 

“AdjustedEBITDA”  shall mean EBITDA, asadjusted by adding, without duplication, (1) pre-tax Nexans FacilityRestructuring Costs in an amount no greater than the Nexans FacilityRestructuring Cost Limit, (2) actual pre-tax external costs of measures takenat the level of the Joint Venture to facilitate compliance by Superior with theSarbanes-Oxley Act of 2002 in an amount not to exceed €250,000 per year, (3)any amounts paid by the Joint Venture pursuant to Section 4.7, (4) any feespayable by the Joint Venture under the Management Services Agreement (orotherwise paid to Essex or one of its Affiliates for similar services) over€1,000,000 per year (without taking into account any reimbursement of externalcosts paid in accordance with the Management Services Agreement), and (5) thePurchase Accounting Adjustment Amount. The foregoing amounts shall be added back to EBITDA in the period orperiods during which and to the extent they are charged against net income ofthe Joint Venture.  For the avoidance ofdoubt, any charges that are added to net income in the calculation of EBITDAshall not be added a second time in the calculation of Adjusted EBITDA.

 

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“Affiliates”shall mean with respect to any Person, any Person directly or indirectlyControlling, Controlled by, or under common Control with such other Person atany time during the period for which the determination of affiliation is beingmade.

 

“Agreement”shall mean this Contribution and Formation Agreement, the Schedules, and theExhibits hereto, as the same may be amended or supplemented from time to timein accordance with the terms hereof.

 

“Ancillary Documents”shall mean, collectively, the contracts and documents set forth on Exhibit1.1.1, and the documents to be delivered pursuant to Section 2.5.

 

“ApplicableBenefit Laws” means all Laws applicable to the Nexans German Benefit Planor Essex Benefit Plan, as the case may be.

 

“BramscheReal Estate Agreement” shall mean the real estate transfer and leaseagreements in the form attached hereto as Exhibit 1.1.2.

 

“BusinessDay” shall mean any day other than a Saturday, a Sunday or a day on whichbanks in New York City or Paris, France are authorized or obligated by law orexecutive order to close.

 

“BusinessPlan” shall mean the business plan for the Joint Venture attached as Exhibit1.1.3.

 

“CashConsideration” shall mean an amount equal to (a) €16.54 million plus(b) €34.8 million, plus (c) €11.3 million, less (d) Nexans ClosingIndebtedness (if any) to be paid to Nexans or its Affiliates at Closingpursuant to Section 2.3.3 (net of any amounts to be paid by Nexans or itsAffiliates at Closing pursuant to Section 2.3.4).

 

“CharterDocuments” shall mean collectively, with respect to each Entity, asapplicable, the articles of incorporation, memorandum and articles ofassociation, bylaws or similar constituent documents of such Entity.

 

“ChaunyLease”  shall mean the lease in theform attached hereto as Exhibit 1.1.4, which in no circumstance shallhave a term ending prior to October****1, 2009.

 

“ChaunyOption” shall mean the option to purchase real property in the formattached hereto as Exhibit 1.1.5**.**

 

“CompetitionLaws” means all Laws that are designed or intended to prohibit, restrict orregulate actions having the purpose or effect of monopolization, lessening orcompetition through merger or acquisition or restraint of trade.

 

**“**ConfidentialityAgreement” shall mean the Master Confidentiality Agreement among Essex,Nexans, the JV Holding Company and the other parties thereto in the formattached hereto as Exhibit 1.1.6.

 

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“Contracts”shall mean all binding contracts, leases and subleases, purchase orders,quotations and pricing arrangements under which a Person sells products, notes,mortgages, indentures or other agreements other than Employee Benefit Plans.

 

“Control”as used with respect to any Entity, shall mean the possession, directly orindirectly, of the power to direct or cause the direction of managementpolicies of such Entity through the ownership of voting securities or byContract, including, without limitation, through the beneficial ownership ofmore than 50% of the voting securities of such Entity.

 

“CopperScrap Agreement” shall mean the agreement for the purchase of copper scrapamong Nexans Wires, Flytex and SCCCin the form attached hereto as Exhibit 1.1.7.

 

“CopperWirerod Agreement” shall mean the long term contract for copper wireroddelivery between SCCC, SLC, L&K, Flytex, German Newco and Essex UK in theform attached hereto as Exhibit 1.1.8.

 

“CreditFacility” shall mean an Agreement for the Sale of Receivables of the JointVenture providing, at the Closing, immediately available funds equal to orgreater than €35,000,000.

 

“EBITDA”shall mean the consolidated earnings before interest, income tax, depreciationand amortization calculated from the US GAAP consolidated financial statementsof the Joint Venture in accordance with Exhibit 1.1.9.

 

“EmploymentAgreement” means any employment Contract, consulting Contract, terminationor severance Contract, salary continuation Contract, or other Contractregarding the terms and conditions of employment or payment of compensation, orof a consulting or independent contract relationship in respect to any currentor former officer, employee, consultant or independent contractor.

 

“EmployeeBenefit Plan” means, with respect to a Nexans Entity or an Essex Entity, asapplicable, each plan, fund, program, agreement, arrangement or scheme,including each plan, fund, program, agreement, arrangement or scheme maintainedor required to be maintained under applicable Laws, that is at any timesponsored or maintained or required to be sponsored or maintained by suchPerson or to which such Person makes or has made, or has or has had anobligation to make, contributions providing benefits to the current and former employees,directors, managers, officers, consultants, independent contractors, contingentworkers or leased employees of such Person used in the conduct of the Nexans WWBusiness or the Essex WW Business, as applicable, or the dependents of any ofthem (whether written or oral).

 

“Entity”shall mean any corporation, firm, unincorporated organization, association,partnership, limited partnership, limited liability company, limited liabilitypartnership, business trust, joint stock company, joint venture organization,entity or business.

 

“Encumbrances”shall mean liens, charges, encumbrances, pledges, security interests, options,or any other similar restrictions or third party rights.

 

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“EnvironmentalLaws” means all Laws relating to pollution or protection of health, safetyor the environment.

 

“EssexBenefit Plans” shall mean each Employee Benefit Plan covering an employeeinvolved in the Essex WW Business which is sponsored or maintained by an EssexEntity or to which an Essex Entity makes or has made, or has or has had anobligation to make, contributions (other than contributions to public pension,health insurance and other social systems of general application that aremandatory by law or national collective bargaining agreements).

 

“EssexCapital Employed” shall mean the book value of the assets of Essex UK, theEssex UK Subsidiary and Essex Pension Trustee less the liabilities (other thanEssex Closing Indebtedness) of Essex UK, the Essex UK Subsidiary and EssexPension Trustee, less (i) the difference between (a) €3 million and (b)any impairment charge recorded after December 31, 2004 but prior to the ClosingDate (which shall be deemed to have occurred on July 1, 2005 for purpose ofcalculating the Essex Capital Employed), and (ii) the pension funding deficitdescribed on Schedule 3.2.17 (to the extent not reserved in the Essex ClosingBalance Sheet) determined as of the Closing Date from the Essex Closing BalanceSheet.

 

“EssexClosing Balance Sheet” shall mean the unaudited consolidated balance sheetof Essex UK and the Essex UK Subsidiary as of the Closing Date (after givingeffect to the transactions that will take place on the Closing Date pursuant tothis Agreement), to be prepared in accordance with UK GAAP applied on a basisconsistent with the principles used in the December 31, 2004 and June 30, 2005balance sheet included in the Essex Financial Statements.

 

“EssexClosing Indebtedness” shall mean any indebtedness of Essex WW Entities,other than the Essex UK Debt, with respect to (a) borrowed money, (b) notespayable and (c) capital leases, installment sale Contracts or other Contractsrelating to the deferred and unpaid purchase price of assets, including anyinterest accrued thereon and prepayment or similar penalties and expenses as ofthe Closing Date.  For the avoidance ofdoubt, Essex Closing Indebtedness shall not include (i) any trade accountspayable owed to unaffiliated third parties, incurred in the ordinary course ofbusiness, or (ii) any Essex Permitted Affiliate Payable, which is treated as anaccount payable for purposes of Essex Capital Employed.

 

“EssexEntities” shall mean, collectively, the Essex Parties and theirSubsidiaries.  Each Essex Party and eachits Subsidiaries is sometimes referred to individually herein as an “EssexEntity.”

 

“EssexExcluded Assets” shall mean the assets, properties and rights listed on Schedule1.1.1.

 

“EssexFinancial Statements” shall mean (i) the unaudited consolidatedbalance sheet of Essex UK and the Essex UK Subsidiary as of December 31,2004 and related statement of income for the year then ended, and (ii) theunaudited consolidated balance sheet of Essex UK and the Essex UK Subsidiary asof June 30, 2005, and relatedstatement of income for the six (6) month period then ended.

 

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“EssexIntellectual Property” shall mean any Essex Owned Intellectual Property andany Essex Licensed Intellectual Property.

 

“EssexLeased Real Property” shall mean each parcel of real property used in theEssex WW Business which is not owned by an Essex Entity (together with allfixtures and improvements thereon).

 

“EssexLicensed Intellectual Property” shall mean any Intellectual Property thatis licensed by an unrelated third party to an Essex Entity or any Affiliatethereof and used or useable in the Essex WW Business, including, as applicable,the Essex Licensed Software.

 

“EssexLicensed Software” shall mean all Software (other than Essex ProprietarySoftware) used by an Essex Entity in connection with the Essex WW Business.

 

“EssexNetherlands” shall mean a partnership organized or to be organized underthe laws of the Netherlands as a direct or indirect wholly-owned Subsidiary ofEssex.

 

“EssexOwned Intellectual Property” shall mean any Intellectual Property that isowned by an Essex Entity or any Affiliate thereof and used or useable in theEssex WW Business including, as applicable, the Essex Proprietary Software.

 

“EssexOwned Real Property” shall mean each parcel of real property which an EssexEntity owns (together with all fixtures and improvements thereon) and is usedin the operation of the Essex WW Business.

 

“EssexParties” shall mean, collectively, Superior, Essex, and Essex Netherlands,once it becomes a party to this Agreement.

 

**“**Essex Pension Trustee**”**means EssexPension Trustees Limited, a private limited company organized under the laws ofEngland and Wales, and registered under number 3527717 in the Register ofCompanies for England and Wales**.**

 

“Essex Pension Trustee Shares”means all of the issued and outstanding Shares of capital stock of Essex Pension Trustee.

 

“EssexPermitted Affiliate Payable” shall mean trade accounts payable owed by anEssex WW Entity to an Affiliate, incurred in the ordinary course of business,to the extent the invoice date thereon is less than 60 days before the ClosingDate, and in a maximum aggregate amount of €100,000.

 

“EssexProprietary Software” shall mean all Software owned by an Essex Entity andused in the operation of the Essex WW Business.

 

“Essex RealProperty” shall mean the Essex Owned Real Property and the Essex LeasedReal Property.

 

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“EssexRegistered Intellectual Property” shall mean all of the Registered IntellectualProperty owned by, filed in the name of, or licensed to an Essex Entity andused in the Essex WW Business.

 

“EssexSoftware” shall mean the Essex Licensed Software and the Essex ProprietarySoftware.

 

“Essex UK”means Essex International Ltd., a company organized under the laws of Englandand Wales.

 

“Essex UKDebt” shall mean all amounts owed by Essex UK to Essex other than any EssexPermitted Affiliate Payable.

 

“Essex UKShares” means all of the issued and outstanding shares of capital stock ofEssex UK.

 

“Essex UKSubsidiary” means Temple Electrical Company Limited.

 

“Essex WWAssets” shall mean all of the assets, properties and rights (whethertangible or intangible) of the Essex Entities used in the Essex WWBusiness.  For the avoidance of doubt,Essex WW Assets shall not include any assets of Essex located in North America.

 

“Essex WWBusiness” shall mean the manufacture, distribution and sale of magnet wireand related products by any Essex Entity through facilities in Europe.

 

“Essex WW Contract”shall mean any Contract related to the Essex WW Business to which an EssexEntity is a party.

 

“Essex WWCustomers” shall any mean customer of the Essex WW Business that accountedfor more than £75,000 of allsales of Essex WW Business during the twelve (12)-month period ended December31, 2004 and any customer of the Essex WW Business that is expected to accountfor more than £75,000 of allsales of the Essex WW Business during the six (6) month period that will endJune 30, 2005.

 

“Essex WWEntities” shall mean, collectively, Essex UK, Essex Pension Trustee****and theirrespective Subsidiaries.

 

“Essex WWSuppliers” shall mean any supplier of goods or services to the Essex WWBusiness which were paid in the aggregate more than £ 75,000 during the twelve (12)-month period ended December 31,2004 and any supplier of goods or services to the Essex WW Business to whichEssex expects to pay in the aggregate more than £ 75,000 during the six (6)-month period that will end June 30,2005.

 

“Flytex”means Nexans Winding Wire S.A.S. (formerly Flytex), a French société paractions simplifiée.

 

“FlytexShares”  shall mean all of the issuedand outstanding shares of capital stock of Flytex.

 

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“FrenchGAAP” means French generally accepted accounting principles applied on abasis consistent with the audited consolidated financial statements of Nexansas of and for the year ended December 31, 2004 in accordance with Regulation 99-02of the French National Accounting Council (Conseil national de lacomptabilité).

 

“FrenchPredrawn Copper Wires Agreement” shall mean the agreement for the purchaseof predrawn copper wires between Nexans Wires and Flytex in the form attachedhereto as Exhibit 1.1.11.

 

“FrenchServices Agreement” shall mean the agreement for services between NexansWires and Flytex substantially in the form attached hereto as Exhibit 1.1.12.

 

“FrenchWinding Wires Division”  shall meanthe division of Nexans Wires engaged in the business of manufacturing, sellingand distributing magnet wire, enamels, varnishes and related products.

 

“GermanNewco” shall mean Lacroix & Kress Winding Wires GmbH, a German privatelimited company.

 

“GermanNewco Shares” shall mean all of the issued and outstanding shares of capitalstock of German Newco.

 

“GermanPredrawn Copper Wires Agreement” shall mean the agreement for the purchaseof predrawn copper wires between L&K and German Newco in the form attachedhereto as Exhibit 1.1.13.

 

“GermanServices Agreement” shall mean the agreement for services between L&Kand German Newco substantially in the form attached hereto as Exhibit 1.1.14.

 

“GermanWinding Wires Division” shall mean the division of L&K engaged in thebusiness of manufacturing, selling and distributing magnet wire, enamels,varnishes and related products.

 

“GovernmentalEntity” shall mean any governmental or regulatory authority, court, agency,commission, body or analogous similar entity.

 

“HazardousMaterials” means (i) any pollutant, chemical or substance, (ii) any toxic,infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemicalor chemical compound, or (iii) any hazardous substance, material or waste,whether solid, liquid or gas, in each case that is subject to regulation,control or remediation under any Environmental Laws, including withoutlimitation, any quantity of friable asbestos, urea formaldehyde,polychlorinated biphenyls, radon gas, crude oil or any fraction thereof, allforms of natural gas, petroleum products or by-products or derivatives.

 

“Hi-Wire”means Hi-Wire Limited, a company organized under the laws of England and Wales.

 

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“Hi-WireShares” shall mean all of the issued and outstanding shares of capitalstock of Hi-Wire.

 

“IndemnifiedParties” shall mean either the Essex/JV Indemnified Parties or theNexans/JV Indemnified Parties, as applicable.

 

“IndependentExpert” means an independent expert designated pursuant to Section 8.11.6.

 

“InitialNet Equity Value” shall mean an amount equal to € 39,700,000, as adjustedpursuant to Section 2.7.

 

“IntellectualProperty” shall mean any or all of the following and all rights, arisingout of or associated therewith: (a) all patents and applications therefor andall reissues, divisions, renewals, extensions, provisionals, continuations andcontinuations-in-part thereof throughout the world; (b) all inventions (whetherpatentable or not), invention disclosures, improvements, trade secrets,proprietary information, know-how, technology, technical data and customerlists, and all documentation relating to any of the foregoing throughout theworld; (c) all copyrights, copyright registrations and applicationstherefor, and all other rights corresponding thereto throughout the world; (d)all industrial designs and any registrations and applications thereforthroughout the world; (e) all internet uniform resource locators, domain names,trade names, logos, slogans, designs, common law trademarks and service marks,trademark and service mark registrations and applications therefor throughoutthe world; (f) all databases and data collections and all rights thereinthroughout the world; (g) all moral and economic rights of authors andinventors, however denominated, throughout the world; and (h) any similaror equivalent rights to any of the foregoing anywhere in the world.

 

“IP LicenseAgreements” shall mean the following agreements:

 

(i)                     NexansTrademark License Agreement from Nexans to the JV Holding Company (for brand)in the form attached hereto as Exhibit 1.1.15(a).

 

(ii)                  Essex TrademarkLicense Agreement from Essex to the JV Holding Company (for product) in theform attached hereto as Exhibit 1.1.15(b).

 

(iii)               Superior TrademarkLicense Agreement from Superior to the JV Holding Company (for brand)****in the form attached hereto as Exhibit 1.1.15(c).

 

(iv)              Trademark LicenseAgreement (Canada) from the JV Holding Company to Nexans Canada, Inc. (for product) in the form attached hereto as Exhibit1.1.15(d).

 

(v)                 L&K PatentLicense Agreement from L&K to the JV Holding Company in the form attachedhereto as Exhibit 1.1.15(e).

 

(vi)              Patent LicenseAgreement (China) from the JV Holding Company to Nexans Tiajin Magnet Wires & Cables Co. Limited in the formattached hereto as

 

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Exhibit1.1.15(f).

 

(vii)           Patent LicenseAgreement (Canada) from the JV Holding Company to Nexans Canada, Inc. in the form attached hereto as Exhibit1.1.15(g).

 

(viii) PatentLicense Agreement from German Newco to Nexans Canada, Inc. in the form attachedhereto as Exhibit 1.1.15(h).

 

(ix)                PatentCross-License Agreement between the JV Holding Company and Essex Technologiesin the form attached hereto as Exhibit 1.1.15(i).

 

(x)                   R&DServices Agreement between Nexans and the JV Holding Company in the formattached hereto as Exhibit 1.1.15(j).

 

(xi)                TrademarkAssignment Agreement from Nexans to the JV Holding Company in the form attachedhereto as Exhibit 1.1.15(k).

 

(xii)             Intellectual PropertyAssignment Agreement from Nexans to the JV Holding Company in the form attachedhereto as Exhibit 1.1.15(l).

 

(xiii)          GRA TerminationAgreement between Nexans, Superior, the JV Holding Company, Flytex, GermanNewco, Nexans Portugal and Hi-wire, in the form attached hereto as Exhibit1.1.15(m).

 

“JointVenture” shall mean the JV Holding Company and its Subsidiaries.

 

“Knowledge”or any similar phrase shall mean, with respect to Essex, the actual knowledge(without any duty of inquiry) of Stephen Carter, David Aldridge, Denys Gounot,Barbara Blackford, Mary Love Sullenberger, Allison Brantley, David Siegel,James Cassella, Greg Desautels, Tracye Gilleland, John Swindell, John Pye andDavid Cummings, and, with respect to Nexans, the actual knowledge (without anyduty of inquiry) of Michel Mayoud (Managing Director Winding Wires EuropeActivity), Renaud Fauvarque (Controller Winding Wires Europe Activity),Jean-Claude Bardy (Sales Director Winding Wires Europe Activity), Pierre-Yve LeTiec (Industrial Director & Plant Manager Chauny (Nexans Winding Wires)), Edouardde Chalendar (Plant Manager Mâcon (Nexans Winding Wires)), Willy Schaumburg(General Manager Lacroix & Kress Winding Wires GmbH), Gerry Wolfe(President, Nexans Portugal & General Manager, Business Unit for finewires), Valery Mercier (Managing Director Varnish Activity), FredericVincent, Jean-Pierre Reichenbach, Vincent Pouillard, Patrick Noonan, MagaliValat, Nicole Mansell, Geraldine Caillet, and Christian Velten - Jameson.

 

“Laws”shall mean all laws, statutes, common law, rules, codes, regulations, restrictions,ordinances, orders, decrees, approvals, directives, judgments, rulings,injunctions, writs, awards and decrees of, or issued or entered by, allGovernmental Entities.

 

“Licenses”shall mean all notifications, licenses, permits (including environmental,construction and operation permits), franchises, certificates, approvals,

 

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exemptions, classifications,registrations and other similar documents and authorizations issued by anyGovernmental Entity, and applications therefor.

 

“ManagementServices Agreement” shall mean the agreement for management servicesbetween Superior and the JV Holding Company in the form attached hereto as Exhibit1.1.18.

 

“MaterialAdverse Effect” shall mean, (i) with respect to the Nexans WW Business, anystate of facts, change, event, effect or occurrence (when taken together withall other states of fact, changes, events, effects or occurrences) that isreasonably likely to result in a reduction in the projected Adjusted EBITDA ofthe Nexans WW Business as contained in the Business Plan of more than 20% inthe 18 month period from July 1, 2005 to December 31, 2006 (determined withouttaking into account insurance recoveries or other non-recurring revenuesresulting from such state(s) of facts, change(s), event(s), effect(s) oroccurrence(s)); or (ii) with respect to the Essex WW Business, any state offacts, change, event, effect or occurrence (when taken together with all otherstates of fact, changes, events, effects or occurrences) that is reasonablylikely to result in a reduction in the projected Adjusted EBITDA of the EssexWW Business as contained in the Business Plan of more than €500,000 in the 18month period from July 1, 2005 to December 31, 2006 (determined without takinginto account insurance recoveries or other non-recurring revenues resultingfrom such state(s) of facts, change(s), event(s), effect(s) or occurrence(s)).

 

“NexansBenefit Plans” shall mean each Employee Benefit Plan covering an employeeinvolved in the Nexans WW Business which is sponsored or maintained by a NexansEntity or to which a Nexans Entity makes or has made, or has or has had anobligation to make, contributions (other than contributions to public pension,health insurance and other social systems of general application that aremandatory by law or national collective bargaining agreements).

 

“NexansCapital Employed” shall mean the book value of the assets of Flytex, GermanNewco, Hi-Wire and Nexans Portugal and their respective Subsidiaries (afterreflecting an asset impairment charge of €20 million, of which €10 millionshall be deemed to be recorded on the Closing Date and €10 million shall bedeemed to be recorded as of July 1, 2005, with any resulting change indepreciation charges being applied pro rata among all fixed assets of theNexans WW Business in accordance with their net book value prior to such deemedimpairment charge) less the liabilities (other than Nexans ClosingIndebtedness) of the Nexans WW Entities and their respective Subsidiaries,determined as of the Closing Date from the Nexans Closing Balance Sheet.  Notwithstanding the foregoing, anyindebtedness owed by Nexans or one of its Affiliates (other than a Nexans WWEntity) to a Nexans WW Entity as of the Closing Date, which is to be paid onthe Closing Date pursuant to Section 2.3.4, shall not be considered assets ofFlytex, German Newco, Hi-Wire or Nexans Portugal for purposes of calculatingthe Nexans Capital Employed.

 

“NexansClosing Balance Sheet” shall mean the unaudited, combined balance sheet ofthe Flytex, German Newco, Hi-Wire, Nexans Portugal and their respectiveSubsidiaries as of the Closing Date (after giving effect to the transactionsthat will take place on the Closing Date pursuant to this Agreement), to beprepared in accordance with French GAAP, applied on a

 

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basis consistent with theprinciples applied in the Nexans Statement of Capital Employed as of December31, 2004 and June 30, 2005, with actual numbers instead of estimated numbers.

 

“NexansClosing Indebtedness” shall mean any indebtedness of the Nexans WW Entitieswith respect to (a) borrowed money, (b) notes payable, (c) capital leases,installment sale Contracts or other Contracts relating to the deferred andunpaid purchase price of assets and (d) any financial liabilities (*dettes financières*), including anyinterest accrued thereon and prepayment or similar penalties and expenses as ofthe Closing Date, except for (i) the indebtedness under Nexans Portugal’s loansfrom the Portuguese Agency for Investment, the Institute for Support of Smalland Medium Enterprises, and Banco Commercial Português, S.A. and (ii)indebtedness under the Subordinated Promissory Note.  For the avoidance of doubt, Nexans ClosingIndebtedness shall not include (i) any trade accounts payable owed tounaffiliated third parties, incurred in the ordinary course of business, or(ii) any Nexans Permitted Affiliate Payable, which is treated as an accountpayable for purposes of Nexans Capital Employed.

 

“Nexans Entities”shall mean, collectively, the Nexans Parties, Flytex, German Newco, Hi-Wire,Nexans Portugal and their Subsidiaries. Each Nexans Party and each of Flytex, German Newco, Hi-Wire and NexansPortugal is sometimes referred to individually herein as a “Nexans Entity”.

 

“NexansExcluded Assets” shall mean the assets, properties and rights listed on Schedule1.1.2.

 

“NexansExtended Management Committee” means the committee consisting of the seniormanagement of the Nexans WW Business, the members of which are listed the Schedule1.1.3.

 

“NexansFacility” means the winding wire and related facilities at: Chauny, France;Macon, France; Bramsche, Germany; Arolsen, Germany; Normanton, United Kingdom;Viano do Castelo, Portugal and the varnish facility at Meyzieu, France.

 

“NexansFacility Restructuring Costs” means the actual pre-tax restructuring costs reflected (including through additionto reserves) in the US GAAP consolidated income statement of the Joint Venture,in connection with the closing or downsizing of a Nexans Facility.  Such costs shall include costs incurred inconnection with a sale or other similar disposition of such Nexans Facility,and shall be offset by any gain or increased by any loss from such sale ordisposition.  For the purposes of theforegoing, in the event of any restructuring of the U.K. distribution businessof the Joint Venture (whether originally part of the Nexans WW Business or theEssex WW Business), half of the cost of the restructuring shall be deemed to beNexans Facility Restructuring Costs, whether or not they relate to a NexansFacility.

 

“NexansFacility Restructuring Cost Limit” means, for any period the greater of:

 

(i) the excess, if any, of (A) €10,000,000,plus the amount of the Restructuring Reserves, less any such restructuringcosts actually charged against the Restructuring Reserve (or any other reserveestablished in the opening US GAAP

 

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consolidated balance sheet ofthe Joint Venture), over (B) the amount of Nexans Facility Restructuring Costsadded to Adjusted EBITDA in all prior periods, and

 

(ii) the amount by which the Nexans FacilityRestructuring Costs for such period cause the aggregate Nexans FacilityRestructuring Costs for the financial year in which such period occurs toexceed €1,000,000.

 

“NexansFinancial Statements” shall mean the Nexans Statements of Capital Employedand Nexans Statements of Operating Income.

 

“NexansGerman Benefit Plans” shall mean the Nexans Benefit Plan covering employeesinvolved in the Nexans WW Business in Germany.

 

“NexansIntellectual Property” shall mean any Nexans Owned Intellectual Propertyand any Nexans Licensed Intellectual Property.

 

“NexansLeased Real Property” shall mean each parcel of real property used in theNexans WW Business which is not owned by a Nexans Entity (together with allfixtures and improvements thereon).

 

“NexansLicensed Intellectual Property” shall mean any Intellectual Property thatis licensed by an unrelated third party to a Nexans Entity or any Affiliatethereof and used or useable in the Nexans WW Business, including, asapplicable, the Nexans Licensed Software.

 

“NexansLicensed Software” means all Software (other than Nexans ProprietarySoftware) used by a Nexans Entity in connection with the Nexans WW Business.

 

“NexansMaterial Required Consent” means each Nexans Required Consent listed in Exhibit1.1.19 hereto.

 

“NexansOwned Intellectual Property” shall mean any Intellectual Property that isowned by a Nexans Entity or any Affiliate thereof and used or useable in theNexans WW Business, including, as applicable, the Nexans Proprietary Software.

 

“NexansOwned Real Property” shall mean each parcel of real property which a NexansEntity owns (together with all fixtures and improvements thereon) and is usedin the operation of the Nexans WW Business including, for the avoidance ofdoubt, all heritable building rights, but excluding real property leasedpursuant to the Normanton Lease, Chauny Lease and the Bramsche Real Estate Agreement.

 

“NexansParties” shall mean, collectively, Nexans, Participations, Nexans Wires,and L&K.

 

“NexansPermitted Affiliate Payable” shall mean (i) trade accounts payable forproducts and services (A) of a type contemplated by the Ancillary Documentsand (B) in amounts for all goods and services (other than the sale ofcopper rod or bare wire) not to exceed €1 million, and (C) provided thatthe account payable for the sale of copper rod or bare wire shall not exceed €3million, such account payable for the sale of copper to have a payment term ofone

 

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year from the Closing Date, or(ii) accounts payable in an amount not to exceed €100,000****arising underthe Agency Agreement dated July 1, 2002 (as amended), between Nexans Wires andNexans Iberia SL, in each case owed by a Nexans WW Entity to an Affiliate, to theextent the invoice date thereon is less than 60 days before the Closing Date.

 

“NexansPortugal” means Nexans Portugal Fios Esmaltados, Unipessoal, Limitada, acompany organized under the laws of Portugal.

 

“NexansPortugal Shares” shall mean all of the issued and outstanding shares ofcapital stock of Nexans Portugal.

 

“NexansProprietary Software” shall mean all Software owned by a Nexans Entity andused in the operation of the Nexans WW Business.

 

“NexansReal Property” shall mean the Nexans Owned Real Property, the Nexans LeasedReal Property and the real property that is leased (or licensed in the case ofNormanton) to the Nexans WW Business pursuant to the Bramsche Real EstateAgreement, the Chauny Lease and the Normanton Lease (together with all fixturesand improvements thereon).

 

“NexansRegistered Intellectual Property” shall mean all of the RegisteredIntellectual Property owned by, filed in the name of, or licensed to a NexansEntity and used in the Nexans WW Business.

 

“NexansSoftware” shall mean the Nexans Licensed Software and the NexansProprietary Software.

 

“NexansStatement of Capital Employed” shall mean each of the unaudited, pro formacombined statements of capital employed as of December 31, 2004 and June 30,2005, respectively, for the Nexans WW Business, with the attached annexes andnotes, as set forth in Exhibit 1.1.20.

 

“NexansStatement of Operating Income” shall mean each of the unaudited, pro formacombined statements of operating income for the year ended December 31, 2004 andfor the three months ended June 30, 2005, respectively, with the attachedannexes and notes and set forth as Exhibit 1.1.21.

 

“Nexans WWAssets” shall mean all of the assets, properties and rights (whethertangible or intangible) of the Nexans Entities used in the Nexans WW Business.

 

“Nexans WWBusiness” shall mean the manufacture, distribution and sale of magnet wire,varnishes, enamels and related products by any Nexans Entity through facilitiesin Europe.

 

“Nexans WWContract” shall mean any Contract related to the Nexans WW Business towhich a Nexans Entity is a party.

 

“Nexans WWCustomer” shall mean any customer of the Nexans WW Business that accountedfor more than €500,000 of sales of the Nexans WW Business during the twelve

 

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(12)-month period endedDecember 31, 2004 and any customer of the Nexans WW Business that is expectedto account for more than €500,000****ofsales of the Nexans WW Business during the six (6) month period that will endJune 30, 2005.

 

“Nexans WWEntities” shall mean, collectively, Flytex, German Newco, Nexans Portugaland Hi-Wire and their respective Subsidiaries.

 

“Nexans WWSuppliers” shall mean any supplier of goods or services to the Nexans WWBusiness which were paid in the aggregate more than €500,000****during the twelve (12)-month period endedDecember 31, 2004 and any supplier of goods or services to the Nexans WWBusiness which were paid in the aggregate more than €500,000 during the six-(6) month period ended June 30, 2005.

 

“NormantonLease” shall mean the license in the form attached hereto as Exhibit1.1.22.

 

“PermittedEncumbrances” shall mean, as to any Person, (i) mechanics’, carriers’,workers’, materialmen’s, warehousemen’s and other similar liens arising orincurred in the ordinary course of business for sums not yet due and payable orwhich liens are being contested by such Person in good faith, and (ii) liensfor Taxes not yet due and payable or which are being contested in good faith bysuch Person.

 

“Person”shall mean any natural person or Entity.

 

“ProductionAsset” shall mean any (i) product line and customer contracts constitutinga part thereof, or (ii) manufacturing facility or plant, or (iii) any othergroup of related assets used in production and sufficient to permit productionof marketable goods and services on an autonomous basis without otherproduction assets.

 

“PurchaseAccounting Adjustment Amount” shall mean, for any period, any chargerecorded in the US GAAP consolidated income statement of the Joint Venture forthe write-down of the carrying value of the copper component of inventory thatis included in the assets on the Nexans Closing Balance Sheet, but only to theextent that the aggregate amount of such charges after the Closing Date is lessthan or equal to the excess of (i) the book value of such copper component ofinventory in the US GAAP opening balance sheet of the Joint Venture, over (ii)the book value of such copper component of inventory in the Nexans ClosingBalance Sheet.

 

“RegisteredIntellectual Property” means all: (a) patents and patent applications(including provisional applications); (b) registered trademarks and servicemarks, applications to register trademarks and service marks, intent-to-useapplications, or other registrations or applications related to trademarks andservice marks; (c) registered copyrights and applications for copyrightregistration; (d) domain name registrations; and (e) any other IntellectualProperty that is the subject of an application, certificate, filing,registration or other document issued, filed with, or recorded with anyfederal, state, local or foreign Governmental Entity or other public body.

 

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“RestructuringReserve” means the reserve for restructuring costs at Nexans Facilitiesreflected in the liabilities in the Nexans Closing Balance Sheet, which reservewas approximately €2 million as of December 21, 2004 and has been and willbe reduced to the extent used prior to the Closing.

 

“SCCC” means Société de Coulée Continue de Cuivre, aFrench société par actions simplifiée.

 

“ShareholdersAgreement” shall mean the Shareholders Agreement to beentered into at Closing by and amongSuperior, Essex Netherlands, Nexans, Participations and the JV Holding Company,in the form set forth in Exhibit 1.1.25.

 

“SLC”means SociétéLensoise de Cuivre, a French société par actious simplifée.

 

“Software”shall mean any computer software program, together with any error corrections,updates, modifications, or enhancements thereto, in both machine-readable formand human-readable form, including all comments and any procedural code.

 

“Subsidiary”shall mean, as to any Person, any Entity (i) of which such Person, directly orindirectly, owns securities or other equity interests representing fiftypercent (50%) or more of the aggregate voting power or (ii) of which suchPerson possesses the right to elect fifty percent (50%) or more of thedirectors or Persons holding similar positions.

 

“SuperiorCredit Agreement” means the Credit Agreement, dated November 10, 2003,between Superior Essex Communications LLC, Essex Group, Inc., the FinancialInstitutions party thereto from time to time, Fleet Capital Corporation,General Electric Capital Corporation, Fleet Securities, Inc. and GECC CapitalMarkets Group, Inc., as amended or supplemented from time to time.

 

“SuperiorIndenture” means the Indenture, dated as of April 14, 2004, betweenSuperior Essex Communications LLC, Essex Group, Inc., the Guarantors partythereto and The Bank of New York Trust Company, N.A., as Trustee, as amended orsupplemented from time to time.

 

“Taxes”shall mean all income, profits, franchise, license, trade, gross receipts,alternative or add-on minimum, environmental, customs duty, capital stock,severance, documentary, stamp, registration, payroll, sales, use, employment,unemployment, disability, property, net worth, withholding, excise, production,value added, occupancy and other taxes, duties or assessments of any naturewhatsoever, together with all surcharges, interest, penalties and additionsimposed with respect to such amounts and any interest in respect of suchpenalties and additions.

 

“TotalOutstanding Shares” shall mean, from time to time, the number of shares ofcapital stock of the JV Holding Company issued and outstanding.

 

“TransferTaxes” shall mean all sales, use, value added, documentary, stamp,registration or similar Taxes that may be imposed in connection with thetransfers contemplated

 

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by this Agreement, togetherwith all interest, penalties and additions imposed with respect to such amountsand any interest in respect of such penalties and additions.

 

“UK GAAP”means United Kingdom generally accepted accounting principles, applied on abasis consistent with the unaudited consolidated financial statements of EssexUK as of and for the year ended December 31, 2004, in accordance withapplicable requirements of the relevant bodies governing accounting standardsin the United Kingdom.

 

“UKServices Agreement” shall mean the agreement for services between Hi-Wireand Tri-Wire Limited substantially in the form attached hereto as Exhibit1.1.26.

 

“US GAAP”means United States generally accepted accounting principles, applied duringthe relevant period on a basis consistent with the consolidated financialstatements included by Superior in its periodic reports filed with the U.S.Securities and Exchange Commission.

 

1.2                                 OtherDefined Terms.  Each of the followingterms is defined in the Section set forth opposite such term:

 
| **Term**                           | ** ** | **Section** | ** ** |
|------------------------------------|------------|-------------|------------|
|                               |       |        |       |
| Additional  Cash Consideration     |       | 2.7.1       |       |
| Capital  Employed Note             |       | 2.6.4       |       |
| CDR  Rules                         |       | 8.11.2      |       |
| Claim  Notice                      |       | 7.5         |       |
| Closing                            |       | 2.4         |       |
| Closing  Date                      |       | 2.4         |       |
| CPA  Firm                          |       | 2.6.3       |       |
| Customer  Forward Sale Obligations |       | 4.12        |       |
| 2006  EBITDA Targets               |       | 2.7.1       |       |
| Equity  Adjustment Amounts         |       | 2.7.1       |       |
| Essex                              |       | Preamble    |       |
| Essex  Deductible                  |       | 7.3.2       |       |
| Essex Material Required  Consent   |       | 3.2.4       |       |
| Essex  Material Required Consents  |       | 3.2.4       |       |
| Essex  Personal Property           |       | 3.2.6       |       |
| Essex/JV  Indemnified Parties      |       | 7.2.1       |       |
| Final  Order                       |       | 5.1.1       |       |
| French  Spin-Off                   |       | 3.1.28      |       |
| French  Spin-Off Agreement         |       | 3.1.28      |       |
| German  Restructuring              |       | 3.1.29      |       |
| German  Transfer Agreement         |       | 3.1.29      |       |
| Governmental  Antitrust Authority  |       | 4.3.1       |       |
| Governmental  Filings              |       | 4.3.1       |       |
| Indemnifying  Party                |       | 7.5         |       |
| Independent  Expert                |       | 8.11.6      |       |
| Italian  WW Customers              |       | 4.7         |       |
| Joint  Venture                     |       | Recitals    |       |
| JV  Holding Company                |       | Recitals    |       |

 

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| **Term**                       | ** ** | **Section** | ** ** |
|--------------------------------|------------|-------------|------------|
|                           |       |        |       |
| L&K                        |       | Preamble    |       |
| Losses                         |       | 7.2.1       |       |
| Nexans                         |       | Preamble    |       |
| Nexans  Deductible             |       | 7.2.2       |       |
| Nexans  Personal Property      |       | 3.1.6       |       |
| Nexans  Required Consent       |       | 3.1.4       |       |
| Nexans  Required Consents      |       | 3.1.4       |       |
| Nexans  Wires                  |       | Preamble    |       |
| Nexans/JV  Indemnified Parties |       | 7.3.1       |       |
| Nondisclosure  Agreement       |       | 4.1.3       |       |
| Notice  Period                 |       | 7.5         |       |
| Order                          |       | 5.1.2       |       |
| Participations                 |       | Preamble    |       |
| Potential  Contributor         |       | 7.7         |       |
| Resolution  Period             |       | 2.6.2       |       |
| Resolved  Items                |       | 2.6.2       |       |
| Subordinated  Note             |       | 2.2.6       |       |
| Superior                       |       | Preamble    |       |
| Termination  Date              |       | 6.1(d)      |       |
| UNCITRAL                       |       | 8.11.3      |       |
| Unresolved  Items              |       | 2.6.3       |       |

 

1.3                                 OtherDefinitional Provisions.

 

(a)                                  Thewords “hereof,” “herein,” and “hereunder” and words of similar import, whenused in this Agreement, shall refer to this Agreement as a whole and not to anyparticular provision of this Agreement.

 

(b)                                 Theterms defined in the singular shall have a comparable meaning when used in theplural, and vice versa.

 

(c)                                  Theterms “Euros” and “€” shall mean the common currency of the European Union.

 

(d)                                 Referencesherein to a specific Section, Exhibit or Schedule shall refer, respectively, toSections, Exhibits or Schedules of this Agreement, unless the express contextotherwise requires.

 

(e)                                  Thewords “include,” “includes,” and “including” when used in this Agreement, shallbe deemed to be followed by the words “without limitation.”

 

(f)                                    Anyreference herein to any Law or to any Ancillary Document involving the partieshereto or their Subsidiaries, shall be deemed to include a reference to anysuch law, rule, regulation, order or other act or any such document, in eachcase as it may be amended or supplemented from time to time.  Reference to any Law in any representation orwarranty made herein shall be deemed to be a reference to such Law as in

 

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effect on the date as of which such representation orwarranty is given unless another date or time period is referred to orspecified.  Reference to any Law in theindemnification provisions of Article VII of this Agreement shall be to suchlaw as in effect on the relevant date or dates up to the Closing Date.

 

1.4                                 USGAAP Financial Statements.

 

(a)                                  TheJV Holding Company shall prepare consolidated annual and quarterly financialstatements for the Joint Venture in accordance with US GAAP (in addition to anyother financial statements required by applicable Law).  The annual US GAAP financial statements shallbe audited by an independent accounting firm of recognized internationalstanding (which may be the independent auditor of Superior).  Certain of the accounting terms used in thisAgreement, the Shareholders Agreement and the Subordinated Note are to bedetermined in accordance with US GAAP.

 

(b)                                 Certainprinciples and practices to be initially applied in the preparation of theJoint Venture’s consolidated financial statements under US GAAP are describedin Exhibit 1.4 hereto.  Exhibit1.4 is intended to reflect selected accounting principles and practices,but the parties understand and agree that it does not constitute an exhaustivelist of all accounting principles and practices that may be material to thepreparation of such financial statements.****Essexagrees to provide to Nexans prompt notice of any change in the application ofUS GAAP by Superior (whether as a result of a change in generally applicableaccounting principles or in the principles or practices applied by Superior,and whether or not reflected on Exhibit 1.4) that would, when applied to theconsolidated financial statements of the Joint Venture, have an impact on thedetermination of amounts under this Agreement, the Shareholders Agreementand/or the Subordinated Note.  Theparties shall negotiate in good faith with a view to adapting the terms of thisAgreement, the Shareholders Agreement or the Subordinated Note, as applicable,so as to maintain the economic rights and obligations of the parties hereunderand thereunder; provided that for any period beginning after the close of the 2006financial year, such an adaptation shall only be required if the Joint Venturechanges the accounting principles that it applies (but not (i) as a resultof a mandatory change in United States generally accepted accounting principlesor (ii) if the Joint Venture changes its practices under then existingaccounting principles).   If the partiesare unable to agree whether an adaptation is required pursuant to this Section1.4(b), or are unable to agree on the terms of such adaptation, in each casewithin thirty days of the date on which Essex is required to provide the noticereferred to above, either party may request that the matter be finallydetermined by an Independent Expert in accordance with Section 8.11.6.

 

ARTICLE IICONTRIBUTIONS AND CLOSING TRANSACTIONS

 

2.1                                 Pre-ClosingTransactions.

 

2.1.1                        EssexContributions to Essex Netherlands. Prior to the Closing, Essex shall create Essex Netherlands (if not inexistence), cause Essex Netherlands to become a party to this Agreement by anaccession agreement in form and substance reasonably satisfactory

 

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to Nexans, andcontribute the Essex UK Shares, the EssexPension Trustee Shares and the Essex UK Debt to Essex Netherlands.

 

2.1.2                        JV HoldingCompany.

 

(a)                                  TheJV Holding Company is a société par actions simplifiée, all of the shares ofwhich are owned, as of the date hereof, by Participations. Nexans shall ensurethat the JV Holding Company shall not have, prior to the sale to EssexNetherlands contemplated in Section 2.1.2(b), and Essex shall ensure that theJV Holding Company shall not incur, after such sale and prior to the Closing,any assets, liabilities or obligations of any nature other than those incidentto its formation, the amount of its shareholders’ equity of €56,542 and thoseliabilities resulting from the transactions described in this Article II.

 

(b)                                 Priorto the Closing, Essex Netherlands shall purchase from Nexans, and Nexans shallsell to Essex Netherlands, 51%of the outstanding share capital of the JV Holding Company for a price of €28,836.42.

 

(c)                                  Priorto the Closing, the parties shall cause the JV Holding Company to, andshall cause the by-laws of the JV Holding Company to be amended from time totime to, comply at all times with the provisions of this Agreement.  Prior to the Closing, the JV Holding Companyshall file with the US Internal Revenue Service such elections and consents asare necessary to cause the JV Holding Company to be treated as a partnershipfor U.S. income tax purposes.

 

2.1.3                        PartialRepayment of Essex UK Debt.  Prior tothe Closing, Essex Netherlands shall cause such amount of the Essex UK Debt tobe forgiven or repaid as shall be necessary to cause the remaining amount ofthe Essex UK Debt to equal € 9,000,000.

 

2.1.4                        ChaunyLease.  Prior to the Closing, Flytexand Nexans Wires shall enter into the Chauny Lease.

 

2.2                                 Transactionsto be completed at Closing.  On theterms and subject to the conditions set forth herein, the followingtransactions shall occur at the Closing.

 

2.2.1                        EssexNetherlands Subscription.  Theshareholders of the JV Holding Company shall approve a capital increase of theJV Holding Company to which Essex Netherlands will subscribe in the amount of€23.8 million (including issue premium). In connection with such capital increase, the JV Holding Company shallissue new shares to Essex Netherlands, so that Essex Netherlands will hold 59%of the issued and outstanding share capital of the JV Holding Company (aftertaking into account the capital increase to be subscribed to by Participationspursuant to Section 2.2.4).  EssexNetherlands shall pay for its shares of the JV Holding Company in cash to aspecial account of the JV Holding Company that will be used by the JV HoldingCompany to make the contribution payments required under Sections 2.2.3 and2.2.7, respectively.

 

2.2.2                        Purchaseby JV Holding Company of Essex UK andEssex Pension Trustee.  The JVHolding Company shall purchase from Essex Netherlands and Essex Netherlandsshall sell to the JV Holding Company for €2 in cash all of its right, title and interest

 

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in and to the Essex UK Shares and the Essex Pension Trustee Shares, free and clear of allEncumbrances.  Following such purchaseand sale, the Joint Venture will own all of the Essex WW Assets, other than theEssex Excluded Assets.

 

2.2.3                        JVHolding Company Subscription for Stock in Essex UK.  The JV Holding Company shall contribute €9,000,000 to Essex UK in exchange foradditional shares of capital stock in Essex UK. Essex UK shall use such additional funds to repay the remainingoutstanding balance of the Essex UK Debt.

 

2.2.4                        NexansSubscription.  The shareholders of theJV Holding Company shall approve a capital increase of the JV Holding Companyto which Participations shall subscribe, in an amount of €16.54 million(including issue premium).  In connectionwith such capital increase, the JV Holding Company shall issue new shares toParticipations, so that Participations will hold 41% of the issued andoutstanding share capital of the JV Holding Company.  Participations shall pay for its shares ofthe JV Holding Company in cash to a special account of the JV Holding Companythat will be used by the JV Holding Company to make the payments required underSection 2.2.7.

 

2.2.5                        Borrowingunder Credit Facility.  The partiesshall cause the JV Holding Company to enter into the Credit Facility.  The parties shall cause the JV HoldingCompany to borrow €20 million under the Credit Facility (including by way ofsale of receivables by the JV Holding Company or its Subsidiaries) in fundsimmediately available at Closing.

 

2.2.6                        Subscriptionof Subordinated Note.  Nexans shallsubscribe for a promissory note in the principal amount of €11,300,000 in theform attached hereto as Exhibit 2.2.6 (the “Subordinated Note”),by paying €11.3 million in cash in immediately available funds to German Newco,and German Newco shall issue the Subordinated Note to Nexans, and the JVHolding Company shall execute the Subordinated Note as guarantor.

 

2.2.7                        Purchaseby the JV Holding Company of Nexans Assets. The JV Holding Company shall purchase from Nexans, Participations,Nexans Wires and L&K, as applicable, and Nexans, Participations, NexansWires and L&K shall sell to the JV Holding Company, for the CashConsideration, (i) all of its right, title and interest in and to the FlytexShares, free and clear of all Encumbrances, (ii) all of its right, title andinterest in and to the German Newco Shares, free and clear of all Encumbrances,(iii) all of its right, title and interest in and to the real propertydescribed on Exhibit 2.2.7, free and clear of all indebtedness andEncumbrances (and the JV Holding Company hereby instructs L&K to transfersuch real property directly to German Newco after the shares of German Newcohave been transferred to the JV Holding Company), (iv) all of its right, titleand interest in and to the Hi-Wire Shares, free and clear of all Encumbrances,(v) all of its right, title and interest in and to the Nexans Portugal Shares,free and clear of all Encumbrances and (vi) all of the right, title andinterest of each Nexans Entity in and to the Nexans Owned Intellectual Propertyand the Nexans Licensed Intellectual Property, free and clear of allEncumbrances, except to the extent owned by the Nexans WW Entities and exceptfor the items listed on Schedule 3.1.21. Following such purchase and sale, the Joint Venture will own all of theNexans WW Assets, other than the Nexans Excluded Assets.

 

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2.2.8                        AncillaryDocuments. Essex and Nexans shall enter into, or cause their Affiliates toenter into (as applicable), the Ancillary Documents to which they are party.

 

2.3                                 Closingand Other Indebtedness; Affiliate Payables.

 

2.3.1                        EssexClosing Indebtedness; Affiliate Payables. At or prior to the Closing, to the extent not repaid pursuant toSections 2.1.3, Essex shall cause (a) all of the Essex Closing Indebtedness tobe repaid in full or otherwise extinguished and (b) all payables and otheramounts owed by an Essex WW Entity to an Affiliate, other than Essex PermittedAffiliate Payables, to be repaid in full or otherwise extinguished.

 

2.3.2                        NexansClosing Indebtedness; Affiliate Payables. At or prior to the Closing, Nexans shall cause (a) all of the NexansClosing Indebtedness to be repaid in full or otherwise extinguished (exceptNexans Closing Indebtedness referred to in Section 2.3.3) and (b) all payablesand other amounts owed by a Nexans WW Entity to an Affiliate, other than NexansPermitted Affiliate Payables, to be repaid in full or otherwise extinguished.

 

2.3.3                        NexansIntercompany Closing Indebtedness. Immediately following the completion of the purchase and salecontemplated in Section 2.2.7, the parties shall cause the JV Holding Companyor its Subsidiaries to repay to Nexans or its Affiliates an amount of NexansClosing Indebtedness owed to Nexans or its Affiliates not to exceed €62million.  Nexans shall notify Essex atleast one Business Day prior to the Closing Date of the amount of suchindebtedness to be repaid and the party to which such repayment is to be made.

 

2.3.4                        Paymentof Amounts Owed to Nexans WW Entities. In the event that Nexans or any of its Affiliates (other than a NexansWW Entity) is the borrower under any indebtedness owed to a Nexans WW Entity(whether under any cash pooling arrangement or otherwise), Nexans or suchAffiliate shall pay such indebtedness on the Closing Date, simultaneously withthe payment of the Nexans Closing Indebtedness referred to in Section 2.3.3.

 

2.4                                 Closing.  The consummation of the transactionscontemplated hereby (the “Closing”) shall take place at Paul, Hastings,Janofsky & Walker LLP, 30, avenue de Messine 75008, Paris, France, or atsuch other location or locations as the parties hereto may otherwise agree, on(a) August 31, 2005, subject to the satisfaction or waiver of the conditionsset forth in Article VI hereof, or (b) if such conditions are not satisfied orwaived on August 31, 2005, on the last day of the calendar month in which suchconditions are satisfied or waived, or (c) at such other time and place as theparties may mutually agree.  The date onwhich the Closing occurs is referred to herein as the “Closing Date.”

 

2.5                                 ClosingDeliveries.

 

(a)                                  Atthe Closing, the Essex Parties, as applicable, shall deliver to the JV HoldingCompany or Nexans, as applicable,

 

(i)                                     acertificate executed by a duly authorized officer of Essex as to compliancewith the conditions set forth in Sections 5.3.1 and 5.3.2 hereof;

 

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(ii)                                  theAncillary Documents to which it is contemplated that an Essex Party will be aparty;

 

(iii)                               awritten instrument signed by Essex Netherlands, Participations and the JVHolding Company to the effect that the JV Holding Company has received andacknowledges having notice of the provisions of the Shareholders Agreement,that transfers of shares of the JV Holding Company made in accordance with theShareholders Agreement have received the consent of Essex Netherlands andParticipations (which consent may not be revoked without the approval of bothof them), and that capital increases effected in accordance with theShareholders Agreement have received the consent of Essex Netherlands andParticipations (which consent may not be revoked without the approval of bothof them);

 

(iv)                              stocktransfer forms and other conveyance documents necessary to transfer the EssexUK Shares to the JV Holding Company; and

 

(v)                                 allother documents required to be entered into by an Essex Party pursuant heretoor reasonably requested by Nexans to consummate the transactions contemplatedhereby.

 

(b)                                 Atthe Closing, the Nexans Parties, as applicable, shall deliver to the JV HoldingCompany or Essex, as applicable,

 

(i)                                     acertificate executed by a duly authorized officer of Nexans as to compliancewith the conditions set forth in Sections 5.2.1 and 5.2.2 hereof;

 

(ii)                                  suchdeeds, instruments of assignment, certificates of title and other conveyancedocuments as are reasonably requested by Essex in order to effectuate theconveyance, transfer and assignment to (A) German Newco of the real propertydescribed on Exhibit 2.2.7;  and(B) the JV Holding Company of the Nexans Registered Intellectual Propertyincluded in the Nexans Owned Intellectual Property required to be transferredpursuant to Section 2.2.7.

 

(iii)                               theAncillary Documents to which it is contemplated that a Nexans Party will be aparty;

 

(iv)                              awritten instrument signed by Essex Netherlands, Participations and the JVHolding Company to the effect that the JV Holding Company has received andacknowledges having notice of the provisions of the Shareholders Agreement,that transfers of shares of the JV Holding Company made in accordance with theShareholders Agreement have received the consent of Essex Netherlands andParticipations (which consent may not be revoked without the approval of bothof them), and that capital increases effected in accordance with theShareholders Agreement have received the consent of Essex Netherlands andParticipations (which consent may not be revoked without the approval of bothof them);  and

 

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(v)                                 allother documents required to be entered into by a Nexans Party pursuant heretoor reasonably requested by Essex to consummate the transactions contemplatedhereby.

 

(c)                                  Atthe Closing, the parties shall cause the JV Holding Company and itsSubsidiaries to deliver to the applicable Essex Entities or Nexans Entities thefollowing:

 

(i)                                     theSubordinated Note;

 

(ii)                                  theCash Consideration;

 

(iii)                               theAncillary Documents to which it is contemplated that it will be a party;

 

(iv)                              theCredit Facility;

 

(v)                                 awritten instrument signed by Essex Netherlands, Participations and the JVHolding Company to the effect that the JV Holding Company has received andacknowledges having notice of the provisions of the Shareholders Agreement,that transfers of shares of the JV Holding Company made in accordance with theShareholders Agreement have received the consent of Essex Netherlands andParticipations (which consent may not be revoked without the approval of bothof them), and that capital increases effected in accordance with theShareholders Agreement have received the consent of Essex Netherlands andParticipations (which consent may not be revoked without the approval of bothof them);

 

(vi)                              stocktransfer forms and other conveyance documents necessary to transfer the Hi-WireShares, the Flytex Shares, the Nexans Portugal Shares and the German NewcoShares to the JV Holding Company; and

 

(vii)                           allother documents required to be entered into by the JV Holding Company pursuanthereto or reasonably requested by Essex or Nexans to consummate thetransactions contemplated hereby.

 

2.6                                 CapitalEmployed.

 

2.6.1                        As soon aspracticable, but in no event later than fifty (50) days following the ClosingDate, Essex shall cause the JV Holding Company to deliver to each of Essex andNexans the Essex Closing Balance Sheet and the Nexans Closing Balance Sheet,together with statements of Essex Capital Employed and Nexans Capital Employed.

 

2.6.2                        After thedelivery of the documents set forth in Section 2.6.1, Essex and Nexans shalleach have thirty (30) days to review them. Essex and Nexans shall each, and Essex shall cause the JV HoldingCompany to, provide the others and their authorized representatives reasonableaccess during normal business hours to all of their and their Subsidiaries’respective books, records and employees and agents having relevant informationconcerning the statements of Nexans Capital Employed and the Essex CapitalEmployed, as well

 

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as the related balance sheets from which they arederived.  Unless Essex or Nexans deliverswritten notice to the JV Holding Company and to Essex or Nexans, as the casemay be, on or prior to such thirtieth (30th) day, describing any objectionswith respect to items of Essex Capital Employed or Nexans Capital Employed withreasonable particularity, Essex and Nexans shall be deemed to have accepted andagreed to the Nexans Capital Employed and the Essex Capital Employed,respectively.  In addition, any itemincluded in the determination of the Nexans Capital Employed or the EssexCapital Employed which is not objected to by either Essex or Nexans shall bedeemed to be accepted by Essex and Nexans (the “Resolved Items”) and anyamounts included within a Resolved Item shall be deemed to be final, binding,and conclusive.  If Essex or Nexansnotifies the JV Holding Company of its objections to the Nexans CapitalEmployed or the Essex Capital Employed, as applicable, Essex, Nexans and the JVHolding Company shall, within twenty-one (21) days (or such longer period asthe parties may agree) following such notice (the “Resolution Period”),attempt to resolve their differences, and any written resolution by them as toany disputed amounts shall be final, binding, and conclusive.

 

2.6.3                        Anyamounts remaining in dispute at the conclusion of the Resolution Period (“UnresolvedItems”) shall be submitted to the London office of BDO Seidman LLP (such firm being referred to as the “CPA Firm”),or, if such firm shall be unable or unwilling to serve in such capacity or ifthe parties shall otherwise mutually agree, such other internationallyrecognized firm of independent accounts mutually agreed by Essex and Nexans(and, in such case, such firm shall be deemed to be the CPA Firm), within ten(10) days after the expiration of the Resolution Period.  All fees and expenses relating to the work,if any, to be performed by the CPA Firm shall be borne by Essex and Nexansequally.  The CPA Firm’s determination ofthe Unresolved Items shall be made within thirty (30) days after the submissionof the Unresolved Items to the CPA Firm, and, together with a calculation ofthe Essex Capital Employed and Nexans Capital Employed based upon the amount ofResolved Items and CPA Firm’s determinations of the Unresolved Items, shall beset forth in a written statement delivered to Essex, Nexans and the JV HoldingCompany by the CPA Firm and shall be final, binding, and conclusive on theparties for all purposes.

 

2.6.4                        Withinfive (5) Business Days following either (i) an agreement by Essex and Nexans asto the Nexans Capital Employed and the Essex Capital Employed or (ii) theCPA Firm’s determination of the Unresolved Items, the following payments shallbe made:

 

(a)                                  Ifthe Essex Capital Employed is greater than €10,500,000, Nexans shall pay toEssex €400,000 and the JV Holding Company shall issue to Essex a promissorynote substantially in the form attached hereto as Exhibit 2.6.4 (a “CapitalEmployed Note”), in an aggregate principal amount equal to the lesser of(i) €500,000, and (ii) the amount by which the Essex Capital Employed exceeds€10,500,000.  If the Essex CapitalEmployed is between €9,500,000 and €10,500,000, Nexans shall pay to Essex an amountequal to forty percent (40%) of the difference between the Essex CapitalEmployed and €9,500,000.  If the EssexCapital Employed is less than €8,500,000, Essex shall pay to Nexans an amountequal to forty percent (40%) of the difference between the Essex CapitalEmployed and €8,500,000; and

 

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(b)                                 Ifthe Nexans Capital Employed is greater than €71,000,000, Superior or Essexshall pay to Participations €4,200,000 and the JV Holding Company shall issueto Participations a Capital Employed Note, in an aggregate principal amountequal to the lesser of (i) €2,000,000, and (ii) the amount by which the NexansCapital Employed exceeds €71,000,000.  Ifthe Nexans Capital Employed is between €64,000,000 and €71,000,000, Essex shallpay to Participations an amount equal to sixty percent (60%) of the differencebetween the Nexans Capital Employed and €64,000,000.  If the Nexans Capital Employed is less than€60,000,000, Nexans shall pay to Essex an amount equal to sixty percent (60%)of the difference between the Nexans Capital Employed and €60,000,000.

 

2.6.5                        Anyamounts owed by a Party pursuant to this Section 2.6 shall be netted againstany amounts owed to such Party pursuant to this Section 2.6.  In the event that Essex is required to make anet payment to Participations, such payment shall be made in consideration ofthe sale by Participations to Essex of shares of the JV Holding Companyrepresenting 1% of the share capital of the JV Holding Company.  If Essex is not required to make such a netpayment, Essex shall purchase from Nexans Participations, for €1,000, shares ofthe JV Holding Company representing 1% of the share capital of the JV HoldingCompany.  Following such transactions,Essex shall hold 60% of the JV Holding Company and Participations shall hold40% of the JV Holding Company.

 

2.7                                 AdditionalAdjustments.

 

2.7.1                        If theJoint Venture’s Adjusted EBITDA for the year ended December 31, 2006 isequal to or greater than the applicable 2006 EBITDA Target (as defined below),(a) the purchase price of the shares sold pursuant to Section 2.6.5 shall beincreased by 60% of the related Equity Adjustment Amount (as defined below)(the “Additional Cash Consideration”), and paid by Superior or Essex toNexans within five Business Days following completion of the audited financialstatements of the Joint Venture for the year ended December 31, 2006 and(b) the Initial Net Equity Value shall be increased by such Equity AdjustmentAmount for purposes of calculating the Put Price and Call Price (as such termsare defined in the Shareholders Agreement).

 

The “2006EBITDA Targets” and the corresponding “Equity Adjustment Amounts”shall be as set forth in the table below.

 
| **2006  EBITDA Target (in millions)** | ** ** | **Equity Adjustment Amount** | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| €8.0 to but  excluding €8.3 |       | €2 million              |       |
| €8.3 to but  excluding €8.7 |       | €3 million              |       |
| €8.7 to but  excluding €9.0 |       | €4 million              |       |
| Greater than  or equal to 9.0         |       | €5 million              |       |

 

In the eventthat there is a sale or disposal (or acquisition) of Production Assets (whetherdirectly or indirectly through the sale, disposal or acquisition of a Personthat owns Production Assets) which would, or is reasonably likely to, result ina reduction (or increase) in projected Adjusted EBITDA (as set forth in theBusiness Plan) for the year ended December 31, 2006, then the 2006 EBITDATargets shall be adjusted to reflect the projected percentage decrease (orincrease) in Adjusted EBITDA resulting from the sale (or acquisition), so as tomaintain the economic rights 

 

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and obligations of the parties,such adjustment to be determined by agreement by the parties or, failing suchagreement, by the Independent Expert pursuant to Section 8.11.6.

 

2.7.2                        TheInitial Net Equity Value shall be increased, for purposes of calculating thePut Price and Call Price, by the amount by which the Nexans Capital Employed(as finally determined pursuant to Section 2.6) exceeds €64,000,000 (up to amaximum of €71,000,000) or decreased by the amount by which the Nexans CapitalEmployed (as finally determined pursuant to Section 2.6) is less than€60,000,000.

 

2.7.3                        TheInitial Net Equity Value shall be decreased, for purposes of calculating thePut Price and Call Price, by the amount by which the Essex Capital Employed (asfinally determined pursuant to Section 2.6) is less than €8,500,000 andincreased by the amount by which the Essex Capital Employed (as finallydetermined pursuant to Section 2.6) is greater than €9,500,000 (up to a maximumof €10,500,000).

 

2.8                                 Payments.  All payments required under this Article IIor any other provision hereof shall, unless otherwise expressly providedherein, be made in cash by wire transfer of immediately available funds to suchbank account as shall be designated in writing by the Person to which theapplicable payment is due.

 

ARTICLE IIIREPRESENTATIONS AND WARRANTIES

 

3.1                                 Representationsand Warranties of Nexans.  Nexanshereby represents and warrants to the Essex Parties as of the date hereof andas of the Closing that:

 

3.1.1                        Organization.

 

(a)               Each Nexans Entityis an Entity duly formed and validly existing under the Laws of itsjurisdiction of organization and has all requisite power and authority to own,lease and operate its properties and to carry on its business as now beingconducted.  Nexans has heretofore madeavailable to Essex true, correct and complete copies of the Charter Documentsof each Nexans WW Entity as currently in effect.  Nexans has heretofore made available to Essexthe corporate record books of each Nexans WW Entity with respect to actionstaken by its shareholders and board of directors since January 1, 2003 (orsince formation for any Entity formed after January 1, 2003). On June 17,2005, Flytex was converted to a *société paractions simplifiée.*

 

(b)              Schedule 3.1.1(b)sets forth each Entity in which a Nexans WW Entity owns, directly orindirectly, any capital stock or other equity, security or interest.

 

(c)               Schedule3.1.1(c) accurately and completely sets forth the capital structure of eachNexans WW Entity by listing thereon the number of shares of capital stock ofsuch Nexans WW Entity, in the case of Hi-Wire, which are authorized and whichare issued and outstanding and the number of shares of capital stock of suchNexans WW Entity owned by each shareholder, partner or other equity holderthereof.  Participations owns all of theHi-Wire Shares and Nexans Portugal Shares, free and clear of allEncumbrances.  Participations

 

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owns all of the Flytex Shares, free and clear of allEncumbrances.  L&K owns all of theGerman Newco Shares, free and clear of all Encumbrances.  There are no outstanding options, warrants,conversion rights, subscriptions or other rights entitling any Person toacquire or receive, or requiring any Nexans WW Entity to issue, any shares ofits capital stock or securities convertible into, or exchangeable for, suchshares of capital stock.

 

3.1.2                        Authorization.  Each of the Nexans Entities has fullcorporate power and authority to execute (and, to the extent applicable, todeliver) this Agreement and the Ancillary Documents to which it is a party, asapplicable, and to perform its obligations hereunder and thereunder and toconsummate the transactions contemplated hereby and thereby.  The execution (and, to the extent applicable,delivery) by each Nexans Entity of this Agreement and the Ancillary Documentsto which it is a party, as applicable, and the performance by each NexansEntity of its obligations hereunder and thereunder and the consummation of thetransactions provided for herein and therein have been duly and validly authorizedby all necessary corporate action on the part of each Nexans Entity.  This Agreement has been, and the AncillaryDocuments shall be as of the Closing Date, duly executed (and, to the extentapplicable, delivered) by each Nexans Entity, as applicable, and do or shall,as the case may be, constitute the valid and binding agreements of each NexansEntity, enforceable against it in accordance with their respective terms.

 

3.1.3                        Absenceof Restrictions and Conflicts.  Theexecution, delivery (where applicable) and performance by each Nexans Entity ofthis Agreement and the Ancillary Documents, as applicable, the consummation ofthe transactions contemplated hereby and thereby and the fulfillment of andcompliance with the terms and conditions hereof and thereof do not or shall not(as the case may be), with the passing of time or the giving of notice or both,(a) contravene or conflict with any term or provision of the Charter Documentsof such Nexans Entity, (b) except as indicated on Schedule 3.1.3, violateor conflict with, constitute a breach of or default under, result in the lossof any benefit under, permit the acceleration of any obligation under or createin any party the right to terminate, modify or cancel any Contract to whichsuch Nexans Entity is a party, (c) contravene or conflict with any judgment,decree or order of any Governmental Entity to which such Nexans Entity is aparty or by which such Nexans Entity or any of its properties are bound, (d)contravene or conflict with any Law or arbitration award applicable to suchNexans Entity, or the Nexans WW Business, or (e) result in the creation orimposition of any Encumbrance or any asset, property or right of such NexansEntity.

 

3.1.4                        RequiredConsents.  Schedule 3.1.4 setsforth each consent, approval, notification, waiver, authorization, order orfiling (each, a “Nexans Required Consent” and collectively, the “NexansRequired Consents”) under any Law, License, or Contract to which a NexansEntity is a party that is necessary for the execution, delivery (whereapplicable) and performance of this Agreement or the Ancillary Documents andthe consummation of the transactions contemplated hereby and thereby in orderto 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 anybenefit under any such Law, License, or Contract.

 

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3.1.5                        RealProperty.

 

(a)                                  Schedule3.1.5(a)(i) sets forth a list of all Nexans Owned Real Property and thename of the Nexans Entity which is the owner thereof.  Except as set forth on Schedule3.1.5.(a)(ii), the applicable Nexans Entity has good and marketable,indefeasible title to the Nexans Real Property (other than Nexans Leased RealProperty).

 

(b)                                 Schedule3.1.5(b) sets forth a true and correct list of all Nexans Leased RealProperty.  The leases with respectthereto are in full force and effect and are valid, binding and enforceableagainst the parties thereto in accordance with their respective terms.

 

(c)                                  Exceptas set forth on Schedule 3.1.5(c), and except further to the extent thatany violation could not, individually or in the aggregate, reasonably beconsidered to be material, no portion of the Nexans Real Property, or anybuilding or improvement located thereon, violates any Law, includingEnvironmental Laws and Laws relating to zoning, building or land use.  Except for the Permitted Encumbrances or anymatters contemplated in the Ancillary Documents, no Nexans Real Property issubject to (i) any Encumbrances, (ii) any governmental decree or order (or, tothe Knowledge of Nexans, threatened or proposed order) that materially limitsor restricts the use of the Nexans Real Property or (iii) any rights of way,building use restrictions, exceptions, variances, reservations or limitationsof any nature whatsoever.

 

(d)                                 Exceptas set forth on Schedule 3.1.5(d), the improvements and fixtures on theNexans Real Property are in good operating condition, ordinary wear and tearexcepted, and are regularly maintained and repaired and are adequate andsuitable for the purposes for which they are presently being used.  Except as set forth on Schedule 3.1.5(d),none of the buildings and improvements owned or utilized by the Nexans Entitiesin the operation of the Nexans WW Business are constructed of, or contain as acomponent part thereof, any material that releases any substance, whethergaseous, liquid or solid, in amounts that are prohibited by applicable Law byreason of such substance being injurious or hazardous to the health of anyindividual who may from time to time be in or about such buildings orimprovements.  There is no condemnation,expropriation or similar proceeding pending or, to the Knowledge of Nexans,threatened against any of the Nexans Real Property or any improvementthereon.  The Nexans Real Property andany real property to be utilized by virtue of the Ancillary Documentsconstitutes all of the real property utilized in the operation of the Nexans WWBusiness.  The buildings and structuresincluded in the Nexans Real Property and real property utilized by virtue ofthe Ancillary Documents have access either directly or by virtue of theAncillary Documents to (a) public roads or valid easements over private streetsor private property for adequate ingress to and egress from all such buildingsand structures, (b) water supply, storm and sanitary sewer facilities,telephone, gas and electrical connections, fire protection, drainage and otherpublic utilities, as is necessary for the conduct of the Nexans WW Business.

 

3.1.6                        PersonalProperty.  Except as set forth on Schedule3.1.6 and equipment not in service but being used for spare parts, allequipment and other items of tangible personal property and assets owned, held orleased, and used in the Nexans WW Business (the “Nexans Personal Property”)(a) are in good operating condition, ordinary wear and tear excepted, and areregularly maintained and repaired, and (b) were acquired and are

 

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usable in the regular and ordinary course ofbusiness.  Except as set forth on Schedule3.1.6(a), all of the Nexans Personal Property is in the possession of theNexans WW Entities and is located at the Nexans Real Property.  No Person other than a Nexans WW Entity ownsany Nexans Personal Property that is necessary to the operation of the NexansWW Business, except for leased items that are subject to personal propertyleases.  Schedule 3.1.6(b) setsforth a true, correct and complete list and general description of each item ofNexans Personal Property having an original cost of more than €100,000.

 

3.1.7                        Sufficiencyof Assets; Title to Assets.

 

(a)                                  Exceptas set forth on Schedule 3.1.7(a) and except for the Nexans’ ExcludedAssets, the Nexans WW Assets constitute all of the assets (whether real,personal or mixed and whether tangible or intangible) used in connection withand necessary to permit the Nexans Entities to conduct, the operations of theNexans WW Business in accordance with their past practices.

 

(b)                                 TheNexans Entities have good and marketable title to or, in the case of the NexansLeased Real Property or leased personal property, valid leasehold interests in,the Nexans WW Assets, free and clear of all Encumbrances except PermittedEncumbrances.

 

(c)                                  Asof the Closing, the Joint Venture will have good and marketable title to or, inthe case of the Nexans Leased Real Property or leased personal property, validleasehold interests in, the Nexans WW Assets (other than the Nexans’ ExcludedAssets), free and clear of all Encumbrances except Permitted Encumbrances.  Except for the Nexans Excluded Assets or asset forth on Schedule 3.1.7(c), as of the Closing, the Nexans WW Assetswill constitute all of the assets (whether real, personal or mixed and whethertangible or intangible) used to conduct operations or necessary to permit theJoint Venture to continue to conduct the operations of the Nexans WW Businessin accordance with past practices.

 

3.1.8                        Inventory.  Except as set forth in Schedule 3.1.8,the inventory included in the Nexans WW Assets (a) was acquired for theoperation of the Nexans WW Business in the ordinary course consistent with pastpractice, (b) is of a quality and quantity usable or saleable in the ordinarycourse of business, except to the extent of reserves in relation theretoincluded in the Nexans Closing Balance Sheet (taken on an aggregate basis), and(c) is valued on the books and records of the Nexans Parties at the lower ofcost or market with the cost determined under the last-in-first-out inventoryvaluation method consistent with past practice.

 

3.1.9                        FinancialStatements.  Except as set forth on Schedule3.1.9(a) or the notes to the Nexans Financial Statements, the NexansFinancial Statements are in conformity with French GAAP (consistently applied),and except to the extent of adjustments made from local accounting standards toFrench GAAP, are in accordance with, the books and records of the NexansEntities, which books and records have been maintained on a basis consistentwith the past practice of the Nexans Entities. Except as set forth in the notes thereto,

 

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the Nexans Statements of Capital Employed and theNexans Statements of Operating Income fairly present the financial conditionand results of operations of the Nexans WW Business as of the dates or for theperiods set forth therein, with the exception of financial liabilities (dettesfinancières) and equity in the case of the Nexans Statement of CapitalEmployed.  Since June 30, 2005, there hasbeen no change in any accounting (or tax accounting) policies, practices orprocedures of the Nexans Entities with respect to the Nexans WW Business.  Each Nexans WW Entity maintains accuratebooks and records reflecting its assets and liabilities and maintains internalaccounting controls as described in the Chairman’s report to the generalshareholders’ meeting of Nexans publicly available on www.nexans.com, providedthat the Nexans Parties make no representation as to whether such controlswould be considered “effective” within the meaning of the rules and regulationsof the Securities and Exchange Commission and the Public Company AccountingOversight Board under Section 404 of the Sarbanes-Oxley Act of 2002.

 

3.1.10                  NoUndisclosed Liabilities. There are no liabilities related to the Nexans WWBusiness that would be required in accordance with French GAAP to be reflectedin a combined, pro forma balance sheet of the Nexans WW Business as of June 30,2005 (or the notes thereto), except for:

 

(a)                                  liabilitiesand obligations properly reflected or provided for in the Nexans Statement ofCapital Employed as of June 30, 2005 (including, for the avoidance of doubt,the notes and annexes thereto) subject to any qualifications made therein;

 

(b)                                 financialliabilities (dettes financières); and

 

(c)                                  liabilitiesand obligations incurred in the ordinary course of business, consistent withpast practice.

 

3.1.11                  Absence ofCertain Changes.

 

(a)                                  SinceJune 30, 2005, there has not been any Material Adverse Effect,

 

(b)                                 SinceJune 30, 2005, there has not been any damage, destruction, loss or casualty tothe Nexans WW Assets with a value in excess of €100,000, whether or not coveredby insurance, or

 

(c)                                  Exceptas set forth on Schedule 3.1.11, since June 30, 2005, there has not beenany action taken of the type described in Section 4.2.1, that, had such actionoccurred following the date hereof without Essex’s prior approval, would be inviolation of such Section 4.2.1.

 

3.1.12                  LegalProceedings.  Except as set forth on Schedule3.1.12(a) and claims solely for damages less than €75,000, there is nosuit, action, claim, arbitration, proceeding or investigation pending or, tothe Knowledge of Nexans, threatened against a Nexans Entity with respect to theownership of the Nexans WW Assets or the operation of the Nexans WW Businessbefore any Governmental Entity.  No suit,action, claim, proceeding or investigation pending or, to the Knowledge ofNexans, threatened against a Nexans Entity with respect to the ownership of theNexans WW Assets or the operation of the Nexans WW Business

 

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before any Governmental Entity (including any of thoseset forth on Schedule 3.1.12(a)), if finally determined adversely, isreasonably likely, individually or in the aggregate, to have a material adverseeffect on the financial condition, results of operations, or prospects of theNexans WW Business.  Except as set forthin Schedule 3.1.12(b), no Nexans Entity is subject to any judgment,decree, injunction, rule or order of any court or arbitration panel related tothe Nexans WW Business or the Nexans WW Assets.

 

3.1.13                  Compliancewith Law.  Except as set forth in Schedule3.1.13, each Nexans Entity is (and has been at all times during the pastthree (3) years) in compliance with all Laws (including applicable Lawsrelating to zoning and the safety and health of employees) applicable to theownership of the Nexans WW Assets or the operation of the Nexans WWBusiness.  No Nexans Entity has beencharged with, and no Nexans Entity has received any written notice that it isunder investigation with respect to, and, to the Knowledge of Nexans, is nototherwise now under investigation with respect to, a violation of any Lawapplicable to the Nexans WW Business.

 

3.1.14                  Contracts.  Each correspondingly lettered section of Schedule3.1.14(a) sets forth a true, correct and complete list of the followingNexans WW Contracts currently in force, or under which any Nexans Entity willhave continuing liabilities and/or obligations after the Closing:

 

(a)                                  bonds,debentures, notes, credit or loan agreements or loan commitments, mortgages,indentures, guarantees or other Contracts relating to the borrowing of money orthe deferred purchase price of property or binding upon any properties orassets (real, personal or mixed, tangible or intangible) of the NexansEntities;

 

(b)                                 NexansWW Contracts that were not entered into in the ordinary course of businessconsistent with past practice;

 

(c)                                  leasesrelating to the Nexans Leased Real Property and all other Contracts involvingthe lease or use of any properties or assets (whether real, personal or mixed,tangible or intangible) involving an annual commitment or payment of more than€50,000 by a Nexans Entity;

 

(d)                                 allContracts related to the Nexans WW Business that (i) limit or restrict aNexans WW Entity or any directors or employees of a Nexans WW Entity fromengaging in any business or other activity in any jurisdiction, (ii) create orpurport to create any exclusive or preferential relationship or arrangement, or(iii) otherwise restrict or limit a Nexans WW Entity’s ability to operate the NexansWW Business;

 

(e)                                  allContracts for capital expenditures or the acquisition or construction of fixedassets requiring the payment by a Nexans Entity of an amount in excess of €100,000;

 

(f)                                    allContracts that provide for an increased payment or benefit, or acceleratedvesting, upon the execution hereof or the Closing or in connection with thetransactions contemplated hereby;

 

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(g)                                 allContracts granting any Person an Encumbrance (other than a PermittedEncumbrance) on all or any part of any Nexans WW Assets;

 

(h)                                 allContracts granting to any Person an option or a first refusal, first-offer orsimilar preferential right to purchase or acquire any Nexans WW Assets;

 

(i)                                     allContracts with any agent, distributor or representative that is not terminablewithout penalty on thirty (30) days’ or less notice, and in respect of which atleast €10,000 in commissions were paid by the Nexans WW Business in 2004;

 

(j)                                     allContracts for the granting or receiving of a license, sublicense or franchiseor under which any Person is obligated to pay or has the right to receive aroyalty, license fee, franchise fee or similar payment;

 

(k)                                  allContracts (i) with respect to Nexans Intellectual Property licensed ortransferred to any Person (other than end user Licenses in the ordinary courseof business) or (ii) pursuant to which any Person is licensing any NexansIntellectual Property to a Nexans Entity;

 

(l)                                     allNexans WW Contracts providing for the indemnification or holding harmless by aNexans Entity of any officer, director, employee or other Person;

 

(m)                               alljoint venture or partnership Contracts related to the Nexans WW Business;

 

(n)                                 allContracts with Nexans WW Customers or Nexans WW Suppliers;

 

(o)                                 allContracts containing irrevocable powers of attorney empowering any Person toact on behalf of a Nexans WW Entity;

 

(p)                                 anyContract entitling any Person to any profits, revenues or cash flows of aNexans WW Entity or requiring payments or other distributions based on suchprofits, revenues or cash flows;

 

(q)                                 allContracts with any Governmental Entity;

 

(r)                                    allEmployment Agreements of a Nexans Entity with any member of the Nexans ExtendedManagement Committee; and

 

(s)                                  allexisting Contracts, agreements and commitments (other than those of a typedescribed in subsections (a) through (r) of this Section 3.1.14 or purchase orsale orders made in the ordinary course of business consistent with pastpractices and which are otherwise not required to be disclosed pursuant tosubsection (a) through (r) above) to which a Nexans WW Entity is a party or bywhich its properties or assets are bound involving an

 

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annual commitment or annual payment to or from aNexans WW Entity of more than €100,000 individually.

 

True, correctand complete copies of all written Nexans WW Contracts listed, or required tobe listed, on Schedule 3.1.14(a) have been made available to Essex orits advisors.  The Nexans WW Contractsare valid, binding and enforceable in accordance with their respective termswith respect to the applicable Nexans Entity and, to the Knowledge of Nexans,each other party to such Nexans WW Contracts. There is no existing notified default or breach of the applicable NexansEntity under any Nexans WW Contract (or, to the Knowledge of Nexans, any eventor condition that, with notice or lapse of time or both could constitute adefault or breach) and, to the Knowledge of Nexans, there is no such default(or event or condition that, with notice or lapse of time or both, couldconstitute a default or breach) with respect to any third party to any NexansWW Contract.  There is no material term,obligation, understanding or agreement that would modify any term of a writtenNexans WW Contract or any right or obligation of a party thereunder which isnot reflected on the face of such Nexans WW Contract.  Except as set forth on Schedule 3.1.14(b),to the Knowledge of Nexans, no Nexans WW Contract is a contract or agreement inwhich, in Nexans’ best estimate, the direct labor cost, direct materials cost,direct energy costs, direct transportation costs and external sales commissions(calculated on a basis consistent with past practice) incurred or to beincurred in connection therewith exceed the revenues derived or to be derivedtherefrom.

 

3.1.15                  Tax Returns;Taxes.  Except as set forth on Schedule3.1.15, (a) all Tax Returns with respect to the Nexans WW Business dueto have been filed through the date hereof in accordance with all applicableLaws have been duly filed and are correct and complete in all materialrespects; (b) all Taxes, deposits and other payments with respect to the NexansWW Business for which a Nexans Entity has liability (whether or not shown onany Tax Return) have been paid in full or will be accrued as liabilities forTaxes on the Nexans Closing Balance Sheet; (c) the amounts so paid, togetherwith all amounts accrued as liabilities for Taxes (including Taxes accrued ascurrently payable but excluding any accrual to reflect timing differencesbetween book and Tax income) on Nexans Financial Statements with respect to theNexans WW Business, shall be adequate based on the tax rates and applicableLaws in effect to satisfy all liabilities for Taxes of the Nexans Entities withrespect to the Nexans WW Business in any jurisdiction through the Closing Date,including Taxes accruable upon income earned through the Closing Date; (d)there are not now any extensions of time in effect with respect to the dates onwhich any Tax Returns with respect to the Nexans WW Business were or are due tobe filed by a Nexans Entity; (e) all Tax deficiencies asserted as a result ofany examination by a Governmental Entity of a Tax Return of a Nexans Entitywith respect to the Nexans WW Business have been paid in full, accrued onNexans Financial Statements or finally settled, and no issue has been raised inany such examination that, by application of the same or similar principles,reasonably could be expected to result in a proposed Tax deficiency for anyother period not so examined; (f) no claims have been asserted and no proposalsor deficiencies for any Taxes of a Nexans Entity with respect to the Nexans WWBusiness are being asserted, proposed or, to the Knowledge of Nexans,threatened, or expected to be assessed, and no audit or investigation of anyTax Return of a Nexans Entity with respect to the Nexans WW Business is currentlyunderway, pending or threatened; (g) no claim has been made since January 1,2003 against a Nexans Entity by any Governmental Entity in a jurisdiction wherethe applicable Nexans Entity does not file Tax Returns with respect to theNexans WW Business that such

 

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Nexans Entity is or may be subject to taxation withrespect to the Nexans WW Business in such jurisdiction; (h) each Nexans Entityhas withheld and paid all Taxes with respect to the Nexans WW Business requiredto have been paid by it in connection with amounts paid or owing to anyemployee, independent contractor, creditor or shareholder thereof or otherthird party; (i) there are no outstanding waivers or agreements between anyGovernmental Entity and a Nexans Entity or for the extension of time for theassessment of any Taxes or deficiency thereof with respect to the Nexans WWBusiness, nor are there any requests for rulings, outstanding subpoenas orrequests for information, notice of proposed reassessment of any property ownedor leased by a Nexans Entity or any other matter pending between a NexansEntity and any Governmental Entity; (j) there are no Encumbrances for Taxeswith respect to a Nexans Entity or the Nexans WW Assets other than Encumbrancesfor Taxes that are not yet due and payable, nor is there any such Lien that ispending or, to the Knowledge of Nexans, threatened; and (k) no Nexans Entity isa party to or bound by any Tax allocation or sharing agreement.

 

3.1.16                  Directors,Employees and Independent Contractors. Schedule 3.1.16 contains a true, accurate and complete list as ofthe date hereof of (a) all of the members of the Nexans Extended ManagementCommittee. Nexans has made available to Essex information relating to theirposition, annual rate of compensation and all emoluments (including any bonus,commission, premium, benefit in kind and incentive entitlement), date of hire,work location, length of service and employee benefit coverages selected orbenefits provided, (b) all of the employees (whether full-time, part-time,fixed-term Employment Agreement, indefinite term Employment Agreement orotherwise) of each Nexans Entity involved in the Nexans WW Business as of thedate hereof.  Nexans has made availableto Essex information relating to their position, category and classification,annual gross salary and other compensation and emoluments and employee benefitcoverages selected or benefits provided, as the case may be, sabbatical leave,parental leave, long-term sick leave and (c) all of the independent contractorsused by each Nexans Entity in connection with the operation of the Nexans WWBusiness to whom fees of more than €10,000 were paid in 2004, specifying thename of the independent contractor, type of labor, all fees and emoluments andbenefits paid or provided to such independent contractor from January 1, 2005through June 30, 2005.  No NexansEntities have made any binding commitments (other than as set forth in employmentcontracts or collective bargaining agreements) to any director, manager,employee, former employee, employee representative, consultant or independentcontractor of a Nexans Entity in connection with the Nexans WW Business withrespect to compensation, emoluments, benefits, promotion, retention,termination, severance or similar matters in connection with the transactionscontemplated hereby or otherwise that would affect the annual rate ofcompensation and all emoluments as detailed in Schedule 3.1.16.

 

3.1.17                  NexansBenefit Plans.  Except for the NexansGerman Benefit Plans and the UK Stakeholders Plan, there are no other NexansBenefit Plans, except that Nexans WW Entities are required by law or nationalcollective bargaining agreements to make payments to mandatory social securityor similar programs in the jurisdictions in which they operate.  The Nexans Entities have made all requiredcontributions to public pension, health insurance and other social systems ofgeneral application that are mandatory by law or national collective bargainingagreements.  The Nexans German BenefitPlans and the UK Stakeholders Plan are described in Schedule 3.1.17 andobligations in respect thereof through the Closing Date will be fully reservedin the Nexans Closing Balance Sheet.

 

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3.1.18                  LaborRelations.  Except as set forth onSchedule 3.1.18:

 

(a)                                  NoNexans Entity is and/or has been a signatory to a collective bargainingagreement or other agreement with or recognizes any trade union, labororganization or other group covering employees involved in the Nexans WWBusiness.  To the Knowledge of Nexans, norequest for recognition is threatened or pending.

 

(b)                                 Nowalk out, strike, or work stoppage involving the employees of a Nexans Entityinvolved in the Nexans WW Business has occurred within the last 12 months or isin progress.

 

(c)                                  Nomaterial claim, complaint, charge or investigation from any employees, socialsecurity administration, Labor Administration, trade union or GovernmentalEntity, regarding any applicable Law, immigration Law, collective bargainingagreement, recognition agreements, contractual, statutory or tortuousobligation, usage, practice or unilateral decision of the employer for, inparticular, safety and health conditions, unpaid wages, bonuses, commissions,employment withholding taxes and/or social security or similar contributions ordeductions, penalties, overtime, or other compensation, profit sharing(Mandatory or Voluntary), Nexans Benefit Plans, company saving plans, benefits,child labor or record keeping violations has been filed or is pending or, tothe Knowledge of Nexans, threatened under applicable Laws with respect toemployees of a Nexans Entity involved in the Nexans WW Business.

 

(d)                                 EachNexans Entity has discharged its obligations in full in relation to salary,wages, fees, commissions, bonuses, premiums, benefits in kind, overtime pay,holiday pay, sick pay, profit sharing (Mandatory or Voluntary), company savingsplans and all other benefits and emoluments relating to its employees,independent contractors and workers involved in the Nexans WW Business sinceJanuary 1, 2002.

 

(e)                                  Nodiscrimination, harassment (moral or sexual) or retaliation claim, complaint,charge or investigation has been filed or is pending or, to the Knowledge ofNexans, threatened against a Nexans Entity, by any employee involved in theNexans WW Business or any representatives of such employees under applicableLaw.

 

(f)                                    EachNexans Entity has concluded since January 1, 2002 valid settlement agreementsand termination agreements and has implemented valid dismissal procedures (bothwith respect to the procedure and the reasons for the dismissal) underapplicable Law of the relevant jurisdictions with respect to former employeesinvolved in the Nexans WW Business.

 

(g)                                 EachNexans Entity has paid or accrued all current assessments under employees,independent contractors and/or workers’ compensation legislation with respectto employees and independent contractors involved in the Nexans WW Business,and no Nexans Entity has been subject to any special or penalty assessmentunder any such legislation with respect to any such employees or independentcontractors that has not been paid.

 

(h)                                 TheEmployment Agreements between any Nexans Entity and any of its employees orworkers involved in the Nexans WW Business do not contain

 

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any termination provisions more onerous than thoserequired by applicable Law or the applicable collective bargaining agreement.  There are no limitations to dismissals orrestructuring other than those provided by applicable Law or collectivebargaining agreement.

 

(i)                                     NoNexans Entity has introduced, and no Nexans Entity has proposed to introduce,any share incentive scheme, share option scheme or profit sharing, bonus,commission or other such incentive scheme for any of its employees involved inthe Nexans WW Business, other than as detailed in Schedule 3.1.17.

 

(j)                                     NoNexans Entity has given notice of any redundancies to any appropriateGovernment Entity in any jurisdiction and no Nexans Entity has commencedconsultation with any independent trade union or employees’ representativewithin the last 12 months in relation to any of its employees or workersinvolved in the Nexans WW Business (except with respect to any consultationrequirement related to the transactions contemplated herein).  No circumstances have arisen under which anyNexans Entity is likely to be required to pay damages for wrongful dismissal orbreach of Contract, to make any contractual or statutory dismissal payment ormake or pay any compensation in respect of unfair dismissal or breach ofContract, to make any other payment under any applicable Law or collectivebargaining agreement or to reinstate or re-engage any former employee, in eachcase with respect to employees, independent contractors or workers involved inthe Nexans WW Business, and in each case except to the extent of amounts to bereserved on the Nexans Closing Balance Sheet;

 

(k)                                  Exceptfor those administrative employees who have been divided between the Nexans WWBusiness and the other activities of Nexans or its Affiliates in Normanton,Bramsche and Chauny, the employees listed in Schedule 3.1.16 are theonly individuals employed by the Nexans Entities and dedicated to the Nexans WWBusiness.

 

(l)                                     Noindividuals employed by a Nexans Entity other than the employees listed in Schedule3.1.16 shall transfer into the employment of the Joint Venture by operationof law by reason of his/her providing services to the Joint Venture or byhis/her working in conjunction or in association with the Joint Venture’semployees or Nexans WW Business.

 

3.1.19                  InsurancePolicies.  Nexans has provided toEssex a copy of the claims history and loss experience of the Nexans WWBusiness under its liability and property damage insurance policies for the twoyear period ended April 30, 2005.

 

3.1.20                  Environmental,Health and Safety Matters.  Except asset forth on Schedule 3.1.20:

 

(a)                                  Inconnection with the operation of the Nexans WW Business, each Nexans Entitypossesses all Licenses required under, and each Nexans Entity is in compliancewith, all Environmental Laws related to the Nexans WW Business.

 

(b)                                 Noportion of the Nexans Owned Real Property or the real property subject to theBramsche Real Estate Agreement, the Chauny Lease or the Normanton Lease hasbeen used as a landfill or waste disposal site. To the Knowledge of Nexans, no portion of the Nexans Leased Real Property(other than the real property subject to

 

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the Bramsche Real Estate Agreement, the Chauny Leaseor the Normanton Lease) has been used as a landfill or waste disposal site.

 

(c)                                  NoNexans Entity has received written notice of actual or threatened liabilityunder any Environmental Law related to the operation of the Nexans WW Businessor the Nexans WW Assets.

 

(d)                                 NoNexans Entity has ever had an audit conducted regarding any environmental orhealth and safety matter related to the Nexans Real Property or the Nexans WWBusiness.  For purposes of this Section3.1.20(d), an “audit” means any inspection, investigation, assessment, study ortest performed at the request of, or on the behalf of, a Governmental Entityconducted since January 1, 2002.  Nexanshas provided to Essex true, correct and complete copies of the finalconclusions and instructions****ofthe Governmental Entity which performed such audit.

 

(e)                                  NoNexans WW Entity has been subject to any administrative or judicial proceedingrelated to the operation of the Nexans WW Business, or paid any fines orpenalties in excess of € 10,000 pursuant to applicable Environmental Laws atany time since January 1, 2002.

 

(f)                                    Inconnection with the operation of the Nexans WW Business, no Nexans Entity issubject to any claim, obligation, liability, loss, damage or expense of anykind or nature whatsoever (other than ordinary course waste disposal,maintenance and remediation activities), contingent or otherwise, incurred orimposed or based upon any provision of any Environmental Law or arising out ofany act or omission of such Nexans Entity, or such Nexans Entity’s employees,agents or representatives related to the Nexans WW Business or arising out ofthe ownership, use, control or operation by such Nexans Entity of any plant,facility, site, area or property used in connection with the Nexans WW Businessfrom which any Hazardous Material was released.

 

(g)                                 Nexanshas made available to Essex or its advisors true, correct and materiallycomplete copies of all material internal reports (findings of personnel of theNexans Entities relating to environmental conditions) and of all externalreports (findings of external consultants relating to environmental conditions)and true, correct and materially complete copies of correspondence sinceJanuary 1, 2002 in the possession of the Nexans Entities, relating toenvironmental matters involving the Nexans WW Business.

 

(h)                                 Noimprovement or equipment included in the Nexans WW Assets contains anypolychlorinated biphenyls, underground storage tanks, or open or closed pits onor under any Nexans WW Asset.

 

(i)                                     NoNexans Entity has, within the last three years, imported, received,manufactured, produced, processed, labeled, or shipped, stored, used, operated,transported, treated or disposed of any Hazardous Material in connection withthe operation of the Nexans WW Business other than in material compliance withall Environmental Laws.

 

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3.1.21                  IntellectualProperty.

 

(a)                                  Schedule3.1.21(a) contains a list of all Nexans Registered Intellectual Propertyand a list of all Nexans Licensed Intellectual Property.

 

(b)                                 Exceptas set forth in Schedule 3.1.21(b), no Nexans Intellectual Property orproduct or service of the Nexans WW Business related to or using NexansIntellectual Property is subject to any proceeding or outstanding decree,order, judgment, agreement or stipulation (i) restricting in any manner theuse, transfer or licensing thereof by a Nexans Entity or (ii) that affects thevalidity, use or enforceability of the Nexans Intellectual Property.  Each item of Nexans Registered IntellectualProperty is valid and subsisting.  Allregistration, maintenance and renewal fees currently due in connection withNexans Registered Intellectual Property have been made and all documents,recordations and certifications in connection with such Nexans RegisteredIntellectual Property have been filed with the relevant patent, copyright,trademark or other authorities in all applicable jurisdictions for the purposeof maintaining such Nexans Registered Intellectual Property.

 

(c)                                  Exceptas set forth in Schedule 3.1.21(c), the Nexans Entities own and havegood and exclusive title to the Nexans Owned Intellectual Property, or havelicenses (sufficient for the conduct of the Nexans WW Business as currentlyconducted) to, each item of Nexans Licensed Intellectual Property, free andclear of any Encumbrance (excluding licenses and related restrictions); theNexans Entities are the exclusive owners or exclusive licensees of alltrademarks and service marks, trade names and domain names used in connectionwith and material to the operation or conduct of the Nexans WW Business,including the sale of any products or the provision of any services by theNexans WW Business, free and clear of all Encumbrances.

 

(d)                                 AllNexans Owned Intellectual Property was developed by (i) an employee of a NexansEntity or of its predecessor company working within the scope of his or heremployment at the time of such development, or (ii) agents, consultants, contractorsor other Persons who have executed appropriate instruments of assignment infavor of the applicable Nexans Entity as assignee that have conveyed to suchNexans Entity ownership of all of its intellectual property rights in theNexans Intellectual Property.

 

(e)                                  Tothe extent that any Nexans Owned Intellectual Property has been developed orcreated by a third party for a Nexans Entity, such Nexans Entity has a writtenagreement with such third party with respect thereto and such Nexans Entitythereby either (i) has obtained ownership of and is the exclusive owner of, or(ii) has obtained a license (sufficient for the conduct of the Nexans WWBusiness as currently conducted) to, all of such third party’s IntellectualProperty in such work, material or invention.

 

(f)                                    Nexansdoes not have Knowledge of, and has not received written notice of or any otherovert threat from any third party, that the operation of the Nexans WW Businessas it is currently conducted, including each Nexans Entity’s design, development,marketing and sale of the product or service of the Nexans WW Business(including with respect to products under development), or any act of theNexans WW Business, has infringed or infringes the Intellectual Property of anythird party.

 

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(g)                                 Tothe Knowledge of Nexans, no Person has or is infringing any Nexans OwnedIntellectual Property or any Nexans Licensed Intellectual Property.

 

(h)                                 EachNexans Entity has taken reasonable steps to protect the rights of such NexansEntity in confidential information and any trade secret or confidentialinformation of third parties used in the Nexans WW Business, and, except underconfidentiality obligations, there has not been any disclosure by such NexansEntity of confidential information of any Nexans Entity or third parties.

 

3.1.22                  Software.

 

(a)                                  Schedule3.1.22 sets forth a list of: (i) the material Nexans Proprietary Software,and (ii) the Nexans Licensed Software.

 

(b)                                 TheNexans Entities have all right, title and interest in and to all intellectualproperty rights in the Nexans Proprietary Software, and the Nexans ProprietarySoftware is free and clear of all Encumbrances. The use of the Nexans Software does not breach any term of any licenseor other contract between a Nexans Entity and any third party.  Each Nexans Entity is in compliance with theterms and conditions of all Contracts in favor of such Nexans Entity relatingto the Nexans Licensed Software.

 

(c)                                  Tothe Knowledge of Nexans, the Nexans Proprietary Software does not infringe anypatent, copyright or trade secret or any other intellectual property right ofany third party.  The source code for theNexans Proprietary Software has been maintained in confidence.

 

(d)                                 TheNexans Proprietary Software was: (i) developed by the Nexans Entities’employees working within the scope of their employment at the time of suchdevelopment; or (ii) developed by agents, consultants, contractors or otherPersons who have executed appropriate instruments of assignment in favor of theapplicable Nexans Entity as assignee that have conveyed to such Nexans Entityownership of all of its intellectual property rights in the Nexans ProprietarySoftware.  No Nexans Entity has receivednotice from any third party claiming any right, title or interest in the NexansProprietary Software.

 

(e)                                  NoNexans Entity has granted rights in the Nexans Software to any third party.

 

3.1.23                  AffiliateMatters.

 

(a)                                  Exceptas set forth on Schedule 3.1.23 and other than Ancillary Documents orany Contracts that will be terminated by the Closing Date,no (i) manager ordirector (or officer, in the case of Nexans Hi-Wire) of a Nexans Entity ormember of the Nexans Extended Management Committee, (ii) close relative of adirector or member of the Nexans Extended Management Committee (for thispurpose, a “close relative” means a parent, sibling, spouse or child), (iii)Entity in which any such director or Person owns any beneficial interest, (iv)Affiliate of any of the foregoing or (v) Affiliate of a Nexans Entity has anyinterest in or is a party to: (a) any Contract with a Nexans Entity relating tothe Nexans WW

 

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Business or the Nexans WW Assets; (b) any loan for orrelating to the Nexans WW Business or the Nexans WW Assets; or (c) any property(real, personal or mixed, tangible or intangible) used by a Nexans Entity inthe operation of the Nexans WW Business.

 

(b)                                 NoNexans Entity is a party to any Contract related to the Nexans WW Business whichimposed, or purports to impose, any obligations or restrictions on any of itsAffiliates (other than a Nexans WW Entity).

 

3.1.24                  Customer andSupplier Relations.  Schedule3.1.24 sets forth a list of the top seventeen Nexans WW Customers (whetherindividual customers or groups) identified by code name by 2004 sales, and allNexans WW Suppliers involving an annual commitment or payment inclusive ofcopper of more than €500,000.  The actualnames of such Nexans WW Customers and Nexans WW Suppliers have been madeavailable to the advisors of Essex.  ** **NoNexans WW Customer has notified any Nexans Entity in writing****within the past twelve months that itintends to cease purchasing any products or services of the Nexans WW Businessor materially decrease the purchasing volume of any products or services of theNexans WW Business.

 

3.1.25                  AccountsReceivable.  Except for receivablesset forth in Schedule 3.1.25, all accounts receivable of the NexansEntities related to the Nexans WW Business (i) are valid, existing andcollectible in a manner consistent with past practice, subject to the reservefor doubtful accounts receivable to be set forth in the Nexans Closing BalanceSheet (taken on an aggregate basis), (ii) represent monies due for goods soldand delivered or services rendered in the ordinary course of business and (iii)to the Knowledge of Nexans, are not subject to any refund or adjustment or anydefense, right of set-off, assignment, restriction, security interest or otherEncumbrance.

 

3.1.26                  Licenses. Schedule 3.1.26 is a true andcomplete list of all Licenses held by each Nexans Entity which are related tothe Nexans WW Business.  Each NexansEntity owns or possesses, and as of the Closing, the Joint Venture will own orpossess, all Licenses that are necessary to enable it to carry on the Nexans WWBusiness as presently conducted.  AllLicenses which are related to the Nexans WW Business are valid, binding and infull force and effect.  Except as setforth on Schedule 3.1.26, the execution and performance hereof and theconsummation of the transactions contemplated hereby shall not adversely affectany License or require the issuance of a new License.  Each Nexans Entity has taken all necessaryaction to maintain each License related to the Nexans WW Business, except wherethe failure to so act shall not have an adverse effect on a Nexans WW Entity orthe Nexans WW Business.  No loss orexpiration of any License related to the Nexans WW Business is pending or, to theKnowledge of Nexans, threatened (other than expiration upon the end of anyterm).

 

3.1.27                  Product andService Warranties.  Schedule3.1.27 sets forth all warranty or guaranty claims in excess of €100,000made since January 1, 2002 with respect to goods sold, or services provided, bythe Nexans WW Business, and there is (a) no pending or, to the Knowledgeof Nexans, threatened claim in excess of €100,000 alleging any breach of anysuch warranty or guaranty and (b) to the Knowledge of Nexans, no basis for anyclaim in excess of €100,000.

 

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3.1.28                  FrenchSpin-Off.

 

(a)                                  Restructuringof French Winding Wire Operations.  Priorto the date hereof, Nexans Wires has, pursuant to the terms and conditions ofthe contribution agreement attached hereto as Exhibit 3.1.28 (the “FrenchSpin-Off Agreement”), conveyed, transferred and assigned to Flytex all ofits right, title and interest in and to the assets and liabilities of theFrench Winding Wires Division in exchange for 871,875 shares of Flytex asprovided therein (the “French Spin-Off”).

 

(b)                                 Immediatelyprior to the consummation of the French Spin-Off, Flytex did not have anyassets, properties, operations or rights whatsoever, except for its registeredshare capital, and Flytex did not have or maintain any employees or EmployeeBenefit Plans.  Immediately prior to theconsummation of the French Spin-Off, Flytex did not have any liabilities orobligations of any nature, whether known or unknown, accrued or hereafterarising, absolute or contingent.

 

(c)                                  Theconsummation of the French Spin-Off did not (i) contravene or conflictwith any term or provision of the Charter Documents of any Nexans Entity, (ii)except as indicated in Schedule 3.1.3, violate or conflict with,constitute a breach of or default under, result in the loss of any benefitunder, permit the acceleration of any obligation under or create in any partythe right to terminate, modify or cancel any Contract to which a Nexans Entityis a party, (iii) contravene or conflict with any judgment, decree or order ofany Governmental Entity to which a Nexans Entity or by which a Nexans Entity orany of its properties are bound, (iv) contravene or conflict with any Law orarbitration award applicable to a Nexans Entity, or (v) result in the creationor imposition of any Encumbrance on any asset, property or right of a NexansEntity.

 

(d)                                 Exceptas set forth on Schedule 3.1.28, Flytex has no assets, operations,rights, obligations or liabilities of any kind, except those related to theNexans WW Business.

 

3.1.29                  GermanRestructuring.

 

(a)                                  Restructuringof German Winding Wire Operations. Prior to the date hereof, L&K has,pursuant to the terms and conditions of the *kaufvertrag*attached hereto as Exhibit 3.1.29 (the “German Transfer Agreement”),conveyed, transferred and assigned to German Newco all of its right, title andinterest in and to the assets and liabilities of the German Winding WiresDivision (the “German Restructuring”).

 

(b)                                 Exceptas set forth on Schedule 3.1.29, German Newco immediately prior to theconsummation of the German Restructuring, German Newco did not have any assets,properties, operations or rights whatsoever, and German Newco did not have ormaintain any employees or Employee Benefit Plans.  Immediately prior to the consummation of theGerman Restructuring, German Newco did not have any liabilities or obligationsof any nature, whether known or unknown, accrued or hereafter arising, absoluteor contingent.

 

(c)                                  Theconsummation of the German Restructuring did not (i) contravene or conflictwith any term or provision of the Charter Documents of any Nexans

 

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Entity, (ii) except as indicated in Schedule 3.1.3,violate or conflict with, constitute a breach of or default under, result inthe loss of any benefit under, permit the acceleration of any obligation underor create in any party the right to terminate, modify or cancel any Contract towhich a Nexans Entity is a party, (iii) contravene or conflict with anyjudgment, decree or order of any Governmental Entity to which a Nexans Entityor by which a Nexans Entity or any of its properties are bound, (iv) contraveneor conflict with any Law or arbitration award applicable to a Nexans Entity, or(v) result in the creation or imposition of any Encumbrance on any asset,property or right of a Nexans Entity.

 

(d)                                 GermanNewco has no assets, operations, rights, obligations or liabilities of anykind, except those related to the Nexans WW Business.

 

3.1.30                  Brokers,Finders and Investment Bankers. Except for Lazard Ltd., neither a Nexans Entity nor any officer,member, director or employee of such Nexans Entity, nor any Affiliate of aNexans Entity has employed any broker, finder or investment banker or incurredany liability for any investment banking fees, financial advisory fees,brokerage fees or finders’ fees in connection with the transactionscontemplated hereby.

 

3.2                                 Representationsand Warranties of the Essex Parties. Essex hereby represents and warrants to the Nexans Parties as of thedate hereof and as of the Closing that:

 

3.2.1                        Organization.

 

(a)                                  EachEssex Entity is an Entity duly formed and validly existing under the Laws ofits jurisdiction of organization and has all requisite power and authority toown, lease and operate its properties and to carry on its business as now beingconducted.  Essex has heretofore madeavailable to Nexans true, correct and complete copies of the Charter Documentsof each Essex WW Entity as currently in effect. Essex has heretofore made available to Nexans the corporate record booksof each Essex WW Entity with respect to actions taken by its shareholders andboard of directors since January 1, 2003 (or since formation for any Entityformed after January 1, 2003).

 

(b)                                 Schedule3.2.1(b) sets forth each Entity in which an Essex WW Entity owns, directlyor indirectly, any capital stock or other equity, security or interest.

 

(c)                                  Schedule3.2.1(c) accurately and completely sets forth the capital structure of eachEssex WW Entity by listing thereon the number of shares of capital stock ofsuch Essex WW Entity which are authorized and which are issued and outstandingand the number of shares of capital stock of such Essex WW Entity owned by eachshareholder, partner or other equity holder thereof.  As of the Closing, Essex Netherlands will ownall of the Essex UK Shares and Essex Pension Trustee Shares, free and clear ofall Encumbrances.  There are nooutstanding options, warrants, conversion rights, subscriptions or other rightsentitling any Person to acquire or receive, or requiring any Essex WW Entity toissue, any shares of its capital stock or securities convertible into, orexchangeable for, such shares of capital stock.

 

3.2.2                        Authorization.  Each of the Essex Entities has full corporatepower and authority to execute (and, to the extent applicable, to deliver) thisAgreement and the

 

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Ancillary Documents to which it is a party, asapplicable, and to perform its obligations hereunder and thereunder and toconsummate the transactions contemplated hereby and thereby.  The execution (and, to the extent applicable,delivery by each Essex Entity of this Agreement and the Ancillary Documents towhich it is a party, as applicable, and the performance by each Essex Entity ofits obligations hereunder and thereunder and the consummation of thetransactions provided for herein and therein have been duly and validlyauthorized by all necessary corporate action on the part of each Essex Entity.  This Agreement has been, and the AncillaryDocuments shall be as of the Closing Date, duly executed (and, to the extentapplicable, delivered) by each Essex Entity, as applicable, and do or shall, asthe case may be, constitute the valid and binding agreements of each Essex Entity,enforceable against it in accordance with their respective terms.

 

3.2.3                        Absenceof Restrictions and Conflicts.  Theexecution, delivery (where applicable) and performance by each Essex Entity ofthis Agreement and the Ancillary Documents, as applicable, the consummation ofthe transactions contemplated hereby and thereby and the fulfillment of andcompliance with the terms and conditions hereof and thereof do not or shall not(as the case may be), with the passing of time or the giving of notice or both,(a) contravene or conflict with any term or provision of the Charter Documentsof such Essex Entity, (b) except as indicated on Schedule 3.2.3, violateor conflict with, constitute a breach of or default under, result in the lossof any benefit under, permit the acceleration of any obligation under or createin any party the right to terminate, modify or cancel any written Contract towhich such Essex Entity is a party, (c) contravene or conflict with anyjudgment, decree or order of any Governmental Entity to which such Essex Entityis a party or by which such Essex Entity or any of its properties are bound,(d) contravene or conflict with any Law or arbitration award applicable to suchEssex Entity, or the Essex WW Business, or (e) result in the creation orimposition of any Encumbrance or any asset, property or right of such EssexEntity.

 

3.2.4                        RequiredConsents.  Schedule 3.2.4 setsforth each consent, approval, notification, waiver, authorization, order orfiling (each, an “Essex Material Required Consent” and collectively, the“Essex Material Required Consents”) under any Law, License, or Contractto which an Essex Entity is a party that is necessary for the execution,delivery (where applicable) and performance of this Agreement or the Ancillary Documentsand the consummation of the transactions contemplated hereby and thereby inorder to avoid a breach or violation of, or giving rise to any right oftermination, cancellation or acceleration of any right or obligation or to aloss of any benefit under any such Law, License, or Contract.

 

3.2.5                        RealProperty.

 

(a)                                  Schedule3.2.5(a)(i) sets forth a list of all Essex Owned Real Property and the nameof the Essex Entity which is the owner thereof. Except as set forth on Schedule 3.2.5(a)(ii), the applicableEssex Entity has good and marketable, indefeasible title to the Essex OwnedReal Property (other than Essex Leased Real Property).

 

(b)                                 Schedule3.2.5(b) sets forth a true and correct list of all Essex Leased RealProperty.  The leases with respectthereto are in full force and effect and are valid, binding and enforceableagainst the parties thereto in accordance with their respective terms.

 

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(c)           Except as set forth on Schedule 3.2.5(c) and exceptfurther to the extent that any violation could not, individually or in theaggregate, reasonably be considered to be material, no portion of the EssexReal Property, or any building or improvement located thereon, violates anyLaw, including Environmental Laws and Laws relating to zoning, building or landuse.  Except for the PermittedEncumbrances or any matters contemplated in the Ancillary Documents, no EssexReal Property is subject to (i) any Encumbrances, (ii) any governmental decreeor order (or, to the Knowledge of Essex, threatened or proposed order) thatmaterially limits or restricts the use of the Essex Real Property or (iii) anyrights of way, building use restrictions, exceptions, variances, reservationsor limitations of any nature whatsoever.

 

(d)           Except as set forth on Schedule 3.2.5(d), theimprovements and fixtures on the Essex Real Property are in good operatingcondition, ordinary wear and tear excepted, and are regularly maintained andrepaired and are adequate and suitable for the purposes for which they arepresently being used.  Except as setforth on Schedule 3.2.5(d), none of the buildings and improvements ownedor utilized by the Essex Entities in the operation of the Essex WW Business areconstructed of, or contain as a component part thereof, any material thatreleases any substance, whether gaseous, liquid or solid, in amounts that areprohibited by applicable Law by reason of such substance being injurious orhazardous to the health of any individual who may from time to time be in orabout such buildings or improvements. There is no condemnation, expropriation or similar proceeding pendingor, to the Knowledge of Essex, threatened against any of the Essex RealProperty or any improvement thereon.  TheEssex Real Property constitutes all of the real property utilized in theoperation of the Essex WW Business.  Thebuildings and structures included in the Essex Real Property have access to (a)public roads or valid easements over private streets or private property foradequate ingress to and egress from all such buildings and structures, (b)water supply, storm and sanitary sewer facilities, telephone, gas andelectrical connections, fire protection, drainage and other public utilities,as is necessary for the conduct of the Essex WW Business.

 

3.2.6        Personal Property. Except as set forth on Schedule 3.2.6 or equipment not in servicebut being used for spare parts, all equipment and other items of tangiblepersonal property and assets owned, held or leased, and used in the Essex WWBusiness (the “Essex Personal Property”) (a) are in good operatingcondition, ordinary wear and tear excepted and are regularly maintained andrepaired, and (b) were acquired and are usable in the regular and ordinarycourse of business.  Except as set forthon Schedule 3.2.6(a), all of the Essex Personal Property is in thepossession of the Essex WW Entities and is located at the Essex RealProperty.  No Person other than an EssexWW Entity owns any Essex Personal Property that is necessary to the operationof the Essex WW Business, except for leased items that are subject to personalproperty leases.  Schedule 3.2.6(b)sets forth a true, correct and complete list and general description of eachitem of Essex Personal Property having an original cost of more than €100,000.

 

3.2.7        Sufficiency of Assets; Title to Assets.

 

(a)           Except as set forth on Schedule 3.2.7(a) and theEssex Excluded Assets, the Essex WW Assets constitute all of the assets(whether real, personal or mixed and whether tangible or intangible) used inconnection with and necessary to permit the

 

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Essex Entities to conductthe operations of the Essex WW Business in accordance with their pastpractices.

 

(b)           The Essex Entities have good and marketable title to or,in the case of the Essex Leased Real Property or leased personal property,valid leasehold interests in, the Essex WW Assets, free and clear of allEncumbrances except Permitted Encumbrances.

 

(c)           As of the Closing, the Joint Venture will have good andmarketable title to or, in the case of the Essex Leased Real Property or leasedpersonal property, valid leasehold interests in, the Essex WW Assets (otherthan the Essex Excluded Assets), free and clear of all Encumbrances exceptPermitted Encumbrances.  Except for theEssex Excluded Assets or as set forth on Schedule 3.2.7(c), as of theClosing, the Essex WW Assets will constitute all of the assets (whether real,personal or mixed and whether tangible or intangible) used to conductoperations or necessary to permit the Joint Venture to continue to conduct theoperations of the Essex WW Business in accordance with past practices.

 

3.2.8        Inventory. Except as set forth in Schedule 3.2.8, the inventory included inthe Essex WW Assets (a) was acquired for the operation of the Essex WW Businessin the ordinary course consistent with past practice, (b) is of a quality andquantity usable or saleable in the ordinary course of business except to theextent of reserves in relation thereto included in the Essex Closing BalanceSheet (taken on an aggregate basis), and (c) is valued on the books and recordsof the Essex Parties at the lower of cost or market, with the cost determinedunder the last-in-first-out inventory valuation method consistent with pastpractice.

 

3.2.9        Financial Statements. Schedule 3.2.9(a) contains the Essex Financial Statements.  Except as set forth on Schedule 3.2.9(b),the Essex Financial Statements are in conformity with UK GAAP (consistentlyapplied) and have been prepared from, and are in accordance with, the books andrecords of the Essex Entities, which books and records have been maintained ona basis consistent with the past practice of the Essex Entities.  Except as set forth on Schedule 3.2.9(c),each balance sheet included in the Essex Financial Statements (including therelated notes and schedules, if any) fairly presents, in all material respects,the financial position of the Essex WW Business as of the date of such balancesheet, and each statement of income included in the Essex Financial Statements(including the related notes and schedules, if any) fairly presents the resultsof operations of the Essex WW Business for the periods set forth therein.  Since June 30, 2005, there has been no changein any accounting (or tax accounting) policies, practices or procedures of theEssex Entities with respect to the Essex WW Business.  Each Essex WW Entity maintains accurate booksand records reflecting its assets and liabilities and maintains internalaccounting controls, provided that the Essex Parties make no representation asto whether such controls would be considered “effective” within the meaning ofthe rules and regulations of the Securities and Exchange Commission and thePublic Company Accounting Oversight Board under Section 404 of theSarbanes-Oxley Act of 2002.

 

3.2.10      No Undisclosed Liabilities.  Except as set forth in Schedule 3.2.9(c),there are no liabilities related to the Essex WW Business that would berequired in accordance with UK GAAP to be reflected in the Essex FinancialStatements as of June 30, 2005, except for:

 

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(a)           liabilities and obligations properly reflected or providedfor in the unaudited consolidated balance sheet of Essex UK and the Essex UKSubsidiary as of June 30, 2005 (including, for the avoidance of doubt, thenotes and annexes thereto) subject to any qualifications made therein;

 

(b)           financial liabilities; and

 

(c)           liabilities and obligations incurred in the ordinarycourse of business, consistent with past practice.

 

3.2.11      Absence of Certain Changes.

 

(a)           Since June 30, 2005, there has not been any MaterialAdverse Effect,

 

(b)           Since June 30, 2005, there has not been any damage,destruction, loss or casualty to the Essex WW Assets with a value in excess of€100,000, whether or not covered by insurance, or

 

(c)           Except as set forth on Schedule 3.2.11 since June30, 2005, there has not been, any action taken of the type described in Section4.2.2, that, had such action occurred following the date hereof without Nexans’prior approval, would be in violation of such Section 4.2.2.

 

3.2.12      Legal Proceedings.  Except as set forth on Schedule 3.2.12(a)and claims solely for damages less than €75,000, there is no suit, action,claim, arbitration, proceeding or investigation pending or, to the Knowledge ofEssex, threatened against an Essex Entity with respect to the ownership of theEssex WW Assets or the operation of the Essex WW Business before anyGovernmental Entity.  No suit, action,claim, proceeding or investigation pending or, to the Knowledge of Essex,threatened against an Essex Entity with respect to the ownership of the EssexAssets or operation of the Essex WW Business before any Governmental Entity(including any of those set forth on Schedule 3.2.12(a)), if finallydetermined adversely, is reasonably likely, individually or in the aggregate,to have a material adverse effect on the financial condition, results ofoperations, or prospects of the Essex WW Business.  Except as set forth in Schedule 3.2.12(b),no Essex Entity is subject to any judgment, decree, injunction, rule or orderof any court or arbitration panel related to the Essex WW Business or the EssexWW Assets.

 

3.2.13      Compliance with Law.  Except as set forth in Schedule 3.2.13,each Essex Entity is (and has been at all times during the past three (3)****years) in compliance, with all Laws(including applicable Laws relating to zoning and the safety and health ofemployees) applicable to the ownership of the Essex WW Assets or the operationof the Essex WW Business.  No Essex WWEntity has been charged with, and no Essex Entity has received any writtennotice that it is under investigation with respect to, and, to the Knowledge ofEssex, is not otherwise now under investigation with respect to, a violation ofany Law applicable to the Essex WW Business.

 

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3.2.14      Contracts.  Each correspondingly lettered section of Schedule3.2.14(a) sets forth a true, correct and complete list of the followingEssex WW Contracts currently in force, or under which any Essex Entity willhave continuing liabilities and/or obligations after the Closing (other thanthe Essex Benefit Plans set forth on Schedule 3.2.17):

 

(a)           bonds, debentures, notes, credit or loan agreements orloan commitments, mortgages, indentures, guarantees or other Contracts relatingto the borrowing of money or the deferred purchase price of property or bindingupon any properties or assets (real, personal or mixed, tangible or intangible)of an Essex Entity;

 

(b)           Essex WW Contracts that were not entered into in theordinary course of business consistent with past practice;

 

(c)           leases relating to the Essex Leased Real Property and allother Contracts involving the lease or use of any properties or assets (whetherreal, personal or mixed, tangible or intangible) involving an annual commitmentor payment of more than €50,000 by an Essex WW Entity;

 

(d)           all Contracts related to the Essex WW Business that(i) limit or restrict an Essex WW Entity or any directors, secretaries oremployees of an Essex WW Entity from engaging in any business or other activityin any jurisdiction, (ii) create or purport to create any exclusive orpreferential relationship or arrangement, or (iii) otherwise restrict or limitan Essex WW Entity’s ability to operate the Essex WW Business;

 

(e)           all Contracts for capital expenditures or the acquisitionor construction of fixed assets requiring the payment by an Essex WW Entity ofan amount in excess of €100,000;

 

(f)            all Contracts that provide for an increased payment orbenefit, or accelerated vesting, upon the execution hereof or the Closing or inconnection with the transactions contemplated hereby;

 

(g)           all Contracts granting any Person an Encumbrance (otherthan a Permitted Encumbrance) on all or any part of any Essex WW Assets;

 

(h)           all Contracts granting to any Person an option or a firstrefusal, first-offer or similar preferential right to purchase or acquire anyEssex WW Assets;

 

(i)            all Contracts with any agent, distributor orrepresentative that is not terminable without penalty on thirty (30) days’ orless notice, and in respect of which at least €10,000 in commissions were paidby the Essex WW Business in 2004;

 

(j)            all Contracts for the granting or receiving of a license,sublicense or franchise or under which any Person is obligated to pay or hasthe right to receive a royalty, license fee, franchise fee or similar payment;

 

(k)           all Contracts (i) with respect to Essex IntellectualProperty licensed or transferred to any Person (other than end user Licenses inthe ordinary

 

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course of business) or (ii) pursuant to which any Person is licensingany Nexans Intellectual Property to an Essex Entity;

 

(l)            all Essex WW Contracts providing for the indemnificationor holding harmless by an Essex WW Entity of any director, secretary, employeeor other Person;

 

(m)          all joint venture or partnership Contracts related to theEssex WW Business;

 

(n)           all Contracts with Essex WW Customers or Essex WWSuppliers;

 

(o)           all Contracts containing irrevocable powers of attorneyempowering any Person to act on behalf of an Essex WW Entity;

 

(p)           any Contract entitling any Person to any profits, revenuesor cash flows of an Essex WW Entity or requiring payments or otherdistributions based on such profits, revenues or cash flows;

 

(q)           all Contracts with any Governmental Entity;

 

(r)            all Employment Agreements of an Essex WW Entity with anysenior manager or director; and

 

(s)           all existing Contracts, agreements and commitments (otherthan those of a type described in subsections (a) through (r) of this Section3.2.14 or purchase or sale orders made in the ordinary course of businessconsistent with past practices and which are otherwise not required to bedisclosed pursuant to subsection (a) through (r) above) to which an Essex WWEntity is a party or by which its properties or assets are bound involving anannual commitment or annual payment to or from an Essex WW Entity of more than€100,000 individually.

 

True, correct and completecopies of all written Essex WW Contracts listed, or required to be listed, on Schedule3.2.14(a) have been made available to Nexans or its advisors.  The Essex WW Contracts are valid, binding andenforceable in accordance with their respective terms with respect to theapplicable Essex Entity and, to the Knowledge of Essex, each other party tosuch Essex WW Contracts.  Except as setforth on Schedule 3.2.14(b), there is no existing notified default orbreach of the applicable Essex Entity under any Essex WW Contract (or, to theKnowledge of Essex, any event or condition that, with notice or lapse of timeor both could constitute a default or breach) and, to the Knowledge of Essex,there is no such default (or event or condition that, with notice or lapse oftime or both, could constitute a default or breach) with respect to any thirdparty to any Essex WW Contract.  There isno material term, obligation, understanding or agreement that would modify anyterm of a written Essex WW Contract or any right or obligation of a partythereunder which is not reflected on the face of such Essex WW Contract.  Except as set forth on Schedule 3.2.14(c),to the Knowledge of Essex, no Essex WW Contract is a contract or agreement inwhich, in Essex’s best estimate, the direct labor cost, direct materials cost,direct energy costs, direct transportation costs and external sales commissions

 

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(calculated on a basis consistent with past practice) incurred or to beincurred in connection therewith exceed the revenues derived or to be derivedtherefrom.

 

3.2.15      Tax Returns; Taxes.  Except as set forth on Schedule 3.2.15,(a) all Tax Returns with respect to the Essex WW Business due to have beenfiled through the date hereof in accordance with all applicable Laws have beenduly filed and are correct and complete in all material respects; (b) allTaxes, deposits and other payments with respect to the Essex WW Business forwhich an Essex Entity has liability (whether or not shown on any Tax Return)have been paid in full or will be accrued as liabilities for Taxes on EssexClosing Balance Sheet; (c) the amounts so paid, together with all amountsaccrued as liabilities for Taxes (including Taxes accrued as currently payablebut excluding any accrual to reflect timing differences between book and Taxincome) on Essex Financial Statements with respect to the Essex WW Business,shall be adequate based on the tax rates and applicable Laws in effect tosatisfy all liabilities for Taxes of the Essex Entities with respect to theEssex WW Business in any jurisdiction through the Closing Date, including Taxesaccruable upon income earned through the Closing Date; (d) there are not nowany extensions of time in effect with respect to the dates on which any TaxReturns with respect to the Essex WW Business were or are due to be filed by anEssex Entity; (e) all Tax deficiencies asserted as a result of any examinationby a Governmental Entity of a Tax Return of an Essex Entity with respect to theEssex WW Business have been paid in full, accrued on Essex Financial Statementsor finally settled, and no issue has been raised in any such examination that,by application of the same or similar principles, reasonably could be expectedto result in a proposed Tax deficiency for any other period not so examined;(f) no claims have been asserted and no proposals or deficiencies for any Taxesof an Essex Entity with respect to the Essex WW Business are being asserted,proposed or, to the Knowledge of Essex, threatened, or expected to be assessed,and no audit or investigation of any Tax Return of an Essex Entity with respectto the Essex WW Business is currently underway, pending or threatened; (g) noclaim has been made since January 1, 2003 against an Essex Entity by anyGovernmental Entity in a jurisdiction where the applicable Essex Entity doesnot file Tax Returns with respect to the Essex WW Business that such EssexEntity is or may be subject to taxation with respect to the Essex WW Businessin such jurisdiction; (h) each Essex Entity has withheld and paid all Taxeswith respect to the Essex WW Business required to have been paid by it inconnection with amounts paid or owing to any employee, independent contractor,creditor or shareholder thereof or other third party; (i) there are nooutstanding waivers or agreements between any Governmental Entity and an EssexEntity or for the extension of time for the assessment of any Taxes ordeficiency thereof with respect to the Essex WW Business, nor are there anyrequests for rulings, outstanding subpoenas or requests for information, noticeof proposed reassessment of any property owned or leased by an Essex Entity orany other matter pending between an Essex Entity and any Governmental Entity;(j) there are no Encumbrances for Taxes with respect to an Essex Entity or theEssex WW Assets other than Encumbrances for Taxes that are not yet due andpayable, nor is there any such Lien that is pending or, to the Knowledge ofEssex, threatened; and (k) no Essex Entity is a party to or bound by any Taxallocation or sharing agreement.

 

3.2.16      Directors, Employees and IndependentContractors.  Schedule 3.2.16contains a true, accurate and complete list as of the date hereof of (a) all ofthe directors or senior managers of each Essex WW Entity, specifying theirposition, annual rate of compensation and all emoluments (including any bonus,commission, premium, benefit in kind

 

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and incentive entitlement), date of hire, work location, length ofservice, and employee benefit coverages selected or benefits provided, (b) allof the employees (whether full-time, part-time, fixed-term EmploymentAgreement, indefinite term Employment Agreement or otherwise) of each Essex WWEntity involved in the Essex WW Business as of the date hereof.  Essex has made available to Nexansinformation relating to their position, category and classification, annualgross salary and other compensation and emoluments, and employee benefitcoverages selected or benefits provided, as the case may be, sabbatical leave,parental leave, long-term sick leave and (c) all of the independent contractorsused by each Essex Entity in connection with the operation of the Essex WWBusiness to whom fees of more than €10,000 were paid in 2004, specifying thename of the independent contractor, type of labor, all fees and emoluments andbenefits paid or provided to such independent contractor for calendar year2004, work location and address.  NoEssex Entities have made any binding commitments (other than as set forth in employmentcontracts or collective bargaining agreements) to any director, secretary,manager, employee, former employee, employee representative, consultant orindependent contractor of an Essex Entity in connection with the Essex WWBusiness with respect to compensation, emoluments, benefits, promotion,retention, termination, severance or similar matters in connection with thetransactions contemplated hereby or otherwise that would affect the annual rateof compensation and all emoluments as detailed in Schedule 3.2.16.

 

3.2.17      Essex Benefit Plans.  Except as set forth on Schedule 3.2.17:

 

(a)           Schedule 3.2.17(a) contains a true and completelist of each Essex Benefit Plan currently sponsored, maintained or contributedto by an Essex Entity.

 

(b)           With respect to each Essex Benefit Plan identified on Schedule3.2.17(a), the Essex Entities has maintained and currently maintainadequate coverage at least as required by applicable Law or collectivebargaining agreement at a level of coverage maintained by a reasonable employerin the relevant jurisdictions.

 

(c)           With respect to each Essex Benefit Plan identified on Schedule3.2.17(a), Essex has heretofore delivered to Nexans true and completecopies of the plan documents and any amendments thereto (or, in the event theplan is not written, a written description thereof), any related trust or otherfunding vehicle, any reports or summaries required under all applicable Laws,any analyses regarding the adequacy of the funding of, or reserves forliabilities with respect to, any Essex Benefit Plan, and such otherdocumentation with respect to any Essex Benefit Plan (whether current or not)as is reasonably requested by Nexans.

 

(d)           The Essex Entities have made all required contributionsunder its Employee Benefit Plans and paid all premium amounts payable for allperiods through and including June 30, 2005 and adequate provisions have beenmade therefore, in accordance with applicable Laws, Contracts and EmployeeBenefit Plans.  The Essex Entities havemade all required contributions under all social security regimes applicable tothe Essex WW Business.

 

(e)           The records of the Essex Entities accurately reflect theemployment or service histories of its employees, independent contractors,contingent workers, temporary workers and leased employees used in theoperation of the Essex WW Business, including their hours of service.

 

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(f)            Each Essex Benefit Plan has been established, registered,qualified, invested, operated and administered in all material respects inaccordance with its terms and in compliance with all Applicable BenefitLaws.  No Essex Entity has incurred, andno fact exists that reasonably could be expected to result in any liability ofan Essex Entity with respect to any Essex Benefit Plan, including anyliability, tax, penalty, social security or fee under any Applicable BenefitLaw (other than to pay premiums, contributions or benefits in the ordinarycourse of business consistent with past practice).

 

(g)           No fact or circumstance exists that could adversely affectthe social security and/or tax-exempt status of an Essex Benefit Plan that isintended to be social security and/or tax-exempt.

 

(h)           There is no pending or, to the Knowledge of Essex,threatened complaint, claim (other than a routine claim for benefits),proceeding, examination, audit, investigation or other action of any kind in orbefore any Governmental Entity with respect to any Essex Benefit Plan and, tothe Knowledge of Essex, and there exists no state of facts that after notice orlapse of time or both reasonably could be expected to give rise to any suchclaim, investigation, examination, audit or other proceeding or to affect theregistration of any Essex Benefit Plan required to be registered. All benefitclaims will be paid in accordance with Applicable Benefit Laws and the terms ofthe applicable Essex Benefit Plan.

 

3.2.18      Labor Relations.  Except as set forth on Schedule 3.2.18:

 

(a)           No Essex Entity is and/or has been a signatory to acollective bargaining agreement or other agreement with or recognizes any tradeunion, labor organization or other group covering employees involved in theEssex WW Business.  To the Knowledge ofEssex, no such request is threatened or pending.

 

(b)           No walk out, strike or work stoppage involving theemployees of an Essex Entity involved in the Essex WW Business has occurredwithin the last 12 months, or is in progress.

 

(c)           No material claim, complaint, charge or investigation fromany employees, social security administration, Labor Administration, tradeunion or Governmental Entity, regarding any applicable law, immigration law,collective bargaining agreement, recognition agreements, contractual, statutoryor tortuous obligation, usage, practice or unilateral decision of the employerfor, in particular, safety and health conditions, unpaid wages, bonuses,commissions, employment withholding taxes and/or social security or similarcontributions or deductions, penalties, overtime, or other compensation, profitsharing (Mandatory or Voluntary), company saving plans, benefits, child laboror record keeping violations has been filed or is pending or, to the Knowledgeof Essex, threatened under applicable Laws with respect to employees of anEssex Entity involved in the Essex WW Business.

 

(d)           Each Essex Entity has discharged its obligations in fullin relation to salary, wages, fees, commissions, bonuses, premiums, benefits inkind, overtime pay, holiday pay, sick pay, profit sharing (Mandatory orVoluntary), company savings plans and

 

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all other benefits and emoluments relating to its employees,independent contractors and workers involved in the Essex WW Business sinceJanuary 1, 2002.

 

(e)           No discrimination, harassment (moral or sexual) orretaliation claim, complaint, charge or investigation has been filed or ispending or, to the Knowledge of Essex, threatened against an Essex Entity, byany employee involved in the Essex WW Business or any representatives of suchemployees under applicable Law.

 

(f)            Each Essex WW Entity has concluded since January 1, 2002valid settlement agreements and termination agreements and has implementedvalid dismissal procedures (both with respect to the procedure and the reasonsfor the dismissal) under applicable Law of the relevant jurisdictions withrespect to former employees involved in the Essex WW Business.

 

(g)           Each Essex Entity has paid or accrued all currentassessments under employees, independent contractors and/or workers’compensation legislation with respect to employees, and independent contractorsinvolved in the Essex WW Business, and no Essex Entity has been subject to anyspecial or penalty assessment under any such legislation with respect to anysuch employees, or independent contractors that has not been paid.

 

(h)           The Employment Agreements between any Essex WW Entity andany of its employees or workers involved in the Essex WW Business do notcontain any termination provisions more onerous than those required byapplicable Law or the applicable collective bargaining agreement.  There are no limitations to dismissals orrestructuring other than those provided by applicable Law or collectivebargaining agreement.

 

(i)            There are no provisions in any Employment Agreements withemployees involved in the Essex WW Business providing for payment by an EssexWW Entity of extraordinary (more than two years salary and benefits)compensation in the event of termination of employment following thetransactions contemplated by this Agreement.

 

(j)            No Essex Entity has introduced, and no Essex Entity hasproposed to introduce, any share incentive scheme, share option scheme orprofit sharing, bonus, commission or other such incentive scheme for any of itsemployees involved in the Essex WW Business, other than as detailed in Schedule3.2.17.

 

(k)           No Essex Entity has given notice of any redundancies toany appropriate Government Entity in any jurisdiction and no Essex Entity hascommenced consultation with any independent trade union or employees’representative within the last 12 months in relation to any of its employees orworkers involved in the Essex WW Business (except with respect to thetransactions contemplated herein).  Nocircumstances have arisen under which any Essex WW Entity is likely to berequired to pay damages for wrongful dismissal or breach of Contract, to makeany contractual or statutory dismissal payment or make or pay any compensationin respect of unfair dismissal or breach of Contract, to make any other paymentunder any applicable Law or collective bargaining agreement or to reinstate orre-engage any former employee, in each case with respect to employees,independent contractors or

 

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workers involved in the Essex WW Business, and in each case except tothe extent of amounts to be reserved on the Essex Closing Balance Sheet;

 

(l)            The employees listed in Schedule 3.2.16 are theonly individuals employed by the Essex Entities and dedicated to the Essex WWBusiness.

 

(m)          No individuals employed by an Essex Entity other than theemployees listed in Schedule 3.2.16 shall transfer into the employmentof the Joint Venture by operation of law by reason of his/her providingservices to the Joint Venture or by his/her working in conjunction or inassociation with the Joint Venture’s employees or Essex WW Business.

 

3.2.19      Insurance Policies.  Essex has provided to Nexans a copy of theclaims history and loss experience of the Essex WW Business under its liabilityand property damage insurance policies for the two year period ended April 30,2005.

 

3.2.20      Environmental, Health and SafetyMatters.  Except as set forth onSchedule 3.2.20:

 

(a)           In connection with the operation of the Essex WW Business,each Essex Entity possesses all Licenses required under, and each Essex Entityis in compliance with, all Environmental Laws related to the Essex WW Business.

 

(b)           No portion of the Essex Owned Real Property has been usedas a landfill or waste disposal site.  Tothe Knowledge of Essex, no portion of the Essex Leased Real Property has beenused as a landfill or waste disposal site.

 

(c)           No Essex Entity has received written notice of actual orthreatened liability under any Environmental Law related to the operation ofthe Essex WW Business or the Essex WW Assets.

 

(d)           No Essex Entity has ever had an audit conducted regardingany environmental or health and safety matter related to the Real Property orthe Essex WW Business.  For purposes ofthis Section 3.2.20(d), an “audit” means any inspection, investigation,assessment, study or test performed at the request of, or on the behalf of, aGovernmental Entity conducted since January 1, 2002.  Essex has provided to Nexans true, correctand complete copies of the final conclusions and instructions of theGovernmental Entity which performed such audits.

 

(e)           No Essex Entity has been subject to any administrative orjudicial proceeding related to the operation of the Essex WW Business, or paidany fines or penalties in excess of €10,000 pursuant to applicableEnvironmental Laws at any time since January 1, 2002.

 

(f)            In connection with the operation of the Essex WWBusiness, no Essex WW Entity is subject to any claim, obligation, liability,loss, damage or expense of any kind or nature whatsoever (other than ordinarycourse waste disposal, maintenance and remediation activities), contingent orotherwise, incurred or imposed or based

 

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upon any provision of any Environmental Law or arising out of any actor omission of such Essex Entity, or such Essex Entity’s employees, agents orrepresentatives related to the Essex WW Business or arising out of theownership, use, control or operation by such Essex Entity of any plant,facility, site, area or property used in connection with the Essex WW Businessfrom which any Hazardous Material was released.

 

(g)           Essex has made available to Nexans or its advisors true,correct and materially complete copies of all material internal reports(findings of personnel of the Essex Entities relating to environmentalconditions) and of all external reports (findings of external consultantsrelating to the environmental conditions) and true, correct and materiallycomplete copies of correspondence since January 1, 2002 in the possession ofthe Essex WW Entities, relating to environmental matters involving the Essex WWBusiness.

 

(h)           No improvement or equipment included in the Essex WWAssets contains any polychlorinated biphenyls, underground storage tanks, oropen or closed pits on or under any Essex WW Asset.

 

(i)            No Essex Entity has, within the last three years,imported, received, manufactured, produced, processed, labeled, or shipped,stored, used, operated, transported, treated or disposed of any Hazardous Materialin connection with the operation of the Essex WW Business other than inmaterial compliance with all Environmental Laws.

 

3.2.21      Intellectual Property.

 

(a)           Schedule 3.2.21(a) contains a list of all EssexRegistered Intellectual Property and a list of all Essex Licensed IntellectualProperty.

 

(b)           Except as set forth in Schedule 3.2.21(b), no EssexIntellectual Property or product or service of the Essex WW Business related toor using Essex Intellectual Property is subject to any proceeding or outstandingdecree, order, judgment, agreement or stipulation (i) restricting in any mannerthe use, transfer or licensing thereof by an Essex Entity or (ii) that affectsthe validity, use or enforceability of the Essex Intellectual Property.  Each item of Essex Registered IntellectualProperty is valid and subsisting.  Allregistration, maintenance and renewal fees currently due in connection withEssex Registered Intellectual Property have been made and all documents, recordationsand certifications in connection with such Essex Registered IntellectualProperty have been filed with the relevant patent, copyright, trademark orother authorities in all applicable jurisdictions for the purpose ofmaintaining such Essex Registered Intellectual Property.

 

(c)           Except as set forth in Schedule 3.2.21(c), theEssex Entities own and have good and exclusive title to the Essex OwnedIntellectual Property, or have licenses (sufficient for the conduct of theEssex WW Business as currently conducted) to, each item of Essex LicensedIntellectual Property, free and clear of any Encumbrance (excluding licensesand related restrictions); the Essex Entities are the exclusive owners orexclusive licensees of all trademarks and service marks, trade names and domainnames used in connection with and material to the operation or conduct of theEssex WW Business, including the sale of

 

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any products or the provision of any services by the Essex WW Business,free and clear of all Encumbrances.

 

(d)           All Essex Owned Intellectual Property was developed by (i)an employee of an Essex Entity or of its predecessor company working within thescope of his or her employment at the time of such development, or (ii) agents,consultants, contractors or other Persons who have executed appropriateinstruments of assignment in favor of the applicable Essex Entity as assigneethat have conveyed to such Essex Entity ownership of all of its intellectualproperty rights in the Essex Intellectual Property.

 

(e)           To the extent that any Essex Owned Intellectual Propertyhas been developed or created by a third party for an Essex Entity, such EssexEntity has a written agreement with such third party with respect thereto andsuch Essex Entity thereby either (i) has obtained ownership of and is theexclusive owner of, or (ii) has obtained a license (sufficient for the conductof the Essex WW Business as currently conducted) to, all of such third party’sIntellectual Property in such work, material or invention.

 

(f)            Essex does not have Knowledge of, and has not receivedwritten notice of or any other overt threat from any third party, that theoperation of the Essex WW Business as it is currently conducted, including eachEssex Entity’s design, development, marketing and sale of the product orservice of the Essex WW Business (including with respect to products underdevelopment), or any act of the Essex WW Business, has infringed or infringesthe Intellectual Property of any third party.

 

(g)           To the Knowledge of Essex, no Person has or is infringingany Essex Owned Intellectual Property or any Essex Licensed IntellectualProperty.

 

(h)           Each Essex Entity has taken reasonable steps to protectthe rights of such Essex Entity in confidential information and any tradesecret or confidential information of third parties used in the Essex WWBusiness, and, except under confidentiality obligations, there has not been anydisclosure by such Essex Entity of confidential information of any Essex Entityor third parties.

 

3.2.22      Software.

 

(a)           Schedule 3.2.22(a) sets forth a list of: (i) thematerial Essex Proprietary Software, and (ii) the Essex Licensed Software.

 

(b)           The Essex Entities have all right, title and interest inand to all intellectual property rights in the Essex Proprietary Software, andthe Essex Proprietary Software is free and clear of all Encumbrances.  The use of the Essex Software does not breachany term of any license or other contract between an Essex Entity and any thirdparty.  Each Essex Entity is in compliancewith the terms and conditions of all Contracts in favor of such Essex Entityrelating to the Essex Licensed Software.

 

(c)           To the Knowledge of Essex, the Essex Proprietary Softwaredoes not infringe any patent, copyright or trade secret or any other intellectualproperty

 

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right of any third party.  Thesource code for the Essex Proprietary Software has been maintained inconfidence.

 

(d)           The Essex Proprietary Software was: (i) developed by theEssex Entities’ employees working within the scope of their employment at thetime of such development; or (ii) developed by agents, consultants, contractorsor other Persons who have executed appropriate instruments of assignment infavor of the applicable Essex Entity as assignee that have conveyed to suchEssex Entity ownership of all of its intellectual property rights in the EssexProprietary Software.  No Essex Entityhas received notice from any third party claiming any right, title or interestin the Essex Proprietary Software.

 

(e)           No Essex Entity has granted rights in the Essex Softwareto any third party.

 

3.2.23      Affiliate Matters.

 

(a)           Except as set forth on Schedule 3.2.23 and otherthan Ancillary Documents or any Contracts that will be terminated by theClosing Date, no (i) secretary, senior manager or director of an EssexEntity, (ii) close relative of a secretary, director or senior manager of anEssex Entity (for this purpose a “close relative” means a parent, sibling,spouse or child), (iii) Entity in which any such secretary, director or Personowns any beneficial interest, (iv) Affiliate of any of the foregoing or(v)  Affiliate of an Essex Entity has anyinterest in or is a party to: (a) any Contract with an Essex Entity relating tothe Essex WW Business or, the Essex WW Assets; (b) any loan for or relating tothe Essex WW Business or the Essex WW Assets; or (c) any property (real,personal or mixed, tangible or intangible) used by an Essex Entity in theoperation of Essex WW Business.

 

(b)           No Essex Entity is a party to any Contract related to theEssex WW Business which imposed, or purports to impose, any obligations orrestrictions on any of its Affiliates (other than an Essex Entity).

 

3.2.24      Customer and Supplier Relations.  Schedule 3.2.24 contains a list of theEssex WW Customers (whether individual customers or groups) identified by codename by 2004 sales, and all the Essex WW Suppliers involving an annualcommitment or payment inclusive of copper****ofmore than £75,000.  The actual names ofsuch Essex WW Customers have been made available to the advisors ofNexans.  Except as set forth on Schedule3.2.24, no Essex WW Customer has notified any Essex Entity in writingwithin the past twelve months that it intends to cease purchasing any products orservices of the Essex WW Business or materially decrease the purchasing volumeof any products or services of the Essex WW Business.

 

3.2.25      Accounts Receivable.  Except for receivables set forth in Schedule3.2.25, all accounts receivable of the Essex Entities related to the EssexWW Business (i) are valid, existing and collectible in a manner consistent withpast practice, subject to the reserve for doubtful accounts receivable to beset forth in the Essex Closing Balance Sheet (taken on an aggregate basis),(ii) represent monies due for goods sold and delivered or services rendered inthe ordinary course of business and (iii) to the Knowledge of Essex, are notsubject

 

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to any refund or adjustment or any defense, right of set-off,assignment, restriction, security interest or other Encumbrance.

 

3.2.26      Licenses.  Schedule 3.2.26 is a true and completelist of all Licenses held by each Essex Entity which are related to the EssexWW Business.  Each Essex Entity owns orpossesses, and as of the Closing, the Joint Venture will own or possess, allLicenses that are necessary to enable it to carry on the Essex WW Business aspresently conducted.  All Licenses whichare related to the Essex WW Business are valid, binding and in full force andeffect.  Except as set forth on Schedule3.2.26, the execution, and performance hereof and the consummation of thetransactions contemplated hereby shall not adversely affect any License orrequire the issuance of a new License. Each Essex Entity has taken all necessary action to maintain eachLicense related to the Essex WW Business, except where the failure to so actshall not have an adverse effect on an Essex WW Entity or the Essex WWBusiness.  No loss or expiration of anyLicense related to the Essex WW Business is pending or, to the Knowledge ofEssex, threatened (other than expiration upon the end of any term).

 

3.2.27      Product and Service Warranties.  Schedule 3.2.27 sets forth allwarranty or guaranty claims in excess of €100,000****made since January 1, 2002 with respect to goods sold, orservices provided, by the Essex WW Business, and there is (a) no pending or, tothe Knowledge of Essex, threatened claim in excess of €100,000****alleging any breach of any such warrantyor guaranty and (b) to the Knowledge of Essex, no basis for any claim in excessof €100,000.

 

3.2.28      Brokers, Finders and Investment Bankers.  Neither an Essex Entity nor any secretary,member, director or employee of such Essex Entity, nor any Affiliate of anEssex Entity has employed any broker, finder or investment banker or incurredany liability for any investment banking fees, financial advisory fees,brokerage fees or finders’ fees in connection with the transactionscontemplated hereby.

 

3.2.29      Essex Pension Trustee.

 

(a)           Essex Pensions Trustee is a private limited companyorganized under the laws of England and Wales, the sole activity of which hasbeen and is to act as Trustee in respect of an Essex Benefit Plan in the UnitedKingdom.

 

(b)           Essex Pension Trustee does not have any assets,properties, operations or rights whatsoever, except for assets and shareholders’equity of £2.  Essex Pension Trustee doesnot have any liabilities or obligations of any nature, whether known orunknown, accrued or hereafter arising, absolute or contingent, except for itsmandatory fiduciary obligations arising in the ordinary course of itsactivities as trustee of an Essex Benefit Plan in the United Kingdom.

 

(c)           The transfer of Essex Pension Trustee to the Joint Venturepursuant to this Agreement does not and will not (i) contravene orconflict with any term or provision of the Charter Documents of Essex PensionTrustee, (ii) violate or conflict with, constitute a breach of or defaultunder, result in the loss of any benefit under, permit the acceleration of anyobligation under or create in any party the right to terminate, modify or

 

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cancel any Contract to which Essex Pension Trustee is a party(including without limitation termination, modification or cancellation of theEssex Benefit Plan in respect of which it acts as trustee), (iii) contravene orconflict with any judgment, decree or order of any Governmental Entity to whichan Essex Entity or any of its properties are bound, (iv) contravene or conflictwith any Law or arbitration award applicable to an Essex Entity, or (v) resultin the creation or imposition of any Encumbrance on any asset, property orright of an Essex Entity.

 

ARTICLE IV

CERTAINCOVENANTS AND AGREEMENTS OF THE PARTIES 

 

4.1           Access and Information.

 

4.1.1        Access to Book and Records.  Prior to the Closing, Essex and Nexans shalleach permit the other and the other’s representatives to have reasonable accessto its books and records, and its officers and employees and the officers andemployees of its Subsidiaries, in each case (i) during regular business hoursand upon reasonable advance notice to the other, (ii) to the extent that suchaccess does not unreasonably interfere with the business of Essex UK or itsSubsidiaries or the Nexans WW Entities or their respective Subsidiaries, as thecase may be, and (iii) solely for the purpose of and to the extent reasonablynecessary to evaluate the Essex WW Business, the Nexans WW Business or the otherParty’s ability to perform its obligations under this Agreement or theAncillary Documents; provided that any such representatives shall comply withthe confidentiality obligations contained herein and in the NondisclosureAgreement and Confidentiality Agreement, as applicable; and provided, further,that the foregoing shall not (i) require Essex or Nexans to permit anyinspection, or to disclose any information, that in its reasonable judgmentwould result in the disclosure of any trade secrets of third parties or tradesecrets of Essex or Nexans unrelated to the transactions contemplated by thisAgreement or any Ancillary Document or violate any of Essex’s, Nexans’, or anyof their respective Subsidiaries’ or Affiliates’ legal obligations orobligations with respect to confidentiality, provided that Essex or Nexans, asthe case may be, shall, upon the request of the other party, have (x) usedreasonable best efforts to obtain the consent of such third party to suchinspection or disclosure, and (y) informed the other Party in writing thatnotwithstanding such efforts, it is prohibited from disclosing such information(specifying the nature of such non-disclosed information) or (ii) require anydisclosure by Essex or Nexans, or any of their respective Subsidiaries thatwould be reasonably likely to, as a result of such disclosure, have the effectof causing the waiver of any attorney-client privilege; provided, that Essex orNexans, as the case may be, shall have used its commercially reasonable effortsto effect disclosure without the waiver of attorney-client privilege.

 

4.1.2        Return of Information. In the event of the termination of this Agreement, Essex and Nexans,each at its own expense, shall promptly deliver (without retaining any copiesthereof) to Nexans or Essex, as the case may be, or confirm to the other inwriting that it has destroyed, all information furnished to it or itsrepresentatives by the other or any of the other’s Subsidiaries or any of theirrespective agents, employees or representatives as a result hereof or inconnection herewith, whether so obtained before or after the execution hereof,and all analyses, compilations, forecasts, studies or other documents preparedby it or its

 

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representatives which contain or reflect any such information otherthan in materials or presentations provided to their respective lenders orboards of directors.  Essex and Nexansshall, and shall cause their respective employees, agents, officers, directorsand Subsidiaries and the employees, officers, agents, and directors of theirSubsidiaries to, subject to any exceptions set forth in the NondisclosureAgreement and Confidentiality Agreement, as applicable, cause any informationso obtained to be kept confidential and will not use, or permit the use of,such information in its business or in any other manner or for any otherpurpose except as contemplated hereby.

 

4.1.3        Confidentiality Obligations.  In addition to the confidentialityarrangements set forth in this Section 4.1, prior to the Closing allinformation provided or obtained in connection with the transactionscontemplated by this Agreement and the Ancillary Documents (including pursuantto Section 4.1.1 above) shall be held in accordance with and subject to theterms of the Confidentiality Agreement, dated January 28, 2005, betweenSuperior and Nexans (the “Nondisclosure Agreement”).  Following the Closing, all informationprovided or obtained in connection with the transactions contemplated by thisAgreement and the Ancillary Documents (including pursuant to Section 4.1.1above) shall be held in accordance with and subject to the terms of theConfidentiality Agreement.  In the eventof a conflict or inconsistency between the terms of this Agreement and theNondisclosure Agreement, the terms of this Agreement shall govern.  In the event of a conflict or inconsistencybetween the terms of this Agreement and the Confidentiality Agreement afterClosing, the terms of this Agreement shall govern.  In the event of a conflict or inconsistencybetween the terms of the Nondisclosure Agreement and the ConfidentialityAgreement, the terms of the Confidentiality Agreement shall govern.

 

4.2           Conduct of Business.

 

4.2.1        Conduct of Nexans WW Business.  During the period from the date hereof untilthe Closing, except (x) as otherwise expressly contemplated by this Agreementor any Ancillary Document in effect prior to the Closing, or (y) as Essex shallotherwise agree in writing (such agreement not to be unreasonably withheld ordelayed), each of the Nexans WW Entities shall, and Nexans shall cause eachsuch Nexans WW Entity to:

 

(a)           conduct its business in the ordinary course on a basisconsistent with past practice and not engage in any new line of business orenter into any agreement, transaction or activity or make any commitment withrespect to the Nexans WW Business, except for those in the ordinary course ofbusiness and not otherwise prohibited under this Section 4.2.1;

 

(b)           use its commercially reasonable efforts to preserve therelationships and goodwill of such Nexans WW Entity with customers,distributors, suppliers, employees and other Persons having business relationswith such Nexans WW Entity;

 

(c)           duly and timely file or cause to be filed all reports andreturns required to be filed with any Governmental Entity and promptly pay orcause to be paid when due all taxes, assessments and governmental charges,including interest and penalties levied or assessed, unless contested in goodfaith by appropriate proceedings;

 

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(d)           maintain in good repair and working order (ordinary wearand tear excepted), consistent with past practices, all buildings, offices,facilities and other structures used in the Nexans WW Business or located onthe Nexans Real Property, and all equipment, fixtures and other tangiblepersonal property located on the Nexans Real Property;

 

(e)           not authorize for issuance or issue and deliver anyadditional shares of its capital stock or securities convertible into orexchangeable for shares of its capital stock, or issue or grant any right,option or other commitment for the issuance of shares of its capital stock orof such securities, or split, combine or reclassify any shares of its capital stock;

 

(f)            not amend or modify its Charter Documents;

 

(g)           not create any Subsidiary, acquire any capital stock orother equity securities of any corporation or acquire any equity or ownershipinterest in any business or entity which will engage in the Nexans WW Businessor is engaged in a business substantially similar thereto;

 

(h)           except in connection with the French Spin-Off or theGerman Restructuring, not (i) create, incur or assume any indebtedness securedby its assets, (ii) grant, create, incur or suffer to exist anyEncumbrance on its assets that did not exist on the date hereof, (iii) exceptmoving and installation costs (up to €900,000) incurred in connection with thetransfer of equipment from LaGrange, Kentucky to the factories of the Nexans WWBusiness in Arolsen and Bramsche, make any commitment for any capitalexpenditure to be made on or following the date hereof in excess of €200,000 inthe case of any single expenditure (other than a one-time capital expenditureof €350,000 related to the secondary containment facility for chemical productsat Meyzieu) or €1,200,000 in the case of all capital expenditures throughOctober 31, 2005, plus €100,000 per month in November and December 2005 (if theClosing has not previously occurred), (iv) enter into any Contract which cannotbe cancelled by such Nexans WW Entity on notice of not longer than thirty (30)days and without liability or penalty of any kind, except in accordance withpast practice, or (v) enter into any Contract which imposes, or purports toimpose, any obligations or restrictions on any of its Affiliates;

 

(i)            not grant any increase in the compensation or benefits ofany employee that will be employed by the Joint Venture (excluding any increasespecifically provided for in the terms of, or legally required by, any bonus,pension, profit sharing or other plan or commitment) or any increase in thecompensation or benefits payable, or to become payable, to any such employee,except (i) changes that are required by applicable Law, (ii) increases andchanges which such Nexans WW Entity is obligated to provide as of the datehereof, and (iii) other changes in the ordinary course of such Nexans WW Entity’sbusiness, consistent with past practices;

 

(j)            except as required by Applicable Benefit Laws, not adopt,amend or terminate any Nexans Benefit Plan or increase the benefits providedunder any Nexans Benefit Plan, or promise or commit to undertake any of theforegoing in the future;

 

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(k)           not transfer any management level employee to a Nexans WWEntity who will be involved in the Nexans WW Business or transfer anymanagement level employee involved in the Nexans WW Business from a Nexans WWEntity;

 

(l)            not enter into or amend any Employment Agreement with anymanagement level employee involved in the Nexans WW Business;

 

(m)          not cancel any third party debt, waive any third partyclaim, or settle or compromise any legal proceedings related to or inconnection with the Nexans WW Business, other than in the ordinary course ofbusiness consistent with past practice;

 

(n)           perform in all material respects all of its obligationsunder all Contracts and Licenses;

 

(o)           maintain in full force and effect and in the same amountspolicies of insurance comparable in amount and scope of coverage to thatmaintained as of the date hereof by or on behalf of such Nexans WW Entity;

 

(p)           continue to maintain its books and records in accordancewith past practice; and

 

(q)           not authorize, or commit or agree to take, any of theforegoing actions, which such Nexans WW Entity is required not to take withoutEssex’s prior written consent.

 

4.2.2        Conduct of Essex’s Business.  During the period from the date hereof untilthe Closing, except (x) as otherwise expressly contemplated by this Agreementor any Ancillary Document in effect prior to the Closing, or (y) as Nexansshall otherwise agree in writing (such agreement not to be unreasonablywithheld or delayed), Essex UK shall, and Essex shall cause Essex UK to:

 

(a)           conduct its business in the ordinary course on a basisconsistent with past practice and not engage in any new line of business orenter into any agreement, transaction or activity or make any commitment withrespect to the Essex UK Business, except any agreement related to the renewalterms of the lease for the property located in Enfield and except those in theordinary course of business and not otherwise prohibited under this Section4.2.2;

 

(b)           use its commercially reasonable efforts to preserve therelationships and goodwill of Essex UK with customers, distributors, suppliers,employees and other Persons having business relations with Essex UK;

 

(c)           duly and timely file or cause to be filed all reports andreturns required to be filed with any Governmental Entity and promptly pay orcause to be paid when due all taxes, assessments and governmental charges,including interest and penalties levied or assessed, unless contested in goodfaith by appropriate proceedings;

 

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(d)           maintain in good repair and working order (ordinary wearand tear excepted), consistent with past practices, all buildings, offices,facilities and other structures and used in the Essex WW Business or located onthe Essex Real Property, and all equipment, fixtures and other tangiblepersonal property and located on the Essex Real Property;

 

(e)           not authorize for issuance or issue and deliver anyadditional shares of its capital stock or securities convertible into orexchangeable for shares of its capital stock, or issue or grant any right,option or other commitment for the issuance of shares of its capital stock orof such securities, or split, combine or reclassify any shares of its capitalstock;

 

(f)            not amend or modify its Charter Documents;

 

(g)           not create any Subsidiary, acquire any capital stock orother equity securities of any corporation or acquire any equity or ownershipinterest in any business or entity which will engage in the Essex WW Businessor is engaged in a business substantially similar thereto;

 

(h)           not (i) create, incur or assume any indebtedness securedby its assets, (ii) grant, create, incur or suffer to exist any Encumbrance onits assets that did not exist on the date hereof, (iii) make any commitment forany capital expenditure to be made on or following the date hereof in excess of€75,000 in the case of any single expenditure or €500,000 in the case of allcapital expenditures through October 31, 2005, plus €75,000 per month inNovember and December 2005 (if the Closing has not previously occurred), (iv)enter into any Contract which cannot be cancelled by Essex UK on notice of notlonger than thirty (30) days and without liability or penalty of any kind,except in accordance with past practice, or (v) enter into any Contract whichimposes, or purports to impose, any obligations or restrictions on any of itsAffiliates;

 

(i)            not grant any increase in the compensation or benefits ofany employee that will be employed by the Joint Venture (excluding any increasespecifically provided for in the terms of, or legally required by, any bonus,pension, profit sharing or other plan or commitment) or any increase in thecompensation or benefits payable, or to become payable, to any such employee,except (i) changes that are required by applicable Law, (ii) increases andchanges which Essex UK is obligated to provide as of the date hereof, and(iii) other changes in the ordinary course of Essex UK’s business,consistent with past practices;

 

(j)            except as required by Applicable Benefit Laws, not adopt,amend or terminate any Essex Benefit Plan or increase the benefits providedunder any Essex Benefit Plan, or promise or commit to undertake any of theforegoing in the future;

 

(k)           not transfer any management level employee to an Essex WWEntity who will be involved in the Essex WW Business or transfer any managementlevel employee involved in the Essex WW Business from an Essex WW Entity;

 

(l)            not enter into or amend any Employment Agreement with anymanagement level employee involved in the Essex WW Business;

 

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(m)          not cancel any third party debt, waive any third partyclaim, or settle or compromise any legal proceedings related to or inconnection with the Essex WW Business, other than in the ordinary course ofbusiness, consistent with past practice;

 

(n)           perform in all material respects all of its obligationsunder all Contracts and Licenses;

 

(o)           maintain in full force and effect and in the same amountspolicies of insurance comparable in amount and scope of coverage to thatmaintained as of the date hereof by or on behalf of Essex UK;

 

(p)           continue to maintain its books and records in accordancewith past practice; and

 

(q)           not authorize, or commit or agree to take, any of the foregoingactions, which Essex UK is required not to take without Nexans’ prior writtenconsent.

 

4.3           Registrations, Filings andConsents.

 

4.3.1        Governmental Filings. Each of Essex and Nexans shall cooperate with each other and use (andshall cause their respective Subsidiaries to use) commercially reasonableefforts to take or cause to be taken all actions, and do or cause to be doneall things, necessary, proper or advisable on its part under this Agreement andapplicable Laws to consummate and make effective the transactions contemplatedby this Agreement as soon as reasonably practicable, including preparing andfiling as promptly as reasonably practicable all documentation to effect allnecessary applications, notices, petitions, filings and other documents and toobtain as promptly as reasonably practicable all consents, registrations,approvals, permits and authorizations necessary or advisable to be obtainedfrom any third party and/or any Governmental Entity in order to consummate thetransactions contemplated by this Agreement (“Governmental Filings”).  In addition to the foregoing, each of Essexand Nexans shall use commercially reasonable efforts to file or cause to befiled within thirty (30) days following the date of this Agreement (or suchshorter period as may be required by applicable Law) all documentation, filingsand other documents necessary in connection with any required application,report or other filing or request for approval or notifications with anyGovernmental Entity from which consent, approval or clearance is required to beobtained in connection with the transactions contemplated by this Agreement,including, without limitation, any Governmental Entity with regulatoryjurisdiction over enforcement of any applicable Competition Laws (a “GovernmentalAntitrust Entity”).  Each of Essexand Nexans shall respond promptly to any request for additional information ordocumentary material that may be made by any such Governmental Entity.  Subject to applicable Laws relating to theexchange of information, Essex and Nexans shall have the right to review inadvance, and to the extent practicable each will consult the other on, all theinformation relating to either Essex or Nexans or their respective Subsidiariesor Affiliates, as the case may be, with respect to the contents of any filingmade with, or written materials submitted to, any third party and/or anyGovernmental Entity in connection with the transactions contemplated by thisAgreement.  In exercising the foregoingright, each of Essex and Nexans shall act reasonably and as promptly asreasonably practicable.  Notwithstandinganything in this Agreement to the contrary, in no event will either

 

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Essex or Nexans or any Affiliate thereof be obligated to propose oragree to accept any undertaking or condition, to enter into any consent decree,to make any divestiture, to accept any operational restriction, or take anyother action that, in the reasonable judgment of either Essex or Nexans, couldbe expected to limit the right of the Joint Venture to own or operate all orany portion of the Nexans WW Business or Essex WW Business or of either Essexor Nexans (as the case may be) or any Affiliate thereof to own or operate anyportion of their existing businesses or assets.

 

4.3.2        Information Necessary for Filings.  Each of Essex and Nexans shall, upon requestby the other, furnish the other with all information concerning itself, itsSubsidiaries, and Affiliates and such other matters as may be reasonablynecessary or advisable in connection with any statement, filing, notice orapplication made by or on behalf of Essex and Nexans or any of their respectiveSubsidiaries or Affiliates to any third party and/or any Governmental Entity inconnection with the transactions contemplated by this Agreement.

 

4.3.3        Status of Filings. Each of Essex and Nexans shall keep the other apprised of the status ofmatters relating to completion of the transactions contemplated hereby,including promptly furnishing the other with copies of notices or othercommunications received by either Essex, Nexans or any of their respectiveSubsidiaries or Affiliates, as the case may be, from any third party and/or anyGovernmental Entity with respect to the transactions contemplated by thisAgreement.

 

4.4           Taxes.

 

4.4.1        Liability for Pre-Closing Taxes.  Nexans shall be liable for and indemnify theJoint Venture for all Taxes imposed on any Nexans WW Entity or with respect toany asset used in the Nexans WW Business for any taxable year or period thatends on or before the Closing Date and, with respect to any taxable year orperiod beginning before and ending after the Closing Date, the portion of suchtaxable year ending on and including the Closing Date to the extent a provisionor a reserve in respect of the Taxes has not been made in the Nexans ClosingBalance Sheet.  With respect to any Taxreturn required to be filed after the Closing Date by the Joint Venture, Nexansshall not be liable for any Tax liability to the extent such Tax liabilityarises solely as a result of the failure of the Joint Venture to submit thereturns required to be made; provided that Nexans has complied with itsobligations in Section 4.4.6.  Essexshall be liable for and indemnify the Joint Venture for all Taxes imposed onany Essex WW Entity or with respect to any asset used in the Essex WW Businessfor any taxable year or period that ends on or before the Closing Date and,with respect to any taxable year or period beginning before and ending afterthe Closing Date, the portion of such taxable year ending on and including theClosing Date to the extent a provision or a reserve in respect of the Taxes hasnot been made in the Essex Closing Balance Sheet.  If either party is required to pay any Taxesreferred to in this Section 4.4.1, the other party shall, at the request of theresponsible party, cause or cooperate to cause the Joint Venture to take suchaction as the responsible party may reasonably request to contest the liabilityfor such Taxes, at the sole expense of the responsible party.  In addition, if either party makes anindemnity payment pursuant to this Section 4.4.1 with respect to a pre-closingTax liability that is expected to be offset by related Tax savings in one ormore taxable periods commencing after the Closing Date, then the Joint Ventureshall refund such indemnity

 

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payment to such party to the extent that, and at such times or time as,the Joint Venture actually realizes such related Tax savings.

 

4.4.2        Taxes for Short Taxable Year.  For purposes of Section 4.4.1, whenever it isnecessary to determine the liability for Taxes for a portion of a taxable yearor period that begins before and ends after the Closing Date, the determinationof the Taxes of the relevant entity for the portion of the year or periodending on, and the portion of the year or period beginning after, the ClosingDate shall be determined by assuming that the relevant entity had a taxableyear or period which ended at the close of the Closing Date, except thatexemptions, allowances or deductions that are calculated on an annual basis,such as the deduction for depreciation and Taxes on real or personal property,shall be apportioned on a daily basis.

 

4.4.3        Transfer Taxes. Nexans shall pay any Transfer Taxes imposed with respect to thecontributions or transfers set forth in Sections 2.2.4 and 2.2.7 hereof, andEssex shall pay any Transfer Taxes imposed with respect to the contributions ortransfers set forth in Sections 2.1 (other than 2.1.4), 2.2.1, 2.2.2 and 2.2.3hereof.

 

4.4.4        Tax Sharing Agreements.  Prior to the Closing, Nexans shall ensurethat no Tax indemnity agreement, Tax allocation agreement or Tax sharingagreement is in force and effect with respect to any of Nexans Portugal,Hi-Wire, German Newco or Flytex and that no such Nexans Party shall have anyliability as of the Closing Date under any such agreement.  Prior to the Closing, Essex shall ensure thatno Tax indemnity agreement, Tax allocation agreement or Tax sharing agreementis in force and effect with respect to Essex UK and that Essex UK shall have noliability as of the Closing Date under any such agreement.

 

4.4.5        U.S. Tax Elections. Each of the JV Holding Company and its Subsidiaries shall make suchUnited States tax elections as shall be requested by Essex, including, withoutlimitation, an election to be treated as a partnership or a disregarded entityfor United States tax purposes.  TheNexans Parties shall execute such forms and consents as shall be necessary tomake such elections.  Essex shallindemnify, defend and hold harmless the Joint Venture, Nexans or any otherNexans Entity against and in respect of all Losses (as defined in Section7.2.1) sustained or incurred by it arising from such elections; provided,however, that such indemnity shall not apply if Nexans or its Affiliatestransfer any part of its interest in the Joint Venture to an entity formed ororganized under the Laws of the United States or any state therein.

 

4.4.6        Cooperation and Assistance.  Each of the Nexans Parties and the EssexParties shall (and shall cause their respective Affiliates) to:  (i) assist each other party in preparing andfiling any Tax returns or reports of the JV Holding Company or any Subsidiarythereof which such other party is responsible for preparing and filing inaccordance with this Agreement;  (ii)cooperate fully in preparing for any audit of, or dispute with any Taxauthority regarding, any Tax returns or reports of the JV Holding Company orany of its Subsidiaries; and (iii) make available to the other parties and toany Tax authority as reasonably requested all information, records anddocuments relating to the Taxes of the JV Holding Company or any of itsSubsidiaries.

 

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4.5           Control of Operations.  Nothing contained in this Agreement shallgive Essex, directly or indirectly, the right to control or direct theoperations of Nexans or its Affiliates with respect to the Nexans WW Businessprior to the Closing.  Nothing containedin this Agreement shall give Nexans, directly or indirectly, the right tocontrol or direct the operations of Essex or its respective Affiliates withrespect to the Essex WW Business prior to the Closing.

 

4.6           Further Assurances. At any time following the Closing Date, each of Nexans and Essex shall,and shall cause the JV Holding Company to, promptly execute, acknowledge anddeliver any other assurances or documents reasonably requested by the JVHolding Company, Nexans or Essex, as the case may be, and necessary for Nexans,Essex or the JV Holding Company, as the case may be, to satisfy its obligationsunder this Agreement or the Ancillary Documents or obtain the benefitscontemplated by this Agreement or the Ancillary Documents.

 

4.7           Nexans Italy. Prior to the Closing, Nexans shall provide the advisors to Essex withthe names of the customers with whom Nexans Italy has contracts since January1, 2004 (the “Italian WW Customers”), and at Closing, such list shall bedelivered to Essex, including the number of tons sold to such Italian WWCustomers by other Nexans WW Entities (or their predecessors) in 2004.  Nexans shall use commercially reasonableefforts to transfer the Italian WW Customers to the Joint Venture.  On December 31, 2006, the Joint Venture shallpay to Nexans a lump sum amount of €750,000 (which shall be payable withoutregard to whether any such Italian WW Customers are in fact transferred to theJoint Venture).  Nexans shall, or shallcause its Affiliates to, sell to the Joint Venture any of the equipment listedin Exhibit 4.7 hereto that the Joint Venture requests to purchase bynotice delivered to Nexans no later than December 31, 2005, for a price equalto the lesser of 75% of the net book value of such equipment in the most recentconsolidated financial statements of Nexans, or the fair market value of suchequipment.

 

4.8           Non-Assertion of Claims.  Each party to this Agreement agrees that,subject to the occurrence of the Closing, it shall not assert any claim againstthe JV Holding Company, any Nexans WW Entity or any Essex WW Entity that thedevelopment, manufacture, sale or distribution of winding wire, enamel andrelated products infringes, misappropriates or violates any intellectual propertyright of such party existing as of the Closing Date.

 

4.9           Certain Intercompany Payables.  Prior to the Closing, all notes receivable ofeach Nexans WW Entity owing by any director, officer or employee of such NexansWW Entity, or any Affiliate of such Nexans WW Entity shall be paid infull.  Prior to the Closing, all notesreceivable of each Essex WW Entity owing by any director, officer or employeeof such Essex WW Entity, or any Affiliate of such Essex WW Entity shall be paidin full.

 

4.10         French Spinoff/German Restructuring.

 

4.10.1      Change of Name of German Newco.  Prior to the Closing Date, Nexans shall causeGerman Newco to change its name to L&K Winding Wires GmbH, or to such otherlegally permissible name as Essex may request prior to the date on which suchname

 

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change is to become effective. Nexans shall notify Essex prior to taking any irreversible steps toeffect such name change.

 

4.10.2      No Modification to ContributionAgreement.  Notwithstanding anythingto the contrary contained in Sections 3.1.28(a) or 3.1.29(a), or in the FrenchSpinoff Agreement or the German Transfer Agreement, nothing contained thereinshall in any way modify, waive or amend any of the terms of this Agreement or theAncillary Documents or any rights or obligations contained herein ortherein.  In the event of anyinconsistency between this Agreement and either the French Spinoff Agreement orthe German Transfer Agreement, this Agreement shall prevail.

 

4.11         Product Liability Insurance.  Nexans shall take such measures as may benecessary to ensure that the Nexans WW Entities shall be covered after theClosing under the product liability insurance policies maintained by Nexans orits Affiliates in relation to the Nexans WW Business Prior to the Closing Date,in respect of any claims made by such Nexans WW Entities through December 31,2005 in respect of occurrences prior to the Closing Date.

 

4.12         Copper Obligations. At least 3 Business Days prior to the Closing, Nexans shall deliver toEssex a list and description of all forwared copper sale obligations of theNexans WW Business to its customers, including the following items:  customer; contract or customer purchaseorder, reference number; price and method of determination; quantity/amount;and delivery date (the “Customer Forward Sale Obligations”).  Notwithstanding anything in any AncillaryDocument to the contrary, Nexans agrees to sell or cause one of its Affiliatesto sell copper to the Joint Venture on all the same terms as the CustomerForward Sale Obligations other than those Copper Forward Sale Obligations thatare covered by excess copper inventories existing on the Closing Date that areexpected to be depleted over the thirty (30) day period following the Closingand that can otherwise be designated to hedge such Customer Forward SaleObligations during such 30-day period. Nexans will cause the Nexans WW Business not to have, as of the ClosingDate, any forward copper sale obligations, except for the Customer Forward SaleObligations, or any copper hedging, derivative or other similar arrangements orobligations.  In this regard, Nexansshall make arrangements for it or one of its Affiliates (other than a Nexans WWEntity) to take over or otherwise cause to be extinguished prior to Closing allsuch hedging, derivative or other similar arrangements or obligations.

 

4.13         Superior 8-K Requirement.  In the event that Superior is required by therules and regulations of the U.S. Securities and Exchange Commission to file acurrent report on Form 8-K containing pro forma financial statements reflectingthe transactions contemplated herein, or separate financial statements for theNexans WW Business, Nexans agrees to provide such financial or accountinginformation regarding the Nexans WW Business as Superior may reasonablyrequest, as soon as reasonably practical following such request, provided,that Nexans shall not be required to convert any accounting data to U.S. GAAPor to incur material expenses in connection with providing such information,unless Superior agrees to reimburse the costs related to such conversion orsuch expenses, as the case may be.  Ifthe accounting data provided is not prepared in accordance with U.S. GAAP,Nexans shall provide such information about the accounting principles used inpreparing such data as Superior shall reasonably request in order to permitSuperior to make any disclosures required with respect to such accountingprinciples and

 

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any differences from U.S. GAAP and to prepare any requiredreconciliations.  In furnishing suchinformation, Nexans shall not be deemed to represent that the informationresponds to any requirements of the rules and regulations of the U.S. Securitiesand Exchange Commission, and it shall not be liable for any use made bySuperior of such information; provided that Nexans shall not be relieved fromany liability associated with any material inaccuracy in the data or otherinformation provided.

 

4.14         Employment Information.  Following the signing of this Agreement,Nexans shall provide Essex with the dates of birth of all employees of theNexans WW Business except to the extent such information is contained in theFrench Spinoff Agreement.

 

ARTICLE V

CONDITIONSTO CLOSING

 

5.1           Conditions to Each Party’sObligation to Effect the Transaction. The respective obligations of the parties to consummate the transactionscontemplated under Article II are subject to the satisfaction or waiver priorto the Closing Date of each of the following conditions:

 

5.1.1        Governmental Filings. (a) All Essex Governmental Filings (if any) and Nexans GovernmentalFilings (if any) shall have been made or obtained (as the case may be) pursuantto a Final Order, free of any conditions and shall be in full force and effect(b) the approvals of the Governmental Antitrust Authorities of Germany,Poland, Portugal, the Slovak Republic and the United Kingdom shall have beenreceived and/or any applicable waiting period shall have expired or beenterminated or waived, and (c) the Essex Entities shall have obtainedclearance from the UK Pension Regulator such that as a result of theconsummation of the transactions contemplated hereby the UK Pension Regulatorwill not seek to impose monetary orders against any of the parties hereto orany of their Affiliates. For the purposes of this Agreement, “Final Order”means an action or decision that has been granted (or as to which anyapplicable waiting period has expired) as to which (i) no request for a stay,petition for rehearing or reconsideration application for review or appeal ispending, and (ii) no Governmental Entity has undertaken to reconsider theaction on its own motion.

 

5.1.2        No Injunction. No Governmental Entity of competent jurisdiction shall have enacted,issued, promulgated, enforced or entered any Law (whether temporary,preliminary or permanent) that is in effect and enjoins or otherwise prohibitsconsummation of the transactions contemplated by this Agreement (an “Order”),no Governmental Entity shall have instituted any proceeding seeking any suchOrder and no third party shall have instituted any proceeding seeking any suchOrder that is reasonably likely to be enacted, issued or promulgated.

 

5.1.3        Financing.  TheJV Holding Company shall have entered into the Credit Facility substantially inthe form attached as Exhibit 5.1.3, and shall have the right to drawfunds thereunder, or sell receivables with net proceeds, in an aggregate amountof at least €35 million.

 

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5.1.4        Superior Credit Instruments.  Superior shall have obtained a valid andbinding consent covering the matters set forth in Exhibit 5.1.4(a)hereto, from lenders under the Superior Credit Agreement, and a valid andbinding consent from bondholders under the Superior Indenture covering thematters set forth in Exhibit 5.1.4(b) hereto, each in form and substancereasonably satisfactory to Essex and Nexans.

 

5.1.5        JV Holding Company By-Laws.  The By-laws of the JV Holding Company shallhave been amended so as to be in the form attached as Exhibit 5.1.5, andsuch amendment shall be legally effective.

 

5.1.6        Reserved.

 

5.1.7        Pre-Closing Transactions.  All of the transactions described in Section2.1 shall have occurred.

 

5.2           Conditions to Obligations of Essex.  The obligations of the Essex Parties toconsummate the transactions contemplated under Article II are further subjectto the satisfaction or due waiver by Essex on or prior to the Closing Date ofeach of the following conditions:

 

5.2.1        Representations and Warranties.  The representations and warranties of theNexans Parties contained herein shall be true and correct in all materialrespects as of the date hereof and as of the Closing Date as if made as of theClosing Date (except that representations and warranties that are made as of aspecific date or as of the date hereof need be true and correct only as of suchdate), and Essex shall have received a certificate to such effect dated theClosing Date and executed by a duly authorized officer of Nexans.

 

5.2.2        Covenants.  Thecovenants and agreements of the Nexans Entities to be performed or compliedwith on or prior to the Closing (including without limitation those set forthin Article II of this Agreement) shall have been duly performed or compliedwith, as the case may be, in all material respects, and Essex shall havereceived a certificate to such effect dated the Closing Date and executed by aduly authorized officer of Nexans.

 

5.2.3        Delivery of Ancillary Documents.  Each of the Nexans Parties shall haveexecuted and delivered each of the Ancillary Documents to which it is a party,and any Ancillary Documents in effect prior to the Closing shall not have beenamended, modified or terminated, except as expressly approved by Essex.

 

5.2.4        Nexans Consents. Each of the Nexans Parties shall have obtained and made available toEssex the Nexans Material Required Consents.

 

5.2.5        Essex Consents. Essex shall have obtained all Essex Material Required Consents.

 

5.2.6        Resignations; Appointments.  The JV Holding Company shall have receivedresignations, effective as of the Closing Date, of the directors of the JVHolding Company, German Newco, Flytex, Hi-Wire and Nexans Portugal identifiedon Exhibit 5.2.6, and the persons designated by Essex to be directorsshall have been appointed.

 

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5.2.7        Releases; Waivers. Except for liabilities and obligations arising out of a Nexans PermittedAffiliate Payable, the Ancillary Documents and the Nexans Iberia Agreement eachof Nexans Portugal, Hi-Wire, German Newco and Flytex shall have been releasedfrom any and all liabilities and obligations arising out of, or related to, anyContract with Nexans or an Affiliate thereof, and Nexans or the applicableAffiliate thereof shall have waived any and all rights or claims with respectto Nexans Portugal, Hi-Wire, German Newco or Flytex under any such Contract,and agreed to indemnify Nexans Portugal, Hi-Wire, German Newco or Flytex (as applicable)from any and all losses and expenses arising out of any such Contract.

 

5.2.8        Termination. Essex shall have received reasonably satisfactory evidence that theContracts listed on Exhibit 5.2.8 have been terminated, effective on orbefore the Closing Date, and that Nexans Portugal has been indemnified byNexans for any and all losses and expenses arising out of any such Contract.

 

5.2.9        Material Adverse Effect.  Since the date hereof, no event shall haveoccurred which has had or is reasonably likely to have a Material AdverseEffect on the Nexans WW Business.

 

5.2.10      Chauny Option Recordation.  The Chauny Option shall have been filed andrecorded with the applicable Governmental Entity.

 

5.2.11      Copper Obligations.  Nexans shall have delivered to Essex the listand description of Customer Forward Sale Obligations as required by Section4.12, and the Nexans WW Business, as of the Closing Date, shall have no otherforward copper sale obligations or any copper hedging, derivative arrangementsor obligations other than as provided in Section 4.12.

 

5.3           Conditions to Obligations ofNexans.  The obligations of theNexans Parties to consummate the transactions contemplated under Article II arefurther subject to the satisfaction or due waiver by Nexans on or prior to theClosing Date of each of the following conditions:

 

5.3.1        Representations and Warranties.  The representations and warranties of theEssex Parties contained herein shall be true and correct in all materialrespects as of the date hereof and as of the Closing Date as if made as of theClosing Date (except that representations and warranties that are made as of aspecific date or as of the date hereof need be true and correct only as of suchdate), and Nexans shall have received a certificate to such effect dated theClosing Date and executed by a duly authorized officer of Essex.

 

5.3.2        Covenants.  Thecovenants and agreements of the Essex Entities to be performed or complied withon or prior to the Closing (including without limitation those set forth inArticle II of this Agreement) shall have been duly performed or complied with,as the case may be, in all material respects, and Nexans shall have received acertificate to such effect dated the Closing Date and executed by a dulyauthorized officer of Essex.

 

5.3.3        Delivery of Ancillary Documents.  Each of the Essex Parties shall have executedand delivered each of the Ancillary Documents to which it is a party, and

 

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any Ancillary Documents in effect prior to the Closing shall not havebeen amended, modified or terminated, except as expressly approved by Nexans.

 

5.3.4        Essex Consents. Each of the Essex Parties shall have obtained and made available toNexans the Essex Material Required Consents.

 

5.3.5        Nexans Consents. Nexans shall have obtained all Nexans Material Required Consents.

 

5.3.6        Material Adverse Effect.  Since the date hereof, no event shall haveoccurred which has had or is reasonably likely to have a Material AdverseEffect on the Essex WW Business.

 

5.3.7        Releases, Waivers. Except for liabilities and obligations arising out of an Essex PermittedAffiliate Payable, and the Ancillary Documents, Essex UK and the Essex UKSubsidiary shall have been released from any and all liabilities andobligations arising out of, or related to, any Contract with Essex or anAffiliate thereof, and Essex or the applicable Affiliate thereof shall havewaived any and all rights or claims with respect to Essex UK or the Essex UKSubsidiary under any such Contract, and agreed to indemnify Essex UK or theEssex UK Subsidiary (as applicable) from any and all losses and expensesarising out of any such Contract.

 

ARTICLE VI

TERMINATION

 

6.1           Termination. This Agreement may be terminated at any time prior to the Closing:

 

(a)           by mutual written agreement of Essex and Nexans; or

 

(b)           by either Essex or Nexans, by giving written notice ofsuch termination to the other Party, if such other Party shall have breachedany of its material obligations or agreements under this Agreement and suchbreach shall be incapable of cure or has not been cured within thirty (30) daysfollowing the giving of written notice by the non-breaching Party to thebreaching Party of such breach; provided that the cure period may be extendedfor an additional thirty (30) days if the breach is capable of being cured andthe breaching party is actively and diligently exerting good faith efforts tocure the breach; or

 

(c)           by either Essex or Nexans, by giving written notice ofsuch termination to the other Party, if any order permanently enjoining orotherwise prohibiting consummation of the transactions contemplated herebyshall become final and non-appealable; or

 

(d)           by either Essex or Nexans, by giving written notice ofsuch termination to the other, if the Closing shall not have occurred on orprior to the end of the calendar month in which the date that is three (3)months following the date hereof occurs (the “Termination Date”);provided that a Party will not have the right to terminate this Agreement

 

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pursuant to this Section 6.1(d) for so long as such Party is inmaterial breach of its obligations under this Agreement; or

 

(e)           by Essex, by giving written notice of such termination toNexans, if there has been a breach of the representations and warranties of theNexans Parties contained in this Agreement which (x) would result in thefailure of the conditions set forth in Section 5.2.1 and (y) cannot be or isnot cured prior to the Termination Date; or

 

(f)            by Nexans, by giving written notice of such terminationto Essex, if there has been a breach of the representations and warranties ofthe Essex Parties contained in this Agreement which (x) would result in thefailure of the conditions set forth in Section 5.3.1 and (y) cannot be or isnot cured prior to the Termination Date.

 

6.2           Effect of Termination.  In the event of the termination of thisAgreement in accordance with Section 6.1 hereof, this Agreement shallthereafter become void and have no effect, and no Party hereto or itsAffiliates or their respective directors, officers, employees, agents oradvisors shall have any liability to the other Party hereto or its Affiliatesor their respective directors, officers or employees, except for theobligations of the parties hereto contained in this Section 6.2 and in Sections8.2 (Expenses), 8.3 (Public Disclosure), 8.9 (Notices), 8.10 (Governing Law)and 8.11 (Dispute Resolution) hereof, and except that nothing herein willrelieve any Party from liability for any breach of this Agreement prior to suchtermination.

 

ARTICLE VII

SURVIVALAND INDEMNIFICATION

 

7.1           Survival of Representations,Warranties, Covenants and Agreements. Except as set forth in this Section 7.1, the representations andwarranties contained in this Agreement shall survive the Closing and expire onthe second anniversary of the Closing Date. The representations and warranties included in Sections 3.1.20 and3.2.20 shall expire on the fifth anniversary of the Closing Date.  The representations and warranties containedin Sections 3.1.15 and 3.2.15 shall survive the Closing and expire 30 daysafter the expiration of the applicable statute of limitations.  The representations and warranties includedin Sections 3.1.1(c) (with respect to the ownership of the Hi-Wire Shares, theNexans Portugal Shares, the German Newco Shares and the Flytex Shares),3.1.7(b), 3.1.28, 3.1.29, 3.2.1(c) (with respect to the ownership of the EssexUK Shares and the Essex Pension Trustee Shares), 3.2.7(b) and 3.2.29 shall haveno expiration date.  In the event thatany Claim Notice or any other written notice of a claim shall be givenhereunder within the applicable survival period, the representations and warrantiesthat are the subject of such indemnity claim shall survive until such claim isfinally resolved but only with respect to such claim and any relatedmatters.  The covenants and otheragreements contained in this Agreement shall survive the Closing until the dateor dates specified therein or the expiration of the applicable statute oflimitations (including any waivers or extensions thereof) with respect to suchmatters, whichever is later; provided, however, that the survival period of thecovenants contained in Sections 4.2.1 and 4.2.2 shall expire on the secondanniversary of the Closing Date.

 

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7.2           Indemnification by Nexans.

 

7.2.1        Indemnification. For the period commencing on the Closing Date, Nexans shall, subject tothe limitations set forth in Section 7.1 and this Section 7.2, indemnify,defend and hold harmless the Joint Venture, or the Essex Entities to the extentthat the relevant Loss is incurred by the Essex Entities and not the JointVenture (the “Essex/JV Indemnified Parties”), against and in respect ofall direct losses, damages, liabilities, costs and expenses (includingreasonable attorneys’ fees and expenses incurred in investigating, preparing ordefending any claims covered hereby but excluding any consequential damages)(collectively, and subject to Section 7.6, “Losses”) sustained orincurred arising out of, in connection with or relating to (i) any breaches ofany Nexans Party’s representations and warranties set forth in this Agreement(until the expiration of the survival period set forth in Section 7.1), (ii)any breaches of any covenants and agreements of a Nexans Party set forth inthis Agreement (until the expiration of the survival period set forth inSection 7.1), (iii) any liability of German Newco or Flytex for Taxes arisingout of, or relating to, its inclusion in the German consolidated tax group ofNexans or the French consolidated tax group of Nexans, as applicable (but onlyto the extent that the relevant Claim Notice is delivered within 30 days afterthe expiration of the relevant statute of limitations), (iv) any liability orobligation of any nature whatsoever which is not related to the Nexans WWBusiness, (v) any provision of any Environmental Law arising out of or relatingto the ownership, use, control or operation on or prior to the Closing Date ofany real property, plant, facility, site, area or property used in the NexansWW Business (whether currently or previously owned or leased by a NexansParty), including arising from any release of any Hazardous Material oroff-site shipment of any Hazardous Material at or from such real property,plant, facility, site, area or property (but only to the extent that the ClaimNotice is delivered within five****yearsafter the Closing Date), (vi) any provision of any Environmental Lawarising out of or relating to the ownership use, control or operation or priorto the Closing Date of any real property, plant, facility, site, area orproperty subject to Chauny Lease (whether currently or previously owned or leasedby a Nexans Party), including arising from any release of any HazardousMaterial or off-site shipment of any Hazardous Material at or from such realproperty, plant, facility, site, area or property, provided, however, that ifthe JV Holding Company exercises its rights under the Chauny Option to purchasesuch property, any claim for indemnification related to the matters covered bythis clause (vi) shall be made pursuant to and subject to clause (v) of thisSection 7.2.1, and this clause (vi) shall be of no further force or effectexcept with respect to claims previously made, (vii) the matters describedin Exhibit 7.2.1, to the extent in excess of any amounts reservedtherefore (including by way of statistical reserve, if applicable) in theNexans Closing Balance Sheet, and (viii) any liabilities or obligations ofa Nexans WW Entity (whether accrued, contingent, known or unknown) existing asof the Closing Date or relating to ownership or operation of the Nexans WWBusiness prior to the Closing (but only to the extent that the relevant ClaimNotice is delivered prior to March 31, 2007), other than:

 

(a)           liabilities covered by the indemnification obligations setforth in clauses (i)-(vii) of this Section 7.2;

 

(b)           liabilities in an amount and to the extent reflected inthe Nexans Closing Balance Sheet (as finally determined pursuant to Section2.6);

 

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(c)           liabilities and obligations arising after the Closingunder Nexans WW Contracts entered into or becoming effective prior to theClosing in the ordinary course of business (except as a result of breaches ordefaults occurring prior to the Closing); and

 

(d)           liabilities that would have given rise as of the datehereof or as of the Closing Date to a breach of a representation or warrantycontained in Section 3.1****had suchrepresentation or warranty not been (x) qualified by a specified monetarythreshold, (y) made only to the Knowledge of Nexans or (z) made onlyto the extent Nexans had received notice of an event or circumstance.

 

7.2.2        Limitations.  NoNexans Party shall be liable for any Losses resulting from a breach of therepresentations and warranties set forth in this Agreement or an indemnityclaim under Section 7.2.1(vii) or (viii) unless and until the amount of suchLosses sustained or incurred by the Essex/JV Indemnified Parties arising outof, in connection with or relating to any breaches thereof exceeds €25,000 forany individual claim and €300,000 in the aggregate (such aggregate amount, the “NexansDeductible”).  If the aggregateamount of such Losses exceeds the Nexans Deductible, the Nexans Parties shallbe liable only for the amount by which such Losses exceed the NexansDeductible.  In addition, except in casesof fraud, for which there shall be no limit, any payments under this Section7.2 by the Nexans Parties for Losses arising out of any breaches ofrepresentations or warranties Agreement or an indemnity claim under Section7.2.1(vii) or (viii) shall not exceed in the aggregate an amount equal to€17,400,000 plus fifty percent of the amounts received in cash by a NexansParty (including as payment of principal of a Capital Employed Note) pursuantto Sections 2.6 and 2.7, it being understood and agreed that such limitationshall not apply to Losses arising out of any other breaches or matters forwhich the Essex/JV Indemnified Parties are entitled to indemnification underthis Section 7.2.  Notwithstandinganything to the contrary herein, the limitations set forth in this Section7.2.2 shall not apply to breaches of the representations and warranties setforth in Sections 3.1.1(c) (with respect to the ownership of the Hi-WireShares, the Nexans Portugal Shares, the German Newco Shares and the FlytexShares), 3.1.3, 3.1.7(b), 3.1.28 and 3.1.29.

 

7.2.3        Rights to Enforce. Essex may, without the consent of, or any action by, Nexans, enforce onbehalf of the Joint Venture any right of the Joint Venture to indemnificationhereunder.

 

7.3           Indemnification by Essex.

 

7.3.1        Indemnification. For the period commencing on the Closing Date, Superior and Essexshall, subject to the limitations set forth in Section 7.1 and this Section7.3, indemnify, defend and hold harmless the Joint Venture, or the NexansEntities to the extent that the relevant Loss is incurred by the NexansEntities and not by the Joint Venture (the “Nexans/JV Indemnified Parties”),against and in respect of all Losses sustained or incurred arising out of, inconnection with or relating to (i) any breaches of any Essex Party’srepresentations and warranties set forth in this Agreement (until theexpiration of the survival periods set forth in Section 7.1), (ii) any breachesof any covenants and agreements of an Essex Entity set forth in this Agreement(until the expiration of the survival periods set forth in Section 7.1), (iii)any liability or obligation of any nature whatsoever which is not related tothe Essex WW Business, (iv) any provision of any Environmental Law arising outof or relating to the

 

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ownership, use, control or operation on or prior to the Closing Date ofany real property, plant, facility, site, area or property used in the Essex WWBusiness (whether currently or previously owned or leased by an Essex Party),including arising from any release of any Hazardous Material or off-siteshipment of any Hazardous Material at or from such real property, plant,facility, site, area or property, (but only to the extent that the Claim Noticeis delivered within five years after the Closing Date), (v) the mattersdescribed in Exhibit 7.3.1, to the extent in excess of any amountsreserved therefore (including by way of statistical reserve in the EssexClosing Balance Sheet, if applicable) and (vi) any liabilities or obligationsof an Essex WW Entity (whether accrued, contingent, known or unknown) existingas of the Closing Date or relating to ownership or operation of the Essex WWBusiness prior to the Closing (but only to the extent that the relevant ClaimNotice is delivered prior to March 31, 2007), other than:

 

(a)           liabilities covered by the indemnification obligations setforth in clauses (i)-(iv) of this Section 7.3;

 

(b)           liabilities in an amount and to the extent reflected inthe Essex Closing Balance Sheet (as finally determined pursuant to Section2.6);

 

(c)           liabilities and obligations arising after the Closingunder Essex WW Contracts entered into or becoming effective prior to theClosing in the ordinary course of business (except as a result of breaches ordefaults occurring prior to the Closing); and

 

(d)           liabilities that would have given rise as of the datehereof or as of the Closing Date to a breach of a representation or warrantycontained in Section 3.2 had such representation or warranty not been (x)qualified by a specified monetary threshold, (y) made only to the Knowledge ofEssex or (z) made only to the extent Essex had received notice of an event orcircumstance.

 

7.3.2        Limitations. Neither Superior nor Essex shall be liable for any Losses resulting froma breach of the representations and warranties set forth in this Agreement oran indemnity claim under Section 7.3.1(v) or (vi) unless and until the amountof such Losses sustained or incurred by the Nexans/JV Indemnified Partiesarising out of, in connection with or relating to any breaches thereof exceeds€25,000 for any individual claim and €100,000 in the aggregate (such aggregateamount, the “Essex Deductible”). If the aggregate amount of such Losses exceeds the Essex Deductible,Superior and Essex shall be liable only for the amount by which such Lossesexceed the Essex Deductible.  Inaddition, except in cases of fraud, for which there shall be no limit, anypayments under this Section 7.3 by Superior or Essex for Losses arising out ofany breaches of representations or warranties shall not exceed in the aggregate€2,525,000, plus fifty percent of the amounts received in cash by an EssexParty pursuant to Section 2.6 (including as payment of principal of a CapitalEmployed Note) it being understood and agreed that such limitation shall not applyto Losses arising out of any other breaches or matters for which the Nexans/JVIndemnified Parties are entitled to indemnification under this Section7.3.  Notwithstanding anything to thecontrary herein, the limitations set forth in this Section 7.3.2 shall notapply to breaches of the representations and warranties contained in Sections3.2.1(c) (with respect to ownership of the Essex UK Shares and Essex PensionTrustee Shares), 3.2.3, 3.2.7(b), and 3.2.29.

 

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7.3.3        Rights to Enforce. Nexans may, without the consent of, or any action by, Superior or Essex,enforce on behalf of the Joint Venture any right of the Joint Venture toindemnification hereunder.

 

7.4           Indemnification as Sole Remedy;Specific Performance.  Following theClosing, the indemnities provided in this Article VII and in Section 4.4 shallbe the sole and exclusive remedy of the Parties hereto, the JV Holding Company,their Affiliates, successors and assigns with respect to any matter for whichindemnification is available hereunder, except in cases of willful orfraudulent breach of a representation, warrant or covenant, and except that theParties may seek specific performance of the obligations set forth in thisAgreement.

 

7.5           Method of Asserting Claims, Etc.  All claims for indemnification by theIndemnified Party hereunder shall be asserted and resolved as set forth in thisSection 7.5.  In the event that anywritten claim or demand for which Superior, Essex, Nexans, Participations, NexansWires, or L&K, as applicable (an “Indemnifying Party”), may beliable to any Indemnified Party hereunder is asserted against or sought to becollected from any Indemnified Party by a third party, such Indemnified Partyshall promptly, but in no event later than 15 days following such IndemnifiedParty’s receipt of such claim or demand, notify in writing the IndemnifyingParty of such claim or demand (the “Claim Notice”).  The failure by any Indemnified Party tonotify the Indemnifying Party in accordance with this Section 7.5 shall notrelieve any Indemnifying Party from any liability which it may have to suchIndemnified Party with respect to any claim made pursuant to this Section 7.5,except to the extent such failure actually prejudices the IndemnifyingParty.  The Indemnifying Party shall have30 days after receipt of the Claim Notice, whichever is later, (the “NoticePeriod”) to notify the Indemnified Party whether or not it desires todefend the Indemnified Party against such claim or demand and shall during theNotice Period and thereafter be provided by the Indemnified Party with suchinformation relating to the claim or demand as the Indemnifying Party shallrequest.  All costs and expenses incurredby the Indemnifying Party in defending such claim or demand shall be borne bythe Indemnifying Party.  Except ashereinafter provided, in the event that the Indemnifying Party notifies theIndemnified Party within the Notice Period that it desires to defend theIndemnified Party against such claim or demand, the Indemnifying Party shallhave the sole power to direct and control such defense.  If the Indemnifying Party so elects to assumethe defense of such claim, the Indemnifying Party shall not be liable to theIndemnified Party for any legal expenses subsequently incurred by theIndemnified Party, except as hereinafter provided.  The Indemnifying Party shall be liable forthe reasonable fees and expenses of the Indemnified Party in connection withthe defense of a claim if the Indemnified Party shall have been advised inwriting by outside counsel that there are actual conflicts of interests betweenthe Indemnified Party and the Indemnifying Party in connection with the defenseof such claim; provided, however, that the Indemnifying Party shall not beresponsible for the fees and expenses of more than one separate firm ofattorneys at any time for all Indemnified Parties.  If any Indemnified Party desires toparticipate in, but not control, any such defense it may do so at its sole costand expense (except as provided in the preceding sentence), provided that inany action seeking an injunction or decree which would materially restrict thefuture activity or conduct of the Indemnified Party or any Subsidiary orAffiliate thereof, the Indemnified Party shall be entitled to participate inthe defense of such action at the expense of the Indemnifying Party.  The Indemnified Party shall not settle,compromise or discharge a claim or demand for which it is indemnified by theIndemnifying Party or admit to any liability with respect to such claim or

 

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demand without the prior written consent of the IndemnifyingParty.  The Indemnifying Party shall not,without the prior written consent of the Indemnified Party, settle, compromiseor offer to settle or compromise any such claim or demand on a basis whichwould result in the imposition of a consent order, injunction or decree thatwould restrict the future activity or conduct of the Indemnified Party or anySubsidiary or Affiliate thereof.  To theextent the Indemnifying Party shall direct, control or participate in thedefense or settlement of any third party claim or demand, the Indemnified Partywill provide the Indemnifying Party and its counsel access to all relevantbusiness records and other documents, and shall use its reasonable best effortsto assist, and to cause the employees and counsel of the Indemnified Party toassist, in defense of such claim.  If theIndemnifying Party elects not to defend the Indemnified Party or if theforegoing prohibits the Indemnifying Party from defending the IndemnifiedParty, the Indemnified Party shall have the right and the obligation to defendthe claim or demand by appropriate proceedings and shall have the sole power todirect and control such defense.  In suchcase, the Indemnifying Party may participate in the defense at its own expense,and the Indemnified Party will provide the Indemnifying Party and its counselreasonable access to all relevant business records and other documents to theextent not covered by the attorney-client privilege.

 

7.6           Calculation of Losses.

 

7.6.1        The amount of any Loss payable by the Indemnifying Party tothe Indemnified Party shall be net of any net amounts actually recovered by theIndemnified Party under applicable insurance policies or from any thirdparties.  The indemnification amountshall also be reduced by any net tax savings (not mere timing differences)realized by an Indemnified Party as a result of any Loss; provided,however, that in determining the amount of such net tax savings, any taxespayable by the Indemnified Party as a result of the receipt of theindemnification amount shall be taken into account.

 

7.6.2        With respect to the indemnification obligations of Nexans fora breach of a representation or warranty set forth in Section 3.1.20, or forthe matters referred to in Section 7.2.1(v), no “Loss” shall be considered tohave occurred in respect of those matters identified in Schedule 7.6.2hereto, to the extent (and only to the extent) that there is a specific andidentifiable reserve on the Nexans Closing Balance Sheet related to any suchmatter (which reserve shall equal the amounts set forth with respect to suchmatters on Schedule 7.6.2 less amounts incurred prior to the Closing),or to the extent that the remedy for any such matter is planned andspecifically and identifiably budgeted in the capital expenditures reflected onSchedule 7.6.2.  To the extentthat amounts specified in the preceding sentence which were reserved orbudgeted for a specific matter are not used or necessary to cover any liabilityor obligation with respect to such matter, then any excess amount may be usedin connection with another matter listed on Schedule 7.6.2.  This Section 7.6.2 shall be relevant only tothe matters specifically covered herein, and shall not affect theinterpretation of the term “Loss” in any other circumstance.

 

7.7           Assignment of Claims.  If the Indemnified Party receives any paymentfrom an Indemnifying Party in respect of any Losses and the Indemnified Partycould have recovered all or a part of such Losses from a third party (a “PotentialContributor”) based on the underlying claim or demand asserted against theIndemnifying Party, the Indemnified Party shall,

 

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to the extent permitted by Law or any applicable contractualarrangement, assign such of its rights to proceed against the PotentialContributor as are necessary to permit the Indemnifying Party to recover from thePotential Contributor the amount of such payment.

 

7.8           Mitigation. The Indemnified Party shall, upon learning of the situation giving riseor likely to give rise to a Loss use or cause to be used commerciallyreasonable efforts to mitigate the corresponding Loss; provided, however, thatany cost of such mitigation effort shall be indemnified by the IndemnifyingParty.

 

7.9           Consequential Damages.  No Indemnifying Party shall be required toindemnify any Indemnified Party for any consequential or indirect damages orlosses, including without limitation any loss of profit or businessopportunity, and no such consequential or indirect damages shall be considered “Losses”under this Agreement.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1           Entire Agreement; Amendment and Waiver.  This Agreement (including any Exhibits andSchedules hereto) and the Ancillary Documents (including any exhibits andschedules thereto), supersede all prior agreements, written or oral, among theparties with respect to the subject matter hereof and thereof and contain theentire agreement among the parties with respect to the subject matter hereofand thereof.  This Agreement may not beamended, supplemented or modified, and no provisions hereof may be modified orwaived, except by an instrument in writing signed by all of the parties.  No waiver of any provisions hereof by anyparty shall be deemed a waiver of any other provisions hereof by any suchparty, nor shall any such waiver be deemed a continuing waiver of any provisionhereof by such party.

 

8.2           Expenses.  Except as otherwise expressly provided inthis Agreement, whether or not the transactions contemplated by this Agreementare consummated, the parties shall bear their own respective expenses(including, but not limited to, Transfer Taxes and all compensation andexpenses of counsel, financial advisors, consultants, actuaries and independentaccountants) incurred in connection with this Agreement and the transactionscontemplated hereby.

 

8.3           Public Disclosure. Each party hereby agrees with the other party that prior to the Closing,except as may be required to comply with the requirements of applicable Law orthe rules and regulations of any national securities exchange upon which thesecurities of one of the parties or its Affiliates is listed, no press releaseor similar public announcement or communication will be made or caused to bemade concerning the execution or performance of this Agreement unlessspecifically approved in advance by the parties; provided, however, that to theextent that either party to this Agreement is required by Law or the rules andregulations of any stock exchange upon which the securities of one or more ofthe parties or its Affiliates is listed to make such a public disclosure, suchpublic disclosure shall only be made after prior consultation with and deliveryof a copy of the proposed disclosure substantially in the form it will bedisclosed to the public to the other party, if consultation and delivery isreasonably practicable.  Additionally,the Essex parties hereby undertake not to file the Schedules or Exhibits heretoor any of the Ancillary Documents (other than the Shareholders Agreement) with

 

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the Securities Exchange Commission, unless required by Law. If such afiling is required by Law, the Essex parties will seek confidential treatmentof any commercially sensitive provisions, after prior consultation with Nexans.

 

8.4           Assignment. No party may assign any of its rights or obligations under this Agreementwithout the prior written consent of the other party.

 

8.5           Fulfillment of Obligations.  Any obligation of any party to any otherparty under this Agreement, which obligation is performed, satisfied orfulfilled by an Affiliate of such party, shall be deemed to have beenperformed, satisfied or fulfilled by such party.

 

8.6           Third Party Beneficiaries.  This Agreement shall inure to the benefit ofand be binding upon the parties, the JV Holding Company and their respectivesuccessors and permitted assigns. Nothing in this Agreement, express or implied, is intended to conferupon any Person other than the parties, the JV Holding Company or theirrespective successors any rights or remedies under or by reason of thisAgreement.

 

8.7           Reserved.

 

8.8           Section Headings. The section and paragraph headings and table of contents contained inthis Agreement are for reference purposes only and shall not in any way affectthe meaning or interpretation of this Agreement.

 

8.9           Notices.  All notices, requests, claims, demands andother communications hereunder shall be in writing and shall be deemed given(i) on the first calendar day following the date of delivery in person or bytelecopy (in each case with telephonic confirmation of receipt by theaddressee), (ii) on the first calendar day following timely deposit with anovernight courier service, if sent by overnight courier specifying next daydelivery or (iii) on the first calendar day that is at least five (5) daysfollowing deposit in the mails, if sent by registered or certified mail, to theparties at the following addresses (or at such other address for a party asshall be specified by like notice):

 

If to an Essex Party:

 

c/oSuperior Essex Inc.

150 Interstate North Parkway

Atlanta, Georgia

Attention:  Barbara L. Blackford

Facsimile:  (770) 657-6479

 

with a copy to:

 

Paul, Hastings, Janofsky& Walker LLP

600 Peachtree Street, N.E.

Suite 2400

Atlanta, GA  30308-2222

Attention:  Frank Layson

Facsimile:  (404) 685-5206

 

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If to a Nexans Party:

 

Nexans

16, rue de Monceau

75008 Paris

France

Attention:  Patrick Noonan

Facsimile:  331 56 69 8636

 

with a copy to:

 

Cleary Gottlieb Steen &Hamilton LLP

12 rue de Tilsitt

75008 Paris

France

Attention:  Andrew A. Bernstein

Facsimile:  331 45 63 66 37

 

Any notice given by mailshall be effective when received.

 

8.10         Governing Law. This Agreement and the rights and obligations of the parties shall begoverned by and construed in accordance with and subject to the laws of the Republicof France.

 

8.11         Dispute Resolution. Any dispute arising out of or relating in any way to this Agreement orthe breach thereof shall be resolved in accordance with the proceduresspecified in this Section 8.11, which shall be the sole and exclusive procedurefor the resolution of any such dispute.

 

8.11.1      Negotiation Between Executives.  Essex and Nexans shall attempt in good faithto resolve any dispute arising out of or relating to this Agreement promptly bydirect negotiation between executives who have authority to settle thecontroversy and who are at a higher level of management than the persons withdirect responsibility for administration of this Agreement, unless there is noexecutive of a higher level.  Any partymay give the other party written notice of any dispute not resolved in thenormal course of business.  Withinfifteen (15) days after delivery of the notice, the receiving party shallsubmit to the other a written response. Within thirty (30) days after delivery of the disputing party’s notice,the executives of each of Essex and Nexans shall meet at a mutually acceptabletime and place, and thereafter as often as they reasonably deem necessary, toattempt to resolve the dispute.  Allreasonable requests for information made by one party to the other will behonored.  All negotiations pursuant tothis clause are confidential and shall be treated as compromise and settlementnegotiations for purposes of applicable rules of evidence.

 

8.11.2      Mediation With Mutually Agreed-UponNeutral.  If the dispute has not beenresolved by negotiation within forty-five (45) days of the disputing party’snotice, or if Essex and Nexans fail to meet within thirty (30) days, Essex andNexans shall submit the dispute to non-binding mediation under the then-currentCDR Institute for Dispute Resolution’s (the “CDR Rules”) Model MediationProcedure for Business Disputes, and endeavor (but not be

 

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obligated) to settle the dispute in such mediation.  CDR’s address at the time of this Agreementis 366 Madison Avenue, 14th Floor, New York, New York 10017 (212-949-6490) andits website is “www.cdr.org.”  Essex andNexans agree to use their best efforts and good faith to agree mutually on amediator, to be selected from the CDR Technology Panel of Neutrals.  If Essex and Nexans fail to select a mutuallyacceptable mediator within thirty (30) days after either party’s notice to theother party that they request non-binding mediation pursuant to thissubsection, CDR will appoint a mediator from the Technology Panel.

 

8.11.3      Arbitration.  All disputes arising out of orrelating to this Agreement not resolved pursuant to non-binding mediationwithin thirty (30) days or as this time period may be extended by written agreementof the Parties shall be settled finally in an arbitration conducted under theUNCITRAL Model Rules (“UNCITRAL”) and as provided in this Section8.11.3.

 

(a)           The arbitration proceedings shall be conducted in Dublin,Ireland.

 

(b)           The language of the arbitration proceedings shall beEnglish.

 

(c)           The arbitral tribunal shall consist of three (3)arbitrators, one (1) of which shall be selected by Essex and one (1) of whichshall be selected by Nexans.  The thirdarbitrator shall be selected by the two arbitrators appointed by Essex andNexans.

 

(d)           The International Bar Association’s Rules on the Taking ofEvidence in International Commercial Arbitration shall apply together withUNCITRAL governing any submission to arbitration incorporated in this Agreement.

 

(e)           Every award shall be binding on each of Essex and Nexansand may be enforced in any court with appropriate jurisdiction.  By submitting the dispute to arbitrationunder UNCITRAL, the parties undertake to carry out any award without delay.

 

(f)            This agreement to arbitrate shall be binding on theParties and their respective successors, assigns and Affiliates.

 

(g)           The prevailing party in any arbitration proceedingconducted pursuant to this Agreement is also entitled to an award from thearbitration tribunal for both its reasonable fees for legal representation andits related costs.

 

(h)           The parties waive any right or claim to punitive orexemplary damages and agree that punitive or exemplary damages are not withinthe contemplation of this Agreement.  Noarbitral tribunal may order an award consisting in whole or in part of punitiveor exemplary damages.

 

8.11.4      Tolling of Statutes of Limitation.  All applicable statutes of limitationand defenses based on the passage of time shall be tolled while the procedures

 

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specified in Section 8.11 are pending. Essex and Nexans shall take such action, if any, required to effectuatesuch tolling.

 

8.11.5      Right to Injunctive Relief BeforeAppointment of Arbitrators.  Withrespect to any violations of this Agreement that would cause or might causeirreparable injury to any one of the parties to this Agreement (and any timeperiods and notice periods specified thereon), such party may, in addition toany other rights under this Agreement or any Ancillary Document andnotwithstanding the dispute resolution procedures including, particularly, themediation provisions and arbitration agreement contained in this Section 8.11(and any time periods and notice periods specified thereon), seek specificperformance of this Agreement and injunctive relief in any court of competentjurisdiction against any ongoing violation of this Agreement.  Prior to the appointment of the arbitratorspursuant to the arbitration agreement, any party hereto may seek provisional orinterim measures from any court of competent jurisdiction.  After the appointment of the arbitrators, thearbitrators shall have exclusive power to consider and grant requests forprovisional or interim measures.

 

8.11.6      Determination of Financial andAccounting Matters.  The partiesacknowledge that this Agreement and the Ancillary Documents provide for therights and obligations of the parties to be determined in certain instances onthe basis of financial and accounting measures, including without limitationthe level of actual or projected EBITDA or Adjusted EBITDA at various points intime.  Such determinations are requiredto be made in accordance with accounting principles specified in this Agreementand/or in the Ancillary Documents.  Inthe event of a disagreement between the parties regarding any financial or accountingdetermination (other than the level of Capital Employed, as to which an expertdetermination mechanism is separately specified in Section 2.6), following theimplementation of the procedures contemplated by Sections 8.11.1 and 8.11.2, ifsuch disagreement is not resolved pursuant to non-binding mediation withinthirty (30) days (or such longer period as the parties may agree in writing),either Essex or Nexans may, by written notice to the other, request that thedetermination of the issue referred to in this Section 8.11.6 (and only suchissue) be made by an independent expert in financial accounting matters (amanagement consultant, banker or accountant, as appropriate) with experience inthe interpretation of financial models and/or accounting principles of the typeat issue (an “Independent Expert”). If either such party requests the designation of an Independent Expertand Essex and Nexans do not agree on the identity of the person to be namedwithin 30 days of the delivery of the request, either party may request thedesignation of an Independent Expert meeting the requirements described aboveby the International Centre for Expertise in accordance with the provisions forthe appointment of experts under the Rules for Expertise of the InternationalChamber of Commerce.  The IndependentExpert shall be requested to provide an opinion within 30 days of his or herdesignation.  Each party shall cooperate(and cause their Subsidiaries to cooperate) with the Independent Expert,including furnishing any information or documents reasonably requested by theIndependent Expert.  The determination ofthe Independent Expert with respect to the issues referenced to in this Section8.11.6 shall be conclusive and binding in the absence of manifest error.  The fees and expenses of the IndependentExpert shall be shared equally between Essex and Nexans.  Notwithstanding anything to the contrarycontained herein, an Independent Expert shall not be used, or have the authorityto resolve, disagreements between the parties with respect to contractualinterpretation matters (but shall only be competent to determine financial andaccounting matters).

 

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8.12         Severability. The provisions of this Agreement shall be deemed severable and theinvalidity or unenforceability of any provision shall not affect the validityor enforceability of the other provisions hereof.  If any provision of this Agreement, or theapplication thereof to any party or any circumstance, is invalid orunenforceable, (i) a suitable and equitable provision shall be substitutedtherefor in order to carry out, so far as may be valid and enforceable, theintent and purpose of such invalid or unenforceable provision and (ii) theremainder of this Agreement and the application of such provision to otherparties or circumstances shall not be affected by such invalidity orunenforceability, nor shall such invalidity or unenforceability affect thevalidity or enforceability of such provision, or the application thereof, inany other jurisdiction.

 

8.13         Parent Guarantees. Nexans will cause to be performed, and guarantees the prompt andcomplete payment and performance when due of (as primary obligor and not asmere surety), all obligations set forth herein or in any Ancillary Document tobe performed by the Nexans Entities or their Affiliates.  Superior will cause to be performed, andguarantees the prompt and complete payment and performance when due of (asprimary obligor and not as mere surety), all obligations set forth herein or inany Ancillary Document to be performed by the Essex Entities or theirAffiliates.  The guaranty obligations ofNexans and Superior herein are absolute and unconditional and shall continue infull force and effect until the payment and performance of all of theobligations under this Agreement and the Ancillary Documents.

 

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IN WITNESS WHEREOF, thisAgreement has been signed in Paris on behalf of each of the parties hereto asof the date first written above in six original copies.

 

 
|   | SUPERIOR ESSEX INC.   |
|--------|-----------------------|
|   |                  |   |
|   | By:                   | /s/  | Stephen M. Carter |
|   |                  |   |
|   | Name:                 |   | Stephen M. Carter |
|   |                  |   |
|   | Title:                |   | Chief Executive Officer |
|   |                  |   |
|   |                  |   |
|   | ESSEX GROUP, INC.     |
|   |                  |   |
|   | By:                   | /s/  | Stephen M. Carter |
|   |                  |   |
|   | Name:                 |   | Stephen M. Carter |
|   |                  |   |
|   | Title:                |   | Director |
|   |                  |   |
|   |                  |   |
|   | NEXANS                |
|   |                  |   |
|   | By:                   | /s/  | Vincent Pouillard |
|   |                  |   |
|   | Name:                 |   | Vincent Pouillard |
|   |                  |   |
|   | Title:                |   | Attorney-in-fact |
|   |                  |   |
|   |                  |   |
|   | NEXANS PARTICIPATIONS |
|   |                  |   |
|   | By:                   | /s/  | Vincent Pouillard |
|   |                  |   |
|   | Name:                 |   | Vincent Pouillard |
|   |                  |   |
|   | Title:                |   | Attorney-in-fact |
|        |                       |  |  |  |  |

 

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|   | NEXANS WIRES             |
|--------|--------------------------|
|   |                     |   |
|   | By:                      | /s/  | Vincent Pouillard |
|   |                     |   |
|   | Name:                    |   | Vincent Pouillard |
|   |                     |   |
|   | Title:                   |   | Attorney-in-fact |
|   |                     |   |
|   |                     |   |
|   | LACROIX & KRESS GmbH |
|   |                     |   |
|   | By:                      | /s/  | Vincent Pouillard |
|   |                     |   |
|   | Name:                    |   | Vincent Pouillard |
|   |                     |   |
|   | Title:                   |   | Attorney-in-fact |
|        |                          |  |  |  |  |

 

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