EXHIBIT 99.2
SHARE PURCHASE AGREEMENT
DATED AS OF NOVEMBER 18, 2005
BY AND AMONG
SAFRAN SA
SAGEM COMMUNICATION
AND
GRUPO GENERAL CABLE SISTEMAS, S.A.
TABLE OF CONTENTS
ARTICLE I. DEFINITION OF THE ASSETS AND LIABILITIES TO BE CONTRIBUTED........................................ 2
1.1 Contributed Assets......................................................................... 2
1.2 Contributed Contracts...................................................................... 3
1.3 Excluded Assets............................................................................ 3
1.4 Contributed Liabilities.................................................................... 4
1.5 Excluded Liabilities....................................................................... 4
ARTICLE II. CONTRIBUTION..................................................................................... 4
2.1 Contribution............................................................................... 4
2.2 Information and Consultation of the Purchaser.............................................. 4
ARTICLE III. PURCHASE AND SALE OF THE SHARES................................................................. 4
ARTICLE IV. CONSIDERATION.................................................................................... 5
4.1 Final Consideration........................................................................ 5
4.2 Base Consideration and Payment at Closing.................................................. 5
4.3 Determination of Final Consideration....................................................... 5
4.4 Adjustment................................................................................. 7
4.5 Payments................................................................................... 7
ARTICLE V. CLOSING........................................................................................... 7
5.1 Closing.................................................................................... 8
5.2 Closing Deliveries......................................................................... 8
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SAFRAN......................................................... 9
6.1 Organization and Good Standing............................................................. 9
6.2 Authorization - No Violations - Enforceability............................................. 10
6.3 Organization; Qualification of the Subsidiary.............................................. 10
6.4 Capitalization of the Subsidiary........................................................... 11
6.5 Equity Interests........................................................................... 11
6.6 No Broker.................................................................................. 11
6.7 No Undisclosed Liabilities................................................................. 11
6.8 Contributed Receivables and Contributed Inventory.......................................... 11
6.9 Absence of Certain Changes................................................................. 11
6.10 Title to Assets; Encumbrances.............................................................. 12
6.11 Real Property.............................................................................. 13
6.12 Movable Property........................................................................... 14
6.13 Intellectual Property...................................................................... 15
6.14 No Litigation.............................................................................. 17
6.15 Contracts.................................................................................. 17
6.16 Consents................................................................................... 19
6.17 The Contribution........................................................................... 19
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6.18 Interests in Customers, Suppliers, Etc. ................................................... 19
6.19 Loans to or from Directors, Officers and Employees......................................... 19
6.20 Corporate Controls......................................................................... 19
6.21 Product Liability.......................................................................... 20
6.22 Tax Matters................................................................................ 20
6.23 Insurance.................................................................................. 21
6.24 Employees.................................................................................. 21
6.25 Employee Benefit Plans..................................................................... 23
6.26 Compliance with Law. Permits............................................................... 23
6.27 Minute Books, etc. ........................................................................ 23
6.28 Assets and Rights Used in the Cables Business.............................................. 23
6.29 Consultation of Works Council.............................................................. 23
6.30 Inventory; Returns; Periodic Rebates....................................................... 23
6.31 Subsidies.................................................................................. 24
6.32 No Other Representations................................................................... 24
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................. 24
7.1 Organization and Good Standing............................................................. 24
7.2 Authorization - No Violations.............................................................. 24
7.3 Availability of Funds...................................................................... 25
7.4 No Claims or Litigation.................................................................... 25
7.5 No Other Representations................................................................... 25
ARTICLE VIII. COVENANTS...................................................................................... 25
8.1 Covenants of SAFRAN........................................................................ 25
8.2 Covenants of the Purchaser................................................................. 28
8.3 Mutual Covenants........................................................................... 29
ARTICLE IX. CUT OFF PRINCIPLES AND OTHER COVENANTS........................................................... 31
9.1 Tax Matters................................................................................ 31
9.2 Employees.................................................................................. 33
9.3 Bonds...................................................................................... 33
ARTICLE X. CONDITIONS PRECEDENT.............................................................................. 34
10.1 Conditions to Closing for the Seller and the Purchaser..................................... 34
10.2 Conditions to Obligations of the Purchaser................................................. 35
10.3 Conditions to Obligations of the Seller.................................................... 35
ARTICLE XI. INDEMNIFICATION.................................................................................. 36
11.1 General Indemnification Obligation of the Guarantor........................................ 36
11.2 Specific Indemnification Obligations of the Guarantor...................................... 36
11.3 Calculation of Purchaser Losses............................................................ 38
11.4 Limitation of the Guarantor's Indemnification Obligations.................................. 38
11.5 General Indemnification Obligation of the Purchaser........................................ 39
11.6 Method of asserting claims, etc. .......................................................... 40
11.7 Payment.................................................................................... 42
11.8 General Exclusions and Limitations......................................................... 42
11.9 Survival of Representations and Warranties................................................. 45
11.10 Tax Effect of Indemnification Payments..................................................... 45
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11.11 Effect of Investigation.................................................................... 45
ARTICLE XII. POST-CLOSING COVENANTS.......................................................................... 45
12.1 Non Solicitation of Employees.............................................................. 45
12.2 Maintenance of Books and Records........................................................... 45
12.3 Payments Received.......................................................................... 46
12.4 Non-Competition / Non Solicitation of Clients.............................................. 46
12.5 Invalidity or Non-enforceability........................................................... 46
12.6 SAFRAN Names and Trademarks................................................................ 47
12.7 Efforts to Mitigate Damages................................................................ 47
ARTICLE XIII. TERMINATION.................................................................................... 48
13.1 Termination................................................................................ 48
13.2 Consequences............................................................................... 48
ARTICLE XIV. MISCELLANEOUS PROVISIONS........................................................................ 48
14.1 Amendment.................................................................................. 48
14.2 Waivers.................................................................................... 48
14.3 Appointment of the Seller's Agent - Notices................................................ 49
14.4 Assignment................................................................................. 50
14.5 No Third Party Beneficiaries............................................................... 50
14.6 No Set-off................................................................................. 50
14.7 Expenses................................................................................... 50
14.8 Counterparts............................................................................... 50
14.9 Headings, etc. ............................................................................ 50
14.10 Entire Agreement; Severability............................................................. 51
14.11 Governing Law.............................................................................. 51
14.12 Dispute Resolution......................................................................... 51
14.13 Exhibits and Schedules..................................................................... 52
14.14 Interpretation............................................................................. 52
14.15 Conflict................................................................................... 53
14.16 Sales, Transfer and Documentary Taxes...................................................... 53
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LIST OF ANNEXES, EXHIBITS AND SCHEDULES
1 Annex A - List of the Products
2 Annex B - Labinal Term Sheet
3 Annex C - List of the Sites
4 Exhibit A(i) - Contribution Agreement
5 Exhibit B - Requete en designation des co-commissaires a la scission
6 Exhibit 4.3.2 - Executed Lettre de Mission of the Independent Accounting
Firm
7 Schedule A - Definitions
8 Schedule 1.2 - Contributed contracts
9 Schedule 1.5 - Excluded Liabilities
10 Schedule 2.1 - Draft bylaws of the Subsidiary
11 Schedule 4.1.1 - Environmental and safety investment plan
12 Schedule 4.3.1 - Closing Balance Sheet Accounting Principles
13 Schedule 5.2.1(viii) - List of the Ancillary Documents
14 Schedule 5.2.1(xi) - List of the Material Contracts for which evidence of
consent and authorization has to be provided at Closing
15 Schedule 6.5.2 - Equity or ownership or proprietary interest in any other
person engaged in the Cables Business
16 Schedule 6.7 - List of undisclosed liabilities
17 Schedule 6.8.1 - Contributed receivables not incurred in the ordinary
course of business and/or not free and clear of Encumbrances
18 Schedule 6.8.2 - Contributed Inventories not consisting of a quality and
quantity usable and saleable and/or not free and clear of encumbrances
19 Schedule 6.9 - Actions not in the ordinary course of business taken since
December 31, 2004
20 Schedule 6.9(g) - Material strike or other material labor dispute
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21 Schedule 6.9(i) - Business acquired or licensing agreement or joint
venture entered into pertaining to the operation of the Cables Business
22 Schedule 6.11.1(a) - Owned Real Property (Montereau)
23 Schedule 6.11.1(b) - Issues on Owned Real Estate
24 Schedule 6.11.2 - Leased real property
25 Schedule 6.12.1 - List of all items of movable property the value of which
exceeds (euro) 10,000
26 Schedule 6.13.1 - All Material Contributed Intellectual Property not fully
owned by the Seller or the Subsidiary
27 Schedule 6.13.2 - All Material Licensed Intellectual Property on which the
Seller or the Subsidiary does not have full right of usage
28 Schedule 6.13.3 - All Material items of Material Contributed Intellectual
Property the registration, maintenance and renewal fees is not in full
force
29 Schedule 6.13.4 - Royalties, honoraria to be paid by the Seller or, at
Closing, by the Subsidiary, as regards Material Contributed Intellectual
Property
30 Schedule 6.13.5 - Material infringements of the Material Contributed
Intellectual Property and/or the Licensed Intellectual Property
31 Schedule 6.13.6 - Employees whose work contract does not include a waiver
of all right on IP
32 Schedule 6.13.7 - License and any other agreement with respect to, any
Material Contributed Intellectual Property or Material Licensed
Intellectual Property which is not binding or valid
33 Schedule 6.13.8 - Notice of claims concerning Material Contributed
Intellectual Property which could arise from the Transaction
34 Schedule 6.13.9 - Contributed Material Intellectual Property which is not
free and clear of encumbrances
35 Schedule 6.13.10(ii) - List of Licensed Intellectual Property
36 Schedule 6.13.10(iii) - Licensed Intellectual Property
37 Schedule 6.13.10(iv) - List of the patents and trademarks and software
38 Schedule 6.13.10(v)- Material Contributed Intellectual Property
39 Schedule 6.14 - Pending or threatened litigation
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40 Schedule 6.15.1 - List of the Material Contracts
41 Schedule 6.15.1(ix) - List of other Material Contracts
42 Schedule 6.15.2 - List of the contracts threatened by a breach or a
violation
42 bis Schedule 6.15.3 - List of the ongoing Contributed Contracts in
Portugal
43 Schedule 6.16 - Material Contracts the transfer of which may require the
Consent of any party
44 Schedule 6.18 - List of managers, officers, key employee holding interest
in any other party or property implied in the Cables Business, or having
any material cause of action against the Cables Business
45 Schedule 6.20.1 - Description of the internal control procedure
46 Schedule 6.21 - Product Liability
47 Schedule 6.23(i) - List of all insurance policies
48 Schedule 6.23(ii) - Notice of cancellation or non renewal of any insurance
policy
49 Schedule 6.24.1(i) - Detailed list of Transferred Employees
50 Schedule 6.24.1(ii) - Breach of employment agreements or labor Law
51 Schedule 6.24.2(i) - Applicable collective bargaining agreements,
unilateral commitments of Sagem communication represented trade-unions and
of agreements entered into with employee representatives
52 Schedule 6.24.2(ii) - List of the Transferred Employees entitled to
special benefits
53 Schedule 6.24.3 - Lists of the obligations of the Seller as regards
obligations vis-a-vis employee representatives exceeding those provided
for by law or collective bargaining agreements
54 Schedule 6.24.5 - Transferred Employees whose termination requires a
specific payment not provided for by law or the collective bargaining
agreement applicable to such employee
55 Schedule 6.24.6 - List of employees which are not exclusively dedicated to
the Cables Business
56 Schedule 6.24.7 - List of Transferred Employees with a 217 days work year
57 Schedule 6.24.8 - Material Transferred Employees bound by a non-compete
clause
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58 Schedule 6.24.9 - List of Transferred Employees with an open balance with
the "Compte Epargne Temps" as of October 3, 2005
59 Schedule 6.24.11 - Transferred employees whose transfer requires the
consent of the work inspector
60 Schedule 6.24.12 - Reports which identify material liabilities as regards
worker safety or health
61 Schedule 6.26 (i) - Permits required and not obtained. Non compliance with
Law
62 Schedules 6.26 (ii) - Permits required and not obtained. Non compliance
with Environmental Law
63 Schedule 6.31 - List of the Subsidies granted to Seller in relation to the
Cables Business
64 Schedule 7.3 - Letter addressed by Banco de Sabadell to the Purchaser
65 Schedule 8.1.11 - Key personnel to which access shall be granted in
connection with any transition planning
66 Schedule 8.2.4 - List of documents and information with respect to Merger
Control
67 Schedule 9.3 - List of Bonds in force which the seller undertakes to
regularly update until Closing
68 Schedule 10.1.2 - Governmental Approval required for consummation of the
contemplated transactions
69 Schedule 12.6 - List of new products manufactured through molds or tools
on which the Purchaser shall be entitled to engrave the name "SAGEM"
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SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT, dated as of November 18, 2005 (the
"Agreement"), is made and entered into by and among SAFRAN SA, a French
corporation ("SAFRAN"), SAGEM Communication, a French corporation ("SAGEM
Communication" or the "Seller"), acting jointly and severally, on one hand, and
Grupo General Cable Sistemas S.A., a Spanish corporation (the "Purchaser"), on
the other hand.
WITNESSETH:
WHEREAS, on the date hereof, the Seller is engaged, inter alia, in the
business of designing, manufacturing, marketing, distributing and selling low,
medium, high and extra-high voltage energy cables and copper and fiber optic
cables and products as listed in ANNEX A (the "Products") primarily from its
manufacturing facility at Montereau and its administrative and service center at
Malakoff, France (the "Cables Business");
WHEREAS, the Purchaser is interested in acquiring the Cables Business, as
by mean of such it will succeed to enlarge its clientele within the European
market and other countries, reinforce its sales force and thus increase the
sales of products manufactured by General Cable Sistemas, S.A., the result of
which is to increase Spanish export sales;
WHEREAS, on September 30, 2005, Labinal S.A., a subsidiary of SAFRAN, and
the Purchaser have agreed to the terms set forth in ANNEX B;
WHEREAS, subject to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, the Purchaser
desires to purchase from the Seller the Cables Business;
WHEREAS, the Cables Business is located in France and owned and operated
as a division of SAGEM Communication on the sites listed in ANNEX C;
WHEREAS, the Cables Business as currently conducted represents a complete
and autonomous branch of activity of SAGEM Communication (the "Branch");
WHEREAS, the Purchaser wishes to acquire the Branch incorporated in an
immediately operational separate entity and desires to avoid the complex
administrative and legal formalities associated with the transfer of the
personnel and the numerous assets and contracts of the Branch;
WHEREAS the Seller wishes to transfer the Branch and the assets and
liabilities attached thereto to such operational separate entity;
WHEREAS, on or prior to the Closing Date, SAGEM Communication shall have
transferred, by means of contribution of assets (the "Contribution"), the Branch
to a newly incorporated fully-owned subsidiary (the "Subsidiary"), in accordance
with the form of the contribution agreement (the "Contribution Agreement")
attached hereto in EXHIBIT A(i), in exchange for newly-issued shares of the
Subsidiary, which shares, together with the shares of the Subsidiary existing
immediately prior to such contribution of assets, shall comprise all the shares
of the Subsidiary (the "Shares");
WHEREAS the transfer of the Branch, as contemplated by Seller and
Purchaser, may only take place further to the Contribution being submitted under
French Law to the so-called
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"regime des scissions" which facilitates the transfer of the assets, contracts
and liabilities of the Cable Business to the Subsidiary;
WHEREAS, capitalized terms used but not otherwise defined in this
Agreement shall have the meaning assigned to them in SCHEDULE A (terms defined
herein in the singular having the same meaning when used in the plural and
vice-versa);
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I. DEFINITION OF THE ASSETS AND LIABILITIES TO BE CONTRIBUTED
1.1 CONTRIBUTED ASSETS. Except as otherwise provided for herein, "Contributed
Assets" shall mean all of the assets (and all right, title and interest
therein) owned by the Seller or any of its Affiliates, wherever located,
whether tangible or intangible, which are necessary for, used in and
primarily dedicated to the conduct of the Cables Business on the Closing
Date and which shall be contributed to the Subsidiary at the Closing
pursuant to the Contribution Agreement. Contributed Assets shall include,
without limitation:
(a) the clientele of the Cables Business including, without limitation,
the customer records, statistics and credit information relating
specifically to such clientele ;
(b) all real property where the Cables Business is operated including,
in particular, the land and buildings located at Montereau, France,
as described in in SCHEDULE 6.11.1(a);
(c) all equipment, machinery, vehicles, furniture, furnishings, office
supplies, computers identified in SCHEDULE 6.12.1, and all other
tangible personal property;
(d) all finished goods, spare parts, raw materials, components and work
in progress of the Cables Business (the "Contributed Inventory") on
the Closing Date;
(e) all receivables (including inter-company trading receivables) of the
Cables Business on the Closing Date (the "Contributed Receivables");
(f) all Intellectual Property of the Cables Business as defined in
Section 6.13 ;
(g) all information, sales aids, sales literatures, manuals, catalogs,
files, books and records, and data;
(h) all prepaid items, advance payments or deposits, including for
unbilled costs and fees, such as customs bonds that relate
exclusively to the Cables Business arising in the ordinary course;
and
(i) "customer projects in progress".
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in each case as necessary for, used in and primarily dedicated to the
conduct of the Cables Business on the Closing Date.
1.2 CONTRIBUTED CONTRACTS. Except as otherwise provided for herein, and
subject to Section 8.1.10, "Contributed Contracts" shall mean all rights
and obligations under any contract, agreement, lease of personal property,
purchase order, bid, quotation, proposal, registration, license, other
Permit or approval of any nature, technical certifications, or other
document, commitment, arrangement, undertaking, including, but not limited
to, all rights under the contracts listed in SCHEDULE 1.2, and SCHEDULE
6.11.2 hereto, and all rights and obligations under such agreements
arising in the ordinary course of business after the date hereof, in each
case as necessary for, used in and primarily dedicated to the conduct of
the Cables Business on the Closing Date.
1.3 EXCLUDED ASSETS. Notwithstanding the foregoing, the Contributed Assets
shall not include any of the following:
(a) the corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books of account or other records relating
to the corporate organization, maintenance and existence of the
Seller which the Seller must retain pursuant to applicable Laws;
(b) cash on hand or in banks, cash equivalents and financial investments
including without limitation cash, cash equivalents and financial
investments used as collateral for liabilities relating to the
Cables Business to the exclusion of cash for registered capital;
(c) all rights and claims against third parties (including, without
limitation, any rights under insurance contracts for claims caused
by facts which have occurred prior to the Closing Date) pertaining
to any Excluded Liability and all other rights related to Excluded
Liabilities;
(d) subject to Section 9.1.3, the rights to any claims of the Seller for
any tax or social security refunds whatsoever;
(e) inter-company non trading receivables; and
(f) any assets, properties or rights used and/or operated by the Seller
not primarily dedicated to the Cables Business, or otherwise
contemplated to be transferred to the Purchaser hereunder subject,
however, to the rights granted to the Subsidiary under the Ancillary
Agreements.
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1.4 CONTRIBUTED LIABILITIES. "Contributed Liabilities" shall mean the
liabilities and obligations related to the Cables Business at the Closing
of a type which are required to be reflected, and which are included in
the Final Closing Balance Sheet and Closing Statement pursuant to the
Closing Balance Sheet Accounting Principles (as defined herein), subject
to the cut-off rules set forth in ARTICLE IX, all liabilities and
obligations arising under the Contributed Contracts, and all liabilities
and obligations arising in connection with the conduct of the Cables
Business in the ordinary course, which together shall be contributed to
the Subsidiary at the Closing pursuant to the Contribution Agreement ; for
the avoidance of doubt, the Contributed Liabilities shall not include the
Excluded Liabilities.
1.5 EXCLUDED LIABILITIES. "Excluded Liabilities" shall mean (i) any
inter-company financial debt payable by the Subsidiary to SAFRAN or an
Affiliate of the Seller as of the Closing Date, (ii) all liabilities for
asbestos personal injury claims of any person based on alleged exposure at
any time prior to Closing to asbestos containing materials from or in the
Cables Business, (iii) all liabilities for claims relating to offsite lead
contamination (including inter alia soil, water and underground
contamination) from the Cables Business prior to the Closing Date and
brought by any person or governmental body and (iv) all liabilities
arising from, related to or attributable to the alleged practices of the
Cables Business prior to the Closing Date which are object of the
competition authorities investigation described in SCHEDULE 1.5 as well as
all liabilities arising from, related to or attributable to practices, if
any, similar to the one described in SCHEDULE 1.5 implemented prior to the
Closing Date.
ARTICLE II. CONTRIBUTION
2.1 CONTRIBUTION. The Contributed Assets, the Contributed Contracts and the
Contributed Liabilities of the Branch shall be contributed on the Closing
Date by SAGEM Communication to the Subsidiary. SAGEM Communication shall
create, prior to the Closing Date, the Subsidiary, the draft bylaws of
which are attached in SCHEDULE 2.1 hereto. The Contributed Assets, the
Contributed Contracts and the Contributed Liabilities shall be contributed
to the Subsidiary on the Closing Date in accordance with the draft of the
Contribution Agreement attached hereto in EXHIBIT A(i). The "requete en
designation des co-commissaires a la scission" which was filed with the
Commercial courts of Paris is attached hereto in EXHIBIT B.
2.2 INFORMATION AND CONSULTATION OF THE PURCHASER. The Seller shall keep the
Purchaser fully informed and consult with the Purchaser prior to
finalization of any legal step to be taken after the date hereof and
necessary to complete the Contribution. The Purchaser shall have a
reasonable opportunity to comment on any document prepared in connection
with the Contribution in order to ensure that the Contribution is
completed in compliance with the provisions of this Agreement. The
Contribution balance sheet (bilan d'apport) (the "Contribution Balance
Sheet") shall be agreed by the Purchaser.
ARTICLE III. PURCHASE AND SALE OF THE SHARES
In consideration for the Purchaser's agreement to pay the consideration
provided for hereunder, the Seller hereby agrees to sell, transfer and
deliver to the Purchaser, and
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the Purchaser hereby agrees to purchase, on the Closing Date, all of
the Shares free and clear of all liens, charges, pledges or other
security interests or encumbrances or other third party rights
("Encumbrances").
ARTICLE IV. CONSIDERATION
4.1 FINAL CONSIDERATION.
4.1.1. Upon the terms and subject to the conditions hereof, the
Purchaser shall pay an aggregate purchase price to the Seller
for the Shares equal to the Closing Net Equity (as defined in
Section 4.1.2 hereof) from which shall be deducted (i) the
goodwill, if any, (ii) Euros 900,000 and (iii) Euros 3,543,000
in relation to the investment plan described in SCHEDULE 4.1.1
such amount being reduced by the amount expended by the Seller
on or before the Closing Date in relation to the investment
plan described in SCHEDULE 4.1.1 and to the extent such
expenditures have not been capitalized in the Final Closing
Balance Sheet (the "Final Consideration").
4.1.2. "Net Equity" shall mean an amount equal to (i) the aggregate
book value of the assets on a balance sheet, minus (ii) the
aggregate book value of the liabilities on that same balance
sheet, each determined as of the relevant date in accordance
with the Closing Balance Sheet Accounting Principles and the
terms and provisions of this Agreement. For the avoidance of
doubt, no goodwill should be included. The Net Equity
resulting from the Closing Balance Sheet is defined as the
"Closing Net Equity".
4.2 BASE CONSIDERATION AND PAYMENT AT CLOSING. No later than twenty (20)
calendar days prior to the Closing Date SAFRAN shall communicate to
Purchaser the calculation, in accordance with the Closing Balance Sheet
Accounting Principles, of the Net Equity as of the month end prior to
the Closing (Base Net Equity Date) from which shall be deducted (i)
Euros 900,000 and (ii) Euros 3,543,000 in relation to the investment
plan described in SCHEDULE 4.1.1 such amount being reduced by the
amount expended by the Seller on or before the Base Net Equity Date in
relation to the investment plan described in SCHEDULE 4.1.1 and to the
extent such expenditures have not been capitalized in the balance sheet
of the Contributed Business as at the Base Net Equity Date (Base Net
Equity). On the Closing Date, the Purchaser shall pay to Seller eighty
five (85) percent of the Base Net Equity (the "Base Consideration").
The Base Consideration shall be limited to a maximum amount of Euros
72,000,000. ]
4.3 DETERMINATION OF FINAL CONSIDERATION. The Final Consideration shall be
determined as follows:
4.3.1. SAFRAN shall conduct a physical inventory of the Contributed
Inventory and the Contributed Assets on the Closing Date
(Purchaser and/or its representatives shall be entitled to
observe the process); the rules governing the inventory
process shall be reasonably agreed by the Parties prior to
Closing. As soon as practicable and, in any event not later
than forty five (45) Business Days after the Closing Date,
SAFRAN shall prepare and deliver to the Purchaser a balance
sheet of the Contributed Business at the Closing Date (the
"Closing Balance Sheet") and a statement setting forth the
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Closing Net Equity resulting from the Closing Balance Sheet
and the resulting Adjustment (as defined in Section 4.4.2)
(the "Closing Statement"), that is definitively determined as
provided in Section 4.3.2. The Closing Balance Sheet shall be
prepared in accordance with the Closing Balance Sheet
Accounting Principles as set forth in SCHEDULE 4.3.1 and by
taking into account the provisions of ARTICLE I relating to
the definition of the assets and liabilities to be contributed
and the cut-off procedure provided for in ARTICLE IX
hereunder. SAFRAN shall deliver to the Purchaser an
attestation from Cabinet J.H. Legorju confirming that the
Closing Balance Sheet has been prepared in accordance with the
Closing Balance Sheet Accounting Principles and the cut-off
procedures.
4.3.2. The Purchaser shall have forty five (45) Business Days after
the delivery of the Closing Balance Sheet and Closing
Statement in which to review such documents (the "Review
Period"). Unless the Purchaser notifies SAFRAN in writing
during the Review Period of any objection to any of the
Closing Balance Sheet and Closing Statement, specifying in
reasonable detail the items and amounts subject to such
objection (the "Disputed Items"), the Closing Balance Sheet
and the Closing Statement (including the Adjustment, if any
shown thereon) shall be conclusive and binding on SAFRAN and
the Purchaser. If during the Review Period the Purchaser
notifies SAFRAN in writing of any such objection, then the
Purchaser and SAFRAN shall use reasonable efforts for ten (10)
calendar days after such notice to resolve in good faith their
differences and agree upon any adjustments to the disputed
Closing Balance Sheet and Closing Statement. For the avoidance
of doubt the Closing Balance Sheet shall take into account
only the situation as of the Closing Date, including facts and
circumstances known on the Closing Date, and shall not take
into account events, circumstances and knowledge thereof
arising after the Closing, including with respect to
determining provisions and accruals. Any Disputed Items which
are not resolved by the mutual agreement of the Purchaser and
SAFRAN within such ten-day period shall be submitted for
resolution to the Paris office of KPMG or any other reputable
accounting firm mutually agreed by the Parties (the
"Independent Accounting Firm"). The executed Lettre de Mission
of the Independent Accounting Firm is set forth in SCHEDULE
4.3.2 hereto. The Purchaser and SAFRAN shall instruct the
Independent Accounting Firm to limit its examination to the
unresolved Disputed Items, to resolve any such unresolved
Disputed Items affecting the Closing Balance Sheet, and to use
its best efforts to make its determination thereon within
thirty (30) Business Days after its engagement hereunder. The
resolution of any such previously unresolved Disputed Items by
such Independent Accounting firm shall be made in a writing
delivered to SAFRAN and the Purchaser (which writing shall set
forth the amount of any Adjustment, as defined below, as
finally determined) and shall, in the absence of manifest
error, be final, conclusive and binding upon SAFRAN and the
Seller and the Purchaser in accordance with Article 1592 of
the French Civil Code. The fees and expenses charged by the
Independent Accounting Firm with respect to Disputed Items
shall be borne equally by SAFRAN and the Seller, on the one
hand, and the Purchaser, on the other hand.
4.3.3. As part of its obligations under this Section 4.3, the
Purchaser will give full
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access to SAFRAN, and its representatives to all documents,
materials and premises necessary to conduct the physical
inventory of the Contributed Inventory and the Contributed
Assets and prepare the Closing Balance Sheet and the Closing
Statement. Similarly, the Seller will give full access to the
Purchaser and its representatives to all documents, materials
and premises necessary in connection with the physical
inventory of the Contributed Inventory and the Contributed
Assets in accordance with Section 4.3.1 hereof and the review
of the Closing Balance Sheet. The Seller and the Purchaser
shall give full access to the Independent Accounting Firm to
all documents, materials and premises necessary to conduct its
mission.
4.4 ADJUSTMENT.
4.4.1. The Closing Balance Sheet and Closing Statement to which the
Purchaser does not object or to which the Purchaser and SAFRAN
and the Seller agree, or as otherwise conclusively determined
pursuant to Section 4.3 hereof (such final form of the Closing
Balance Sheet and Closing Statement being referred to herein
as the "Final Closing Balance Sheet and Closing Statement")
shall be used in determining the Adjustment.
4.4.2. The Purchaser shall pay to the Seller an amount in Euros equal
to the difference between (i) the Final Consideration and (ii)
the Base Consideration, if such difference is positive; if
such difference is negative, the Seller shall pay such
negative difference to the Purchaser (the "Adjustment").
4.4.3. The payment corresponding to the Adjustment shall be made
within five (5) Business Days following the determination of
the Final Closing Balance Sheet and Closing Statement.
4.5 PAYMENTS. Any payment to be made pursuant to this ARTICLE IV shall be
made in Euros by wire transfer of immediately available funds to the
account of Seller or the Purchaser, as the case may be, such account to
be designated at least three (3) Business Days prior to the date on
which such payment is scheduled to be made.
Sums payable by either party to the other (if any) pursuant to this
ARTICLE IV shall bear interest at the rate of EURIBOR (30 days) plus
two (2)% per annum from, but excluding, the Closing Date to, and
including, the date of payment.
ARTICLE V. CLOSING
7
5.1 CLOSING. The closing of the Transaction shall take place in Paris at
the offices of Norton Rose, Washington Plaza, 42 rue Washington, 75008
Paris, at 2:00 PM, local time, on the last day of the month in which
the conditions set forth in ARTICLE X are satisfied or waived (if
applicable) (targeted to be November 30, 2005) (the "Closing"),
provided that if such date is not a Business Day, the Closing shall
take place on the next succeeding Business Day (the "Closing Date").
5.2 CLOSING DELIVERIES. At the Closing, all of the events listed below
shall occur, each event being conditional upon the occurrence of all of
the others:
5.2.1. DELIVERIES BY THE SELLER. SAFRAN and the Seller shall deliver
or make available to the Purchaser (or procure the delivery or
the making available of, as the case may be) the following:
(i) duly executed and completed share transfer forms
representing the Shares in favor of the Purchaser or
its designee(s);
(ii) up-to-date share transfer registries and shareholders
accounts of the Subsidiary;
(iii) certified copy of the by-laws, the minutes of
shareholders' meetings evidencing duly completion of
the Contribution to the Subsidiary and the related
share capital issue in accordance with applicable
Law;
(iv) unconditional resignation letters, effective on the
Closing Date, from all the directors of the
Subsidiary, with the exception of those persons the
name of which shall be notified by the Purchaser to
the Seller no later than fifteen (15) calendar days
prior to the Closing Date;
(v) a certified copy of the minutes of the meeting of the
shareholders of the Subsidiary appointing as
directors and corporate officers, subject to the
condition precedent of the completion of the sale of
the Shares provided for herein, those persons the
name of which shall be notified by the Purchaser to
the Seller no later than fifteen (15) calendar days
prior to the Closing Date;
(vi) certified copies of the minutes of the meetings of
the supervisory board of SAFRAN and the board of
directors of the Seller, approving the Transaction;
(vii) executed counterparts of the Contribution Agreement;
(viii) executed counterparts of all Ancillary Agreements
listed in SCHEDULE 5.2.1(viii) hereto;
(ix) evidence with regard to the Transaction that, in
accordance with applicable labor laws, all required
consultation procedures have been duly carried out
and authorization of
8
relevant transfers, as the case may be, has been
obtained from the labor inspector for the Transferred
Employees listed in SCHEDULE 6.24.11 who are also
employee representatives of the Seller;
(x) a list of all bank accounts and names of all persons
having signature authority over any such account and
a list of the name of each Person holding a proxy,
general or special power of attorney, or other
similar instrument from the Subsidiary;
(xi) evidence that consents and authorizations required
for the transfer of the Material Contracts listed in
SCHEDULE 5.2.1(xi) to the Subsidiary and the
subsequent transfer of the Shares to the Purchaser
have been obtained;
(xii) Statement from the Guarantor certifying that the
representation and warranties stated in ARTICLE VI
are true and correct at the Closing Date.
5.2.2. DELIVERIES BY THE PURCHASER. The Purchaser shall deliver to
the Seller at the Closing the following:
(i) the Base Consideration provided for under Section
4.2;
(ii) executed counterparts of the Ancillary Agreements;
(iii) a certified copy of the resolution of the meeting of
the board of directors of the Purchaser approving the
Transaction; and
(iv) evidence that the Purchaser has obtained all
necessary clearances and/or consents from the
competent merger control authorities in accordance
with applicable national and/or European laws.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SAFRAN
Except as set forth in the disclosure schedules of this ARTICLE VI,
prepared, signed by the Seller, delivered to the Purchaser and attached herewith
(the "Disclosure Schedules"), SAFRAN represents and warrants to the Purchaser
that all of the statements contained in this ARTICLE VI are true and correct at
the date hereof and the Closing Date unless the statement refers to a specific
date in which case it is made solely with respect to such date. For purposes of
the representations and warranties of SAFRAN contained herein, disclosure, in
any section of the Disclosure Schedules, of any facts or circumstances shall be
deemed to be adequate response and disclosure of such fact or circumstances with
respect to all representations or warranties by SAFRAN calling for disclosure of
such information with the exception of the information and documents disclosed
in Schedule 6.26 (ii) which shall be deemed to be disclosed only with respect to
the representation concerning compliance with Environmental Law made by SAFRAN
in Section 6.26.
6.1 ORGANIZATION AND GOOD STANDING. Each of SAFRAN and the Seller is a
9
corporation, duly organized, validly existing and in good standing
under the laws of France, and the Seller has all requisite corporate
power and authority to enable it to own and operate the properties and
assets it now owns or operates and to carry on its business as
presently conducted.
6.2 AUTHORIZATION - NO VIOLATIONS - ENFORCEABILITY.
6.2.1. The execution and delivery of this Agreement, the Contribution
Agreement, and the Ancillary Agreements, and the performance
by SAFRAN and the Seller of the Transaction have been (or, in
the case of the Contribution Agreement and the Ancillary
Agreements, will have been at the Closing Date) duly
authorized by all necessary corporate action. Assuming valid
execution by the other parties thereto, this Agreement
constitutes (and the Contribution Agreement and the Ancillary
Agreements, will constitute on the Closing Date) a valid and
binding agreement of each of SAFRAN and the Seller enforceable
against each of SAFRAN and the Seller, individually, in
accordance with the terms hereof and thereof.
6.2.2. The execution, delivery and performance of this Agreement, the
Contribution Agreement, the Ancillary Agreements and the
consummation of the purchase and sale of the Shares and the
Transaction will not:
(i) violate or conflict in any respect with any provision
of the by-laws (or other governing documents) of the
Seller or the Subsidiary;
(ii) subject to Section 6.17, breach, violate or
constitute a default under or an event which would
give rise to any right of termination, acceleration
or cancellation, in accordance with the terms of any
Material Contract, to which the Seller or the
Subsidiary may be bound;
(iii) violate or conflict, in any material respects, with
any Law applicable to the Cables Business, the Seller
or the Subsidiary; or
(iv) violate or require any Permit under any Law
applicable to the Seller, the Subsidiary or the
Cables Business except for the authorizations
required pursuant to articles 8.2.2 and 8.2.4.
6.3 ORGANIZATION; QUALIFICATION OF THE SUBSIDIARY.
6.3.1. At the Closing Date, the Subsidiary will be a societe par
actions simplifiee ("SAS") that is duly organized and validly
existing under the laws of France with full corporate power
and authority to carry on the Cables Business as it was being
conducted by the Seller immediately prior to such date and to
own and operate its properties and assets.
6.3.2. Prior to the Contribution, the Subsidiary has not conducted
any business and has no assets, except its statutory capital,
or liabilities.
10
6.4 CAPITALIZATION OF THE SUBSIDIARY. At the Closing Date, all of the
Shares will be validly issued, fully paid and owned by the Seller free
and clear of any Encumbrances. The Shares will not be subject to any
preemptive rights, subscriptions rights, options, conversion rights,
warrants, rights of first refusal or buy out, promise to sell or other
transfer restrictions. Other than this Agreement, neither the Seller
nor the Subsidiary is a party to any other agreement with a third
party, nor has made any commitment to any third party with respect to
the Shares or any interest therein.
6.5 EQUITY INTERESTS.
6.5.1. The Subsidiary has no subsidiaries and does not directly or
indirectly own any capital stock of or other equity interests
in any corporation, partnership, or other person, and the
Subsidiary is not member of, or participant in, any
partnership, joint venture, Groupement d'Interet Economique or
similar enterprise.
6.5.2. Except as set forth in SCHEDULE 6.5, neither SAFRAN nor the
Seller owns, directly or indirectly, any equity or ownership
or proprietary interest in any other Person engaged in a
business competing with the Cables Business.
6.6 NO BROKER. Except for Lazard Freres, there is no broker, finder or
financial advisor, who is acting or has acted on behalf of SAFRAN and
the Seller in connection with the transactions contemplated by this
Agreement. Except for Lazard Freres, there is no person, firm or
corporation entitled to receive any brokerage, commission or finder's
or financial advisory fee from SAFRAN and the Seller in connection with
the transactions contemplated by this Agreement.
6.7 NO UNDISCLOSED LIABILITIES.
Except as otherwise set forth in SCHEDULES 6.7 and 9.3 as well as in
the Final Closing Balance Sheet and Closing Statement, there is no
liability (including off balance sheet liabilities) which is required
to be reflected in the Final Closing Balance Sheet and Closing
Statement (and its Annexe) according to the Closing Balance Sheet
Accounting Principles and which is transferred to the Purchaser or the
Subsidiary as a consequence of the Transaction.
6.8 CONTRIBUTED RECEIVABLES AND CONTRIBUTED INVENTORY.
6.8.1. ACCOUNTS RECEIVABLE. Except as otherwise set forth in SCHEDULE
6.9.1, all Contributed Receivables were incurred in the
ordinary course of business and are free and clear of all
Encumbrances.
6.8.2. INVENTORY. Except as otherwise set forth in SCHEDULE 6.9.1,
the Contributed Inventory consists of a quality and quantity
usable and saleable in the ordinary course of business and is
free and clear of all Encumbrances.
6.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 6.9,
subject to the actions to be carried out in accordance with the terms
of the present Agreement in order to effect the carve out of the Cables
Business, and during the period since December 31, 2004, the Cables
Business has been conducted only in the ordinary course and the Seller
and the Subsidiary have not:
(a) caused the Cables Business to create, incur or assume any
long-term debt; or create, incur, assume, maintain or permit
to exist any short-term debt other than
11
in the ordinary course of business;
(b) caused the Cables Business to assume, guarantee, or otherwise
become liable for the obligations of any other Person, other
than in the ordinary course of business;
(c) paid, loaned or advanced any amount (to the exclusion of the
amounts paid in relation to their employment and/or in
relation to professional expenses) to, or sold, or transferred
any properties or assets relating to the Cables Business to
any directors, officers or other Key Employees of the Seller;
(d) caused the Cables Business to make or commit to make any
capital expenditures in an amount greater than Euros 100,000
per item and Euros 500,000 in the aggregate;
(e) received any written notice, nor have knowledge of any verbal
notice, of termination of any Material Contract (as defined in
Section 6.15);
(f) made any general wage or salary increase to the Transferred
Employees (except for the 2005 annual increases and annual
bonuses; made any material increase in compensation, not
consistent with past practice, payable or to become payable to
any of the cadres of the Cables Business; made or suffered any
termination of employment of any of the Key Employees, or
received written notice of any intention by any of the Key
Employees to terminate his or her employment;
(g) except as set forth in SCHEDULE 6.9(g), become involved with
(including having received any written notice) any material
strike or other material labor dispute and the Key Employees
have not received any verbal or written notice that the
Transaction will result in a material strike;
(h) suffered any material damage or destruction, whether or not
covered by insurance;
(i) except as set forth in SCHEDULE 6.9(i), acquired any other
business or entered into any licensing arrangement or joint
venture pertaining to the operation of the Cables Business;
(j) entered into agreements or commitments, except agreements or
commitments made in the ordinary and usual course of business,
consistent with past practice, and in an amount not to exceed
Euros 500,000 (VAT excluded) individually; or
(k) agreed, whether in writing or otherwise, to take any action
described in this Section.
6.10 TITLE TO ASSETS; ENCUMBRANCES. Except for assets sold since December
31, 2004 in the ordinary course of business, the Seller has, and the
Subsidiary will have at Closing, good title to each of the assets
reflected on the Final Closing Balance Sheet, free and clear of all
Encumbrances (other than Permitted Liens) and in particular to the
Contributed Assets and the Owned Real Property. The Seller has, and the
Subsidiary at Closing will have, good title to assets purchased (and
not resold) since December
12
31, 2004, and such assets may be transferred without restriction.
6.11 REAL PROPERTY.
6.11.1. OWNED REAL PROPERTY.
(a) SCHEDULE 6.11.1(a) sets forth a description of the real
property where the Cables Business is operated (including at Montereau,
France) which are part of the Contributed Assets (the "Owned Real
Property").
(b) Except as set forth in SCHEDULE 6.11.1(b) and for
those matters identified in the environment and
safety investment program described in SCHEDULE
4.1.1.
(i) Seller is, and at Closing the Subsidiary will be, the
full and exclusive owner of the Owned Real Property
which is duly identified at the appropriate land and
mortgages register according to the laws and
regulations in force;
(ii) The Owned Real Property is not subject to any
encumbrance of any kind (meaning any pledge,
mortgage, seizure, privilege, lien, usufruct, right
of pre-emption, enjoyment or claim, easement, right
of first refusal or any third party option right or
any other encumbrance or security interest of any
kind) (hereinafter referred to as "Real Property
Encumbrance(s)") for the benefit of third parties,
other than the Permitted Real Property Encumbrances.
(iii) The Seller has received no written notice from a
Governmental Authority or local authority (including
regional and municipal authorities) relating to a
decision which may impair the full and exclusive
ownership and the free enjoyment of the Owned Real
Property and the Key Employees have no knowledge of
projects or plans by such authorities which would
give rise to such a decision.
(iv) All the commitments undertaken by the Seller and by
the Seller's predecessors vis-a-vis the
administrative authorities in relation to the Owned
Real Property (including obligations of any nature,
if any, arising from the town planning agreements, or
from any other agreement entered into with
administrative bodies and including, moreover,
obligations of payment connected with the issue of
any authorization or permit) have been fulfilled in
all material respects;
(v) All the construction works which have been carried
out in relation to the Owned Real Property have been
carried out in compliance with the material rights of
third parties and, in all material respects, with the
applicable building and zoning laws and regulations
(the "Building and Zoning Laws"), the relevant
building licenses and with any other necessary
administrative
13
authorization;
(vi) All material construction permits, licenses and other
authorizations relating to the Owned Real Property
have been obtained in accordance with all applicable
Building and Zoning Laws and consequently are valid
and effective;
(vii) The Owned Real Property is in all material respects
in compliance with town planning, health and safety,
safety at place of work and fire prevention laws and
regulations and Seller has no knowledge of any
structural defect of the Owned Real Property likely
to materially affect the operation of the Cables
Business as currently conducted. The use
classification of the Owned Real Property lawfully
allows its use for the carrying out of the activities
of the Cable Business.
(viii) The Owned Real Property is served by drainage, water,
electricity and gas services all of which are
connected to the mains and, to Seller's knowledge,
said utilities are in good working condition, subject
to normal wear and tear.
(ix) All easements necessary for the conduct of business
on the Owned Real Property have been obtained by the
Seller and shall not be terminated as a result of the
transfer of the Owned Real Property to the
Subsidiary.
(x) On the Closing Date, and subject to the
representations or warranties with respect to the
Owned Real Property given hereabove, the Owned Real
Property will be transferred to the Subsidiary on an
"as is" basis (en l'etat) ; therefore neither SAFRAN
nor the Seller makes any representations or warranty
related thereto other than those set forth in this
Section 6.11.1.
6.11.2. LEASED REAL PROPERTY. SCHEDULE 6.11.2 sets forth a complete
description of each Lease of the Cables Business. At the
Closing, each Lease is valid, binding and enforceable in
accordance with its terms. There is no default by the Seller,
and at Closing by the Subsidiary, under any Lease that could
lead to a valid termination of it. There are no material
Encumbrances upon the Leases.
6.12 MOVABLE PROPERTY.
6.12.1. SCHEDULE 6.12.1 contains a list which enumerates each item of
movable property owned or leased by the Seller on the date
hereof with a net book value exceeding Euros 10,000 on the
date it was acquired or the date hereof and necessary for,
used in and primarily dedicated to the conduct of the Cables
Business on the date hereof ("Movable Property").
6.12.2. Except for those matters identified in the environment and
safety investment program described in Schedule 4.1.1, all of
the Movable Property listed in SCHEDULE 6.12.1, excluding
items sold or disposed of in the ordinary course
14
of business prior to the Closing, together with other items of
Movable Property acquired after the date hereof (and not
disposed of) in the ordinary course of business prior to the
Closing, exists and is part of the Contributed Assets and, to
the Seller's knowledge, is, subject to normal wear and tear,
routine maintenance and repairs, in good working condition to
run the Cables Business as currently conducted and is in
substance adequate for the uses to which it is being put.
6.12.3. Subject only to the representations and warranties contained
in this Section 6.12, the Movable Property will be transferred
to the Subsidiary "as is" basis, and neither SAFRAN nor the
Seller makes any representation or warranty related thereto
except for those set forth in this Section 6.12.
6.13 INTELLECTUAL PROPERTY.
6.13.1. Except as set forth in SCHEDULE 6.13.1, the Seller or the
Subsidiary currently has, and the Subsidiary will have as at
the Closing, the full ownership of and sole and exclusive
right to use, sell, license, dispose of, or enforce its rights
in and to the Material Contributed Intellectual Property as is
necessary for, used in and primarily dedicated to the conduct
of the Cables Business as currently conducted.
6.13.2. Except as set forth in SCHEDULE 6.13.2, the Seller currently
has, and the Subsidiary will have as at the Closing, the full
right to use or enforce its rights in and to the Material
Licensed Intellectual Property as is necessary for, used in
and primarily dedicated to the conduct of the Cables Business
as currently conducted.
6.13.3. Except as set forth in SCHEDULE 6.13.3, all registration,
maintenance and renewal fees in connection with the Material
Contributed Intellectual Property are in full force and effect
and have been paid by the Seller, and all documents and
certificates in connection with such Material Contributed
Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authority in France and
other relevant international and foreign jurisdictions, as the
case may be, where the Cables Business is operated for the
purposes of maintaining such Material Contributed Intellectual
Property registrations.
6.13.4. Except as set forth in SCHEDULE 6.13.4, there are no
royalties, honoraria, fees or other payments payable by the
Seller or at Closing by the Subsidiary to any person by reason
of ownership, use, license, sale or disposition of the
Material Contributed Intellectual Property.
6.13.5. Except as set forth in SCHEDULE 6.13.5, to SAFRAN and the
Seller's knowledge, there are no infringements of the Material
Contributed Intellectual Property and the Material Licensed
Intellectual Property.
6.13.6. Except as set forth in SCHEDULE 6.13.6, subject to the
applicable Collective Bargaining Agreement and French Laws ,
employment agreements entered into between the Seller and the
Subsidiary and the Transferred Employees who actively
participate in research and development of new products
15
include a provision pursuant to which such Transferred
Employees' potential right, title or interest in or to the
Material Contributed Intellectual Property is automatically
transferred to the employer without additional compensation
being owed to such Transferred Employee. To the Seller's
knowledge, none of its former employees, Transferred
Employees, officers or directors hold any registered right,
title or interest, in or to the Material Contributed
Intellectual Property, or have initiated, or notified in
writing their intent to initiate, a procedure the purpose of
which is to hold rights, titles or interests in or to the
Material Contributed Intellectual Property.
6.13.7. Except as set forth in SCHEDULE 6.13.7, each license of, and
other agreement with respect to, any Material Contributed
Intellectual Property or Material Licensed Intellectual
Property is valid, legally binding upon the Seller or, at
Closing upon the Subsidiary, and enforceable in accordance
with its terms. To the Seller's knowledge, there exists no
violation or breach of, or default by any party under any such
agreement.
6.13.8. Except as set forth in SCHEDULE 6.14.8, neither the Seller nor
the Subsidiary received any written notice asserting that the
contemplated Transaction, if and when consummated, would
provide a valid basis for any claim or assertion challenging
the validity, ownership or right to use, sell, license or
dispose of any Material Contributed Intellectual Property.
6.13.9. Except as set forth in SCHEDULE 6.13.9, the Material
Contributed Intellectual Property is free and clear of any
Encumbrance, fully transferable, alienable and licensable by,
or between, the Seller, the Subsidiary and the Purchaser
without material restriction and without payment of any kind
being due to any third party.
6.13.10. For purposes of this Agreement, the following capitalized
terms shall have the meaning set forth below:
(i) "Intellectual Property" shall mean (i) all French,
international and foreign patents and applications
therefor and all reexaminations, reissues, divisions,
renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions
(whether patentable or not), invention disclosures,
trade secrets, proprietary information (including
plans, specifications and drawings), and know how;
(iii) all copyrights, copyrights registrations and
applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all
domain names, uniform resource locators ("URLs") and
other names and locators associated with the
Internet; (v) all computer software, including,
without limitation, all source code, object code, and
firmware; and (vi) all trade names, logos, common law
trademarks and service marks, trademark and service
mark registrations and applications therefor
throughout the world.
(ii) "Licensed Intellectual Property" means that
Intellectual
16
Property licensed to the Seller or, at Closing to the
Subsidiary, or otherwise used in the Cables Business
that is not included in the Contributed Intellectual
Property but which is necessary for, currently used
in and primarily dedicated to the Cables Business on
the Closing Date; such Licensed Intellectual Property
is more specifically listed in SCHEDULE 6.13.10(ii).
(iii) "Material Licensed Intellectual Property" means the
Licensed Intellectual Property listed in SCHEDULE
6.13.10(iii).
(iv) "Contributed Intellectual Property" means that
Intellectual Property owned by the Seller, or at
Closing by the Subsidiary, necessary for, currently
used in and primarily dedicated to the Cables
Business on the Closing Date. A list of the
trademarks, patents and software included in the
Contributed Intellectual Property is set forth in
SCHEDULE 6.13.10 (iv).
(v) "Material Contributed Intellectual Property" means
the Contributed Intellectual Property listed in
SCHEDULE 6.13.10(v).
6.14 NO LITIGATION. There is no civil, commercial, labor related, criminal
or administrative action, demand, hearing, notice of violation or
investigation or arbitration proceeding pending or, to the Seller's
knowledge, threatened against SAFRAN, the Seller or the Subsidiary
relating to the Cables Business, other than as set forth on SCHEDULE
6.14. Neither SAFRAN, nor the Seller or the Subsidiary has received any
written notice, that it is, or will become, subject to any judgment,
order, decree or entered in any lawsuit or proceeding which is likely
to affect the conduct of the Cables Business.
6.15 CONTRACTS.
6.15.1. SCHEDULE 6.15.1 sets forth a list of the Contributed Contracts
which meet any one of the following criteria (the "Material
Contracts"):
(i) contracts (including, without limitation,
dealer/distributor/installer/customers contracts,
loan agreement, guarantee agreement, mortgage,
security agreement and other document or written
arrangement relating to the borrowing of money or for
lines of credit, guarantee agreement in respect of a
third party obligation, but not including contracts,
agreements or arrangements with officers, Transferred
Employees, agents, consultants, advisors, or sales
representatives) for a total or annual amount in
excess of Euros 100,000 or the equivalent thereof in
any other currency;
17
(ii) any agreement the remaining term of which exceeds one
(1) year or is unlimited in duration (except for
labor agreements) requiring more than three (3)
months notice of termination;
(iii) any written agreement entered into with federal,
national or governmental authorities or agencies
necessary for the conduct of the Cables Business;
(iv) any agreement for the purchase or sale of goods or
materials representing two (2) % or more by value of
the total annual sales of the Cables Business;
(v) contracts providing for the sharing of profits, the
payment of commissions or bonuses, or the payment of
any amounts based on profits or revenues but not
including employment agreements;
(vi) contracts, agreements or arrangements with officers,
Transferred Employees, agents, consultants, advisors,
or sales representatives providing for annual
payments in excess of Euros 75,000;
(vii) contracts (x) materially restricting or (y)
prohibiting the Seller and the Subsidiary from
carrying on the Cables Business in any jurisdictions;
(viii) contracts relating to the holding and/or transfer of
securities or interest in any entity or to the
control or management thereof; and
(ix) the contracts listed in SCHEDULE 6.15.1 (ix)
6.15.2. Except as set forth on SCHEDULE 6.15.2, (i) all Material
Contracts are valid, binding, enforceable in accordance with
their terms and in full force and effect, (ii) the Seller and
the Subsidiary are not in default under or in violation of,
nor has any event occurred that (whether with or without
notice, lapse of time or the occurrence of any other event)
would constitute a default under or a violation of, any
Contributed Contract, to which they are a party or by which
they are bound, (iii) there are no Contributed Contracts with
respect to which the performance of the Transaction will
constitute a default or an event of acceleration or
renegotiation, subject to Sections 6.2.2(ii) and 6.17, (iv)
the Seller and the Subsidiary have not received a written
notice that they are in default under any Material Contract,
(v) within the past two years, the Seller has not paid any
penalties in excess of 25,000 Euros for late performance of
any of its obligations under any Contributed Contract in
connection with the Cables Business, (vi) the Seller and the
Subsidiary have not received a written notice of termination
for any Material Contract (vii) to the Seller's knowledge, no
other party to any Material Contract is in default thereunder,
and (viii) upon Closing subject to Section 6.17 below, the
Subsidiary will have, or will acquire from the Seller, all
rights under the
18
Contributed Contracts and will be in a position to enforce the
same in accordance with their terms.
6.15.3. Except as set forth in SCHEDULE 6.15.3, there is no on-going
Contributed Contracts in Portugal.
6.16 CONSENTS. Except as set forth in SCHEDULE 6.16 hereto, no Material
Contracts, require the consent of any party to their assignment to the
Subsidiary or to the subsequent transfer of the Shares to the Purchaser
in connection with the Transaction (a "Consent").
6.17 THE CONTRIBUTION. On the Closing Date, Seller shall have transferred
validly to the Subsidiary, by means of contribution of assets (apport
partiel d'actifs), all the Contributed Assets and Contributed
Liabilities pursuant to the Contribution Agreement.
6.18 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC.
To SAFRAN's and the Seller's knowledge and except as set forth in
SCHEDULE 6.18, no officer, director or key employee of the Seller or
any Seller's Affiliate or Transferred Employee:
(i) owns, directly or indirectly, any interest in or is
an officer, director, employee or consultant of, any
person which is a lessor, lessee, supplier,
distributor, sales agent, customer or client of the
Cables Business;
(ii) owns, directly or indirectly, in whole or in part,
any tangible or intangible property that the Cables
Business uses; or
(iii) owes any amount to the Cables Business except for
claims in the ordinary course of business (such as
the amounts due in relation to their employment
and/or in relation to professional expenses).
6.19 LOANS TO OR FROM DIRECTORS, OFFICERS AND EMPLOYEES.
There are no outstanding loans or open account advances payable to the
Seller or at Closing to the Subsidiary by any current or former
officer, director, or employee of the Cables Business, and there are no
guarantees, endorsements or other obligations of the Seller, or at
Closing of the Subsidiary, with respect to any indebtedness, obligation
or liability of any of the foregoing persons. Except as may arise in
relation to their employment and/or professional expenses there are no
outstanding loans or open account advances payable by either the
Seller, or at Closing by the Subsidiary, to any current or former
officer, director, or employee of the Cables Business.
6.20 CORPORATE CONTROLS.
6.20.1. Set forth in SCHEDULE 6.20.1 is an accurate and complete
description of the internal control procedures applied by
Seller in relation to the Cable Business and, in particular,
the financial reporting process and control environment
relating thereto.
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6.20.2. To the Seller's knowledge, neither the Seller nor the
Subsidiary, nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Seller
or the Subsidiary, has, directly or indirectly, on behalf of
the Seller or the Subsidiary made or offered any bribe,
kickback or other payment of a similar or comparable nature to
any person or entity, private or public, regardless of form,
whether in money, property or services, to obtain favorable
treatment in securing business or to obtain special
concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
6.21 PRODUCT LIABILITY. Except as set forth in SCHEDULE 6.21:
(i) within the past two (2) years, with regard to the Products
distributed or sold prior to the Closing Date relating to
the Cables Business, there has not been any written claim
or notice of investigation against the Seller or the
Subsidiary or any of their agents (a) relating to any
alleged hazard or alleged defect in design, production or
implementation, or (b) pursuant to any warranty relating to
said Products which in both cases could not be dealt with
by the after-sales services of the Cables Business in the
ordinary course of business ;
(ii) within the past two (2) years, with regard to the Products
distributed or sold prior to the Closing Date relating to
the Cables Business to Seller's knowledge there has been no
such defect; and
(iii) within the past five (5) years, there have not been any
general or partial product recalls, reworks or post-sale
warnings relating to any product designed, produced,
distributed or sold by the Cables Business and no such
recalls, reworks or post-sale warnings are under
consideration or investigation by the Cables Business.
6.22 TAX MATTERS.
6.22.1. The Seller or the Subsidiary, as the case may be, have, in the
operation of the Cables Business, complied in all material
respects with all applicable Tax laws, rules and regulations,
and in particular have (i) within the time and manner
prescribed by law duly filed (or there have been filed on
their behalf) with appropriate taxing authorities all Tax
Returns required to be filed by them or with respect to the
Cables Business, and such Tax Returns are complete and correct
in all material respects, and (ii) paid in full or made
adequate provision for all Taxes shown to be due on such Tax
Returns.
6.22.2. There are no liens for Taxes upon any assets of the Cables
Business.
6.22.3. No audits, examinations, investigations, or other
administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns filed by or on
behalf of the Cables Business by the Seller or the Subsidiary.
Neither the Seller, with respect to the Cables Business, nor
the
20
Subsidiary have received any written notice of deficiency or
assessment from any Governmental Entity with respect to any
liability for Taxes of the Cables Business. The statute of
limitations has not been extended for any tax period
applicable to the Cables Business.
6.22.4. There is no Tax benefits (including in particular Tax
holidays, Tax credits, Tax abatement, Tax exonerations)
granted to Seller in relation to the Cables Business.
6.23 INSURANCE. Set forth in SCHEDULE 6.23(i) is a complete list and summary
description of all insurance policies currently maintained by the
Cables Business, with respect to the Cables Business, together with, in
respect of each such policy, the name of the insurer and the risk
insured against, which cover properties, assets, businesses and
operations of the Cables Business. All such policies are valid and in
full force and effect. All premiums due on them have been paid. The
Seller or the Subsidiary are not in breach of the terms of any such
policies which could cause their automatic termination or an increase
of the policy premium and has timely served proper and accurate notice
of all events or information required in connection with such policies
in a timely manner other than with respect to events or information
which would not enable the insurance company to either terminate the
relevant policy or deny total or partial coverage under such policy.
Furthermore, except as set forth in SCHEDULE 6.23(ii) (a) the Seller or
the Subsidiary have not received any written notice of cancellation or
non-renewal of any such policies nor to the Seller's knowledge is the
termination of any such policies threatened, (b) there is no claim
notified in writing to the Cables Business under any such policies as
to which coverage has been questioned, denied or disputed by the
underwriters of such policies, (c) the Seller or the Subsidiary have
not received any written notice from any of its insurance carriers that
any insurance premium will be increased in 2006, or that any insurance
coverage presently provided for will not be available to the Cables
Business in 2006 on substantially the same terms as now in effect, as a
result of claims made prior to the date hereof and the Closing Date and
(d) none of such policies or arrangements provides for any
retrospective premium adjustment, experienced-based liability or loss
sharing arrangement affecting the Cables Business. All Seller's group
insurance policies relating to the Cables Business and any assets used
in the Cables Business will terminate upon Closing.
6.24 EMPLOYEES.
6.24.1. SCHEDULE 6.24.1(i) contains (i) a list of all the employees
(including employees with fixed term contract) who work
exclusively for the Cables Business and who will be
transferred, pursuant to article L.122-12 of the French Labor
Code, to the Subsidiary, subject to the provision of Section
9.2, identified by age, seniority and classification as of the
date hereof (the "Transferred Employees"), (ii) a schedule of
remuneration of such Transferred Employees as of the last day
of the month preceding the date hereof listing all
remuneration, bonuses, consideration, compensation,
commissions, award, loans and any other cash or non-cash
benefit received by each Transferred Employee for 2004 and for
the period between 1 January 2005 and the last day of the
month preceding the date hereof and (iii) a description of
employment practices and policies relating to compensation and
days-off beyond mandatory statutory or regulatory
21
obligations. Except as disclosed on SCHEDULE 6.24.1(ii), the
Cables Business has complied, in all material respects, at all
times with employment agreements and all labor Laws (including
collective bargaining and company agreement, practices and
unilateral commitments of the employer), applicable in each of
the jurisdictions in which it operates.
6.24.2. SCHEDULE 6.24.2(i) lists, with regard to the Cables Business
(i) all applicable collective bargaining and company
agreements, custom practices and unilateral commitments of the
Seller, (ii) all trade-unions represented, and (iii) any
agreements entered into with employee representatives. Except
as set forth in SCHEDULE 6.24.2(ii), none of the Transferred
Employees is entitled to benefits or advantages, such as
pension or retirements benefits, bonus (including "13th month"
payment), profit sharing, stock purchase or stock option
plans, which exceed those provided for by Law or by the
agreements referred to above.
6.24.3. SCHEDULE 6.24.3 lists the material obligations of the Seller
and the Subsidiary vis-a-vis bodies representing the
employees, insofar as such obligations exceed those provided
for by law or the collective status referred to above.
6.24.4. To the Seller's knowledge, no Key Employee has declared in
writing his or her intention to resign within the three month
period preceding the date hereof or in connection with the
Transaction.
6.24.5. Except as set forth in SCHEDULE 6.24.5, pursuant to the terms
of existing contracts as of the date hereof, there is no
Transferred Employee whose termination would require payment
by the Cables Business of an amount exceeding that provided by
Law or by the applicable collective bargaining agreement or
who is or may be entitled to any compensation as a result of
the consummation of the Transaction.
6.24.6. Except as set forth in SCHEDULE 6.24.6, in connection with the
Transaction, no employees of the Seller (including former
employees) other than the Transferred Employees falls within
the scope of article L.122-12 of the French Labor Code.
6.24.7. SCHEDULE 6.24.7 sets forth the list of Transferred Employees
who have signed an amendment to their employment contract
providing for a 217 days work year.
6.24.8. Except as set forth in SCHEDULE 6.24.8, no Key Employee is
bound by a non-compete clause.
6.24.9. SCHEDULE 6.24.9 contains a list of each of the Transferred
Employees having an open balance with the "Compte Epargne
Temps" system including the number of days and the valuation
of those days as of 3 October 2005.
6.24.10. No Transferred Employee has the status of a VRP under the Law.
6.24.11. Except as set forth in SCHEDULE 6.24.11, no labor inspector
authorization is required for the transfer to the Subsidiary
of any Transferred Employee.
22
6.24.12. Except as set forth in SCHEDULE 6.24.12, there are no worker
safety or health reports, studies, investigations or audits by
third parties, which have been provided to SAFRAN or the
Seller and which identify material liabilities with respect to
the Cables Business.
6.25 EMPLOYEE BENEFIT PLANS.
The Seller and the Subsidiary sponsor and/or maintain as to the
Transferred Employees all employee benefit plans required to be
sponsored and/or maintained pursuant to the Laws of the jurisdictions
where the Transferred Employees are located.
6.26 COMPLIANCE WITH LAW. PERMITS.
Except as set forth on SCHEDULES 6.26 (i) AND 6.26 (ii), and for those
matters identified in the environment and safety investment program
described in SCHEDULE 4.1.1, (i) all Permits required for the proper
operation of the Cables Business have been obtained by the Seller or
the Subsidiary and are in full force and effect, (ii) the activities of
the Cables Business are carried out in accordance with such Permits and
in compliance with all applicable Laws (including Environmental Law) in
all material respects, (iii) no claims have been filed against the
Cables Business and the Seller has not received any written notice
alleging any violation of applicable Laws, nor does the Seller have any
knowledge of any inquiry, investigation or proceedings relating to
alleged violations of applicable Laws and (iv) no written notices have
been received by the Seller relating to termination or cancellation of
any such Permits.
6.27 MINUTE BOOKS, ETC.
All accounts, books, ledgers and other material records of the Seller
with respect to the Cables Business, and the Subsidiary, required by
Law have been kept and completed in all material respects in compliance
with applicable Laws. The minute books, share transfer registry and
shareholders account of the Subsidiary are complete and true in all
material respects.
6.28 ASSETS AND RIGHTS USED IN THE CABLES BUSINESS.
Notwithstanding anything provided to the contrary in this Agreement,
the Contributed Assets and Contributed Contracts, together with the
rights and assets made available pursuant to the Ancillary Agreements,
include all the rights and assets necessary for, used in and primarily
dedicated to the conduct of the Cables Business in the same manner as
it was conducted prior to the date hereof.
6.29 CONSULTATION OF WORKS COUNCIL.
At Closing, all required consultation procedures of the Seller's works
council and all required authorizations of the labor inspector (or
similar person or body) in connection with the Transaction shall have
been carried out.
6.30 INVENTORY; RETURNS; PERIODIC REBATES.
In the conduct of the Cables Business, the Seller has not and does not,
with respect to Products, (i) provide credit notes to, or receive
invoices from, clients with respect to unsold inventory held by
clients, or (ii) accept the return of unsold inventory from
23
clients, or (ii) pay periodic rebates to clients.
6.31 SUBSIDIES.
Set forth in SCHEDULES 6.31 is a complete list of the Subsidies granted
to Seller in relation to the Cables Business in the last five (5) years
along with a description of the consequences of the Transaction on such
Subsidies. SCHEDULE 6.31 also includes a description of the conditions
for the grant of the said Subsidies and of Seller's compliance with
such conditions.
6.32 NO OTHER REPRESENTATIONS. Neither SAFRAN, the Seller nor any other
person or entity acting on any of their behalf, makes any
representation or warranty, express or implied, other than those
contained in this ARTICLE VI.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to SAFRAN and the Seller as follows:
7.1 ORGANIZATION AND GOOD STANDING.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Spain, and has all requisite corporate
power and authority to conduct its business as now being conducted.
7.2 AUTHORIZATION - NO VIOLATIONS.
7.2.1. The execution and delivery by the Purchaser of this Agreement
and the Ancillary Agreements and the performance by it of the
Transaction have been (or, in the case of the Ancillary
Agreements, will have been at the Closing Date) duly
authorized by all necessary corporate action. Assuming valid
execution by the other parties thereto, this Agreement and
each of the Ancillary Agreements to which the Purchaser is a
party hereunder, constitutes (or will constitute when signed)
a valid and binding agreement of the Purchaser, enforceable
against it in accordance with the terms hereof or thereof,
subject to the Enforceability Exception.
7.2.2. The execution, delivery and performance by the Purchaser of
this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the Transaction will not: (i)
violate or conflict with any provision of the certificate of
incorporation (or other constitutive documents) or by-laws (or
other governing documents) of the Purchaser; (ii) materially
breach, violate or constitute a default under or an event
which would give rise to any right of termination or
cancellation, in accordance with the express terms of any
agreement, to which the Purchaser is a party, or by which the
Purchaser or any of its properties or assets may be bound;
(iii) violate or conflict with any Law applicable to the
Purchaser or by which any of its properties or assets may be
bound; or (iv) except as expressly envisaged in this
Agreement, require any registration or filing by the Purchaser
with, or any permit, license, exemption, consent,
authorization or approval of, or the giving of any notice by
the Purchaser to, any Governmental Entity.
24
7.3 AVAILABILITY OF FUNDS
The Purchaser has, as of 30 September 2005, available cash in the
amount of Euros 73,200,000 which together with the bank loan to be
granted to the Purchaser at Closing will constitute sufficient
immediately available funds, in cash, to pay the Base Consideration at
the Closing Date, the Adjustment, as the case may be, pursuant to
Section 4.4 hereto and to pay any other amounts payable pursuant to
this Agreement and to effect the Transaction. Is attached hereto as
SCHEDULE 7.3 the letter addressed by Banco de Sabadell to the Purchaser
relating to the granting of the above mentioned bank loan.
7.4 NO CLAIMS OR LITIGATION. There are no suits, actions, claims,
proceedings or investigations pending or, to the Purchaser's knowledge,
threatened challenging the validity of this Agreement, any of the
Ancillary Agreements to which the Purchaser is or is to become a party,
or the Transaction.
7.5 NO OTHER REPRESENTATIONS. Neither the Purchaser nor any other person or
entity acting on behalf of the Purchaser, makes any representation or
warranty, express or implied other than those contained in this ARTICLE
VII.
ARTICLE VIII. COVENANTS
8.1 COVENANTS OF SAFRAN.
SAFRAN, pending the Closing and except as otherwise agreed to in
writing by the Purchaser, covenants and agrees to, and shall cause the
Seller to act, as follows :
8.1.1. CONDUCT OF THE CABLES BUSINESS IN THE ORDINARY COURSE. The
Cables Business shall be conducted by the Seller or through
the Subsidiary in the ordinary course (save the Contribution
to the Subsidiary) and in the same manner as heretofore
conducted. In particular, SAFRAN shall cause the Seller, and
the Subsidiary, not to (i) make or commit to make any capital
expenditure (other than the capital expenditures relating to
environmental, health and safety matters listed in SCHEDULE
4.1.1) in an amount greater than Euros 100,000 per item and
Euros 300,000 in the aggregate, (ii) enter into agreements or
commitments, except agreements or commitments made in the
ordinary and usual course of business, in amount exceeding
Euros 200,000 (VAT excluded) individually or (iii) enter into
any advance metals purchase or any other hedging transaction
unless such purchase or transaction is made within the
framework of a customer firm order. SAFRAN shall cause the
Seller and the Subsidiary not to take, or agree to or commit
to take, any action that would result in any of the conditions
to the Closing, as set forth in ARTICLE X not being satisfied
or that would impair the ability of the Purchaser or the
Seller to consummate the Closing in accordance with the terms
hereof or delay such consummation.
8.1.2. AMENDMENT OF CORPORATE DOCUMENTS. SAFRAN shall cause the
Seller not to (i) amend the Subsidiary's by-laws or similar
organizational documents (except that the Subsidiary may be
organized under the by-laws attached in SCHEDULE 2.1 hereto),
(ii) issue, sell, transfer, pledge, dispose of
25
or encumber any shares of any class or series of the
Subsidiary's capital stock, or securities convertible into or
exchangeable for any shares of any class or series of the
Subsidiary's capital stock (except in connection with the
Contribution), or (iii) declare or pay any dividend or other
distribution payable in cash, stock or property with respect
to any shares of any class or series of the Subsidiary's
capital stock.
8.1.3. DEBTS. Except in the ordinary course of business, SAFRAN shall
cause the Seller, in respect of the Cables Business, and the
Subsidiary not to incur or assume any debt nor to assume or
guarantee the obligations of any other Person,
8.1.4. CHANGE IN COMPENSATION. SAFRAN shall cause the Seller and the
Subsidiary not to make any material change in the compensation
payable, or to become payable, to any of the Transferred
Employees (other than normal recurring increases in the
ordinary course of business or pursuant to plans, programs or
agreements existing on the date hereof and disclosed to the
Purchaser under Section 6.24).
8.1.5. REORGANIZATION. SAFRAN shall cause the Seller and the
Subsidiary not to adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization which
could prevent the consummation of the Transaction.
8.1.6. TAX AGREEMENTS. SAFRAN shall cause the Seller and the
Subsidiary not to enter into any agreement with any Tax
authority in respect of the Subsidiary or the Cables Business,
without the Purchaser's prior written consent.
8.1.7. MAINTENANCE OF PHYSICAL ASSETS. SAFRAN shall cause The Seller
either directly or through the Subsidiary to continue to
maintain and service the physical assets used in the conduct
of the Cables Business consistent with past practice.
8.1.8. MAINTENANCE OF INSURANCE. SAFRAN shall cause the Seller and
the Subsidiary to maintain until the Closing Date the
insurance policies, referred to on Schedule 6.23 (i) hereto.
8.1.9. SALE OF ASSETS. SAFRAN shall cause the Seller not to, either
directly or indirectly through the Subsidiary, sell or
encumber all or any part of the Contributed Assets, other than
in the ordinary course of the Cables Business (save with
respect to the Contribution), or initiate or participate in
any discussions or negotiations or enter into any agreement to
do any of the foregoing. SAFRAN shall cause the Seller not to,
either directly or indirectly through the Subsidiary, provide
any confidential information concerning the Cables Business or
its properties or assets to any third party other than in the
ordinary course of business, and subject to, in that
particular case, the execution of a confidentiality agreement.
8.1.10. CONTRIBUTED CONTRACTS AND CONSENTS. The transfer of the
Contributed Contracts shall be effected as follows:
26
(i) Any Contributed Contract which can be assigned by the
Seller to the Subsidiary and subsequently as part of
the transfer of the Shares to the Purchaser without
the consent of the relevant counter-party shall be
transferred by the Seller to the Subsidiary on the
Closing Date. The Parties shall inform the
counter-party concerned, as necessary, of such
assignment.
(ii) Notwithstanding the foregoing, on or immediately
prior to the Closing Date, SAFRAN shall cause the
Seller to notify the Cables Business's debtors of the
assignment of their respective obligations to the
Subsidiary. The form of such notification shall be
agreed with the Purchaser.
(iii) Beginning on the date hereof, SAFRAN shall cause the
Seller to make reasonable efforts to obtain any
consents and waivers necessary to convey to the
Subsidiary the Contributed Contracts. If before the
Closing Date no consent can be obtained for the
transfer of certain Contributed Contracts (a) the
Parties shall continue to use their reasonable
commercial efforts to obtain such consent as promptly
as possible after the Closing Date, and (b) with
respect to such Contributed Contracts for which the
appropriate consents have not been obtained prior to
the Closing Date, and until such consents are
obtained, the Seller shall continue the performance
of such contracts on behalf of the Subsidiary, in
which case the Purchaser shall hold the Seller
harmless from all claims made by the counter
party(ies) concerned with regard to such Contributed
Contracts, provided, however, that such claims do not
arise out of a breach by the Seller of the terms and
conditions of such Contracts, in which case the
Seller shall then hold the Purchaser harmless from
all claims made against the Purchaser by the counter
party(ies) concerned by such breach, and (c) once the
consent is obtained, the Seller shall transfer such
contracts to the Subsidiary, and the Parties shall
notify the counter-party concerned of such
assignment.
(iv) If the provision described in sub-paragraph (iii) (b)
above cannot be implemented with regard to any
specific Contributed Contract, the Parties shall
negotiate in good faith to find a solution which
leads to an economic result as close as possible to a
full transfer of the Contributed Contract(s)
concerned.
(v) Any expenses, costs, fees or penalties incurred by
the Seller or the Subsidiary in connection with the
assignment of the Material Contracts shall be borne
by the Seller.
8.1.11. ACCESS. Subject to applicable competition Laws, Purchaser's
officers, counsel, accountants and other representatives shall
have reasonable access,
27
during normal business hours, to the key personnel identified
in SCHEDULE 8.1.11 in connection with transition planning.
Access to any other personnel will be subject to SAFRAN's
prior written consent which will not be unreasonably withheld.
Subject to applicable competition Laws, and to reasonable
procedures provided by the Seller, the Seller shall provide,
to the extent reasonably necessary to implement transition
planning, access to facilities, during normal business hours,
and information relating to the Cables Business.
8.1.12. INTELLECTUAL PROPERTY. SAFRAN shall cause the Seller to
cooperate with the Purchaser with respect to any
re-registration, application for re-registration or any other
actions required to validly transfer the Intellectual Property
to the Purchaser or the Subsidiary.
8.1.13. THE CONTRIBUTION. SAFRAN shall cause the Seller to take all
necessary steps to cause the Contribution to be valid and
effective and to obtain the appointment by the competent
Commercial Court of "co-commissaires a la scission" on the
basis of the request attached hereto as EXHIBIT B.
8.1.14. ENVIRONMENT. A complementary order (arrete complementaire)
is currently being prepared and is expected to reflect the
different changes carried out on the installations operated on
the Montereau site. In this regard, SAFRAN shall, and shall
cause the Seller to, cooperate with the Purchaser to
facilitate, to the extent practicable, the issuance by the
Prefet of the complementary order and, in particular, organize
a meeting between SAFRAN, the Seller, the Purchaser and the
relevant administrative authorities in order to introduce the
Purchaser.
8.1.15. CERTIFICATIONS. Files requesting certifications OHSAS 18001
and ISO 14001 are currently being prepared by the Seller. In
this regard, SAFRAN shall and shall cause the Seller to,
cooperate with the Purchaser to obtain, to the extent
practicable, such certifications.
8.1.16. EMPLOYEES RECORDS. All employment records of the Transferred
Employees will be transferred to the Subsidiary at Closing.
8.2 COVENANTS OF THE PURCHASER. 8.2.1. COLLECTING CONTRIBUTED RECEIVABLES.
The Purchaser shall use its reasonable commercial efforts in a manner
consistent with past practice to collect the Contributed Receivables
within a period of twelve (12) months of the Closing Date. The
Purchaser shall inform in writing the Seller of any difficulties
encountered by the Purchaser in the recovery of Contributed Receivables
in accordance with this section, and shall provide an opportunity for
the Seller to be involved where necessary to ensure the effective
collection of the Contributed Receivables.
Any Contributed Receivable which has not been collected upon expiry of
the twelve (12) month period referred to above as a result of the
relevant debtors' payment default shall be considered as a "Uncollected
Receivable".
If any amount collected by the Purchaser with respect to a Contributed
28
Receivable exceeds its net book value in the Final Closing
Balance Sheet, such excess collected by the Purchaser shall be
reimbursed forthwith by the Purchaser to the Seller.
8.2.2. CHANGE OF SITE OPERATOR. Promptly following the Closing, the
Purchaser shall notify the Prefet, in compliance with Article
34 of Decree n(degrees) 77-1133 of September 21, 1977, of a
change of site operator and send a copy of such notification
to SAFRAN and the Seller.
8.2.3. INSURANCE REPLACEMENT. Purchaser will arrange adequate
insurance cover for the Cables Business and its assets with
effect from the Closing Date.
8.2.4. MERGER CONTROL. The Purchaser shall ensure that complete
merger control filings to the extent required by Law will
accurately be made as soon as practical but no later than
(five) 5 Business Days after the signing of this Agreement
provided all documents and information set forth in SCHEDULE
8.2.4 required from Seller and SAFRAN for such filing shall
have been communicated to the Purchaser.
8.3 MUTUAL COVENANTS.
8.3.1. CONFIDENTIALITY. Unless and until the Closing has been
consummated, the parties will hold, and shall cause their
counsel, independent certified public accountants, appraisers
and investment bankers to hold in strict confidence any
confidential data or information relating to the Transaction,
and in particular the terms and conditions of the present
Agreement and its schedules, using the same standard of care
to protect such confidential data or information as is used to
protect each party confidential information, which shall in
any event not be less than a reasonable standard of care. If
the transaction contemplated by this Agreement is not
consummated, the Purchaser agrees that it shall promptly
return or cause to be returned to the Seller, upon its written
request, all written materials and all copies thereof that
were supplied to the Purchaser or its counsel by the Seller
and that contain any such confidential data or information.
Notwithstanding the foregoing and to the extent they are not
contrary to the provisions of this Agreement, sections 2 to 5
of the non disclosure agreement entered into by SAFRAN and the
Purchaser, dated as of 9 July 2003, and amended on 12 July
2005, shall survive.
8.3.2. PRESS RELEASES. No public release, disclosure or announcement
concerning the Transaction shall be issued by either party or
any of their Affiliates, or any of the officers, directors or
employees thereof, without the prior written consent of the
other party (which consent shall not be unreasonably
withheld), except as such release or announcement may be
required by any applicable law, rule or regulation (in
particular those of any national or international stock
exchange), in which case the party required to make the
release or announcement shall allow the other party reasonable
time to comment on such release or announcement in advance of
such issuance; provided, however, that the Seller may make
internal announcements to its respective employees and
competent works council (and, in the case of the Seller, to
the Transferred Employees) only to the extent specifically
required
29
by applicable labor law.
8.3.3. FINALIZATION OF THE ANCILLARY AGREEMENTS. The Parties and
their respective Affiliates shall cooperate in good faith in
order to prepare and finalize the Ancillary Agreements
(attached hereto in final form) as well as all other
documents, appendices and agreements required for the Closing
that have not been prepared and/or completed on the date
hereof.
8.3.4. ADDITIONAL SCHEDULES. From time to time prior to the Closing,
SAFRAN may supplement or amend the Disclosure Schedules with
respect to any matter arising after the date hereof that, if
existing at, or occurring on, or known on the date of this
Agreement, would have been required to be set forth or
described in the Disclosure Schedules. No such supplement to
or amendment of the Disclosure Schedules made after the
execution hereof and notified to the Purchaser shall be deemed
to cure any breach of any representation or warranty made
pursuant to this Agreement, except:
(a) subject to the provisions of paragraphs (b), (c) and
(d) below, for purposes of the certificate of Seller
required to be delivered pursuant to section 5.2.1
(xii);
(b) subject to the provisions of paragraph (c) below, for
purposes of satisfying the condition set forth in
Section 10.2.1, and unless (i) the matter disclosed
in the supplemental or amended disclosure constitutes
a Material Adverse Change, (ii) can reasonably be
expected to have a material and continuing adverse
effect on the operations of the Cables Business
following the Closing or (iii) has not been fully
cured by SAFRAN prior to the Closing;
(c) for purposes of the indemnification provisions set
forth in ARTICLE XI and then only if the matter
giving rise to a supplemental or amended disclosure
has arisen in the ordinary conduct of the Cables
Business as defined in Section 8.1.1, 8.1.4, 8.1.7
and 8.1.9.0; and
(d) for all purposes if it constitutes disclosure with
respect to an Excluded Liability or the matter
covered by Section 11.2.1 (d), it being understood
that any disclosure in relation therewith shall be
for information purposes only and may not limit in
any way the rights of Purchaser under this Agreement
in relation with indemnification for Excluded
Liabilities.
8.3.5. FURTHER ACTIONS. Subject to the terms and conditions herein
provided, each of the parties will use its commercially
reasonable efforts to take or cause to be taken all actions
(and provide all documents) necessary to consummate the
Transaction contemplated by this Agreement.
If at any time after the Closing a party reasonably considers
or is reasonably advised that any further actions or deeds are
necessary to transfer the ownership of the Contributed Assets
or otherwise to carry out this Agreement, the other party
shall execute all such further actions, or cause its officers
or directors to execute all such further actions, and deliver
all such
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deeds and take and do all such other actions and things as may
be reasonably requested by the requesting party to confirm any
and all right, title and interest in, to such Contributed
Assets or otherwise to carry out this Agreement.
8.3.6. Utilities services.
Prior to the Closing Date, SAFRAN shall, and shall cause the
Seller to, enter into certain general services contracts for
the provision, in particular, of gas and electricity.
SAFRAN shall, and shall cause the Seller to, use reasonable
commercial efforts to cause the providers of gas and
electricity to continue to provide such goods and services to
the Subsdiary substantially to the same extent and under terms
and conditions consistent with the ordinary course of business
prior to the Closing Date.
ARTICLE IX. CUT OFF PRINCIPLES AND OTHER COVENANTS
9.1 TAX MATTERS.
9.1.1. PRINCIPLE. SAFRAN shall be liable for all Taxes and all Tax
Claims with respect to the operation of the Cables Business or
the Subsidiary (i) in connection with any Tax period ending on
or before the Closing Date or, (ii) with respect to any Tax
period beginning before and ending after the Closing Date in
connection with the portion of such Tax period ending on the
Closing Date ("Pre-Closing Taxes"). The Purchaser or the
Subsidiary shall be liable for the Taxes imposed directly on
the Subsidiary or on the Seller with respect to the Cables
Business (i) in connection with any Tax period beginning after
the Closing Date, and (ii) with respect to any Tax period
beginning before and ending after the Closing Date in
connection with the portion of such Tax period beginning on
the Closing Date ("Post-Closing Taxes").
9.1.2. TAX RETURNS. SAFRAN shall, or shall cause the Subsidiary or
the Cables Business to, as the case may be, prepare and timely
file all required Tax Returns of the Subsidiary or relating to
the Cables Business or the Contributed Assets for any tax
period ending on or before the Closing Date, and all required
Tax Returns of the Subsidiary or relating to the Cables
Business or the Contributed Assets for periods or years
commencing before and ending after the Closing Date if the due
date for such straddle period Tax Returns is on or before the
Closing Date.
9.1.3. APPORTIONMENT OF TAXES. With respect to any Taxes for which
SAFRAN is liable under subsection 9.1.1 above that are payable
with respect to (i) any Tax period ending on or before the
Closing Date, and (ii) any Tax period beginning before and
ending after the Closing Date, in connection with the portion
of such Tax period ending on the Closing Date (an "Interim
Period"), the portion of any such Taxes that are allocable to
the portion of the Interim
31
Period ending on the Closing Date, shall (1) in the case of
Taxes that are either based upon or related to income,
receipts or turnover be deemed equal to the amount that would
be payable if the Tax year ended on the Closing Date and (2)
in the case of Taxes (other than those described above in
clause (1)) imposed on a periodic basis, be deemed to be the
amount of such Taxes for the entire Interim Period multiplied
by a fraction, the numerator of which is the number of
calendar days in the portion of the Interim Period ending on
the Closing Date and the denominator of which is the number of
calendar days in the entire Interim Period.
9.1.4. ALLOCATION OF REFUNDS AND CREDITS. SAFRAN shall be entitled to
any refunds or credits (including any interest paid or
credited with respect thereto) in respect of any liability for
any of the Taxes for which SAFRAN is liable under subsection
9.1.1 above. The Purchaser shall be entitled to any refunds or
credits (including, without limitation, any interest paid or
credited with respect thereto) in respect of any liability for
any Tax with respect to the operation of the Cables Business
or the Subsidiary, as the case may be for any Tax periods or
portion thereof beginning after the Closing Date (including,
without limitation, any taxes allocated to such period under
subsection 9.1.1 hereof). Each of SAFRAN and the Purchaser
shall cause any amount to which the other party is entitled
under this subsection 9.1.4, but which is received by or
credited to the other party or any of such party's Affiliates,
at any time after the Closing Date, as applicable, to be paid
to the other party in immediately available funds promptly
after receipt (or, if the amount of the credit or refund is
applied against any other liability of the party, within ten
days of the notice of application). SAFRAN and the Purchaser
shall cooperate reasonably with one another to obtain such
refunds.
9.1.5. NOTIFICATION OF PROCEEDINGS. The Purchaser shall notify within
thirty (30) days SAFRAN in writing upon receipt by the
Purchaser, of notice of any pending or threatened audits or
assessments of Taxes which may affect the amount of
Pre-Closing Taxes, and SAFRAN shall similarly notify the
Purchaser with respect to Post-Closing Taxes. SAFRAN shall
have the sole right to represent the taxpayer's interest in
any tax audit or administrative or court proceeding (a
"Proceeding") insofar as such Proceeding relates solely to
taxable periods ending on or before the Closing Date and the
Purchaser shall have the sole right to represent such
interests in any such Proceeding insofar as it relates solely
to taxable periods beginning on or after the Closing Date. In
connection therewith, the Purchaser and SAFRAN each may employ
counsel of their choice at their own expense and the Purchaser
and SAFRAN agree that each will cooperate with the other and
the other's counsel in the defense against or compromise of
any claim or item or with respect to any period in a
Proceeding for which the other is responsible, and that each
will compensate the other for any costs or expenses incurred
by the other in rendering such cooperation. In any case in
which a Proceeding relates to a taxable period beginning
before and ending after the Closing Date or involves claims or
items which affect periods for which SAFRAN is responsible and
periods for which the Purchaser is responsible, the Purchaser
and SAFRAN agree to cooperate with one another in good faith
in jointly representing the taxpayer's interests. If the
Purchaser and SAFRAN cannot
32
agree as to any aspect of such a Proceeding, as to which they
shall act jointly, such aspect shall be submitted to the
Independent Accounting Firm. The fees and expenses charged by
the Independent Accounting Firm with respect to the
determination of said Proceeding shall be borne equally by
SAFRAN, on the one hand, and the Purchaser, on the other hand.
9.1.6. Notwithstanding anything to the contrary herein, SAFRAN shall
have no liability pursuant to this Section 9.1 with respect to
any Tax liability of a kind which was required to be accrued
on the Closing Balance Sheet according to the Accounting
Principles and was properly so accrued. Any dispute with
respect to any such liability shall be addressed solely and
exclusively by the procedures set forth in Section 4.3.
9.2 EMPLOYEES.
9.2.1. Subject to the provision of this Section 9.2, the employment
contracts of the Transferred Employees shall be transferred
from the Seller to the Subsidiary at Closing (together with
their title, seniority, payroll, allowances and fringe
benefits) pursuant to the statutory provisions applicable to
their employment agreements as of the Closing Date. SAFRAN
shall be responsible for all wages, bonuses, commissions,
vacation entitlement, overtime hours payments and any other
benefits (including any incentive payment, transaction bonuses
or other payment which may be due to any Transferred Employees
as a result of the Transaction), as well as for all payroll
taxes and social contributions due or accrued in connection
therewith ("Payroll Benefits"), due by the Seller to the
employees so transferred or accrued up to or relating to any
period prior to Closing but not yet paid on such date except
as provided for in the Final Closing Balance Sheet (the
"Accrued Employee Liabilities"). The Subsidiary shall be
responsible for the Payroll Benefits accrued following the
Closing Date and relating to the employment after the Closing
of the Transferred Employees. The Accrued Employee
Liabilities, if any, shall be calculated by the Purchaser and
notified to SAFRAN within ten (10) Business Days of the end of
the Review Period. In the event of disagreement between the
Parties with regard to the amount of the Accrued Employee
Liabilities, such amount shall be determined in accordance
with the procedure (procedure contradictoire) set forth under
Section 4.3.2 using the Closing Balance Sheet Accounting
Principles set forth in SCHEDULE 4.3.1(ii), and the amount so
calculated (the "Final Accrued Employee Liabilities") shall,
upon such determination, be paid by SAFRAN to the Purchaser
within two (2) Business Days.
9.2.2. Notwithstanding anything to the contrary herein, SAFRAN shall
have no liability pursuant to this Section 9.2 with respect to
any liability of a kind which was required to be accrued on
the Closing Balance Sheet according to the Accounting
Principles and was properly so accrued. Any dispute with
respect to any such liability shall be addressed solely and
exclusively by the procedures set forth in Section 4.3.
9.3 BONDS.
SCHEDULE 9.3 sets forth a list of the Bonds in force at the date hereof
which Seller
33
undertakes to regularly update until Closing. At least two (2) weeks
prior to Closing Date, the Seller will deliver to the Purchaser an
updated list of the Bonds (the "UPDATED LIST OF BONDS"). After that
date, the Seller shall notify the Purchaser of any change on the
Updated List of Bonds.
Purchaser and SAFRAN shall, and SAFRAN shall cause the Seller to, use
reasonable commercial efforts to help the Purchaser, to replace the
Bonds in force at the Closing with bonds made available by the
Purchaser in compliance with the Contributed Contracts to which the
Bonds relate. For those Bonds which are not replaced at Closing, as
described above, SAFRAN undertakes to, and shall cause the Seller to,
make its reasonable commercial efforts, to the extent practicable, to
maintain such Bonds after Closing in order to allow the Purchaser to
proceed with the replacement of such Bonds with new bonds in compliance
with the relevant Contributed Contracts.
9.4 MICROGAINE PATENT
SAFRAN shall, and shall cause the Seller to, (i) make their reasonable
effort to obtain from France Telecom waiver of its right of first
refusal (droit de preemption) in relation with the transfer to the
Subsidiary of the patent request number 9009627 and its subsequent
foreign extensions (the "FT Patents") and which right results from the
Co-ownership Agreement between France-Telecom and Silec dated 25 June
1992 (as amended on March 17, 2000) or (ii), if such waiver is not
obtained on the Closing Date, grant a royalty free license to the
Subsidiary under which the Subsidiary will have the right to use the FT
Patents as it is currently used by Seller.
ARTICLE X. CONDITIONS PRECEDENT
10.1 CONDITIONS TO CLOSING FOR THE SELLER AND THE PURCHASER.
The respective obligations of the Seller and the Purchaser to
consummate the purchase and sale of the Shares are subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (all or any of which may be waived in writing by either the
Seller or the Purchaser in their respective sole discretion):
10.1.1. NO INJUNCTIONS OR RESTRAINTS. No Governmental Entity shall
have enacted, issued, promulgated, enforced or entered any law
or order (whether temporary, preliminary or permanent) which
is then in effect and has the effect of making illegal or
otherwise preventing or prohibiting the consummation of all or
a substantial part of the Transaction or threatened in writing
to initiate such law or order.
10.1.2. GOVERNMENTAL AND REGULATORY APPROVALS (OTHER THAN MERGER
CONTROL). All registrations, filings, licenses, consents,
permits and transfers of permits, approvals and actions with
and notices to any governmental or regulatory authority
required of any of the Purchaser, the Subsidiary or the Seller
to consummate the purchase and sale of the Shares and the
other transactions contemplated hereby, (each a "Governmental
Approval"), the failure of which to be obtained or taken could
be reasonably expected to have material adverse effect on the
ability of the Purchaser and the Seller to consummate
34
the Transactions, shall have been obtained. A list of such
Governmental Approvals is attached hereto in SCHEDULE 10.1.2.
10.1.3. MERGER CONTROL. The Parties shall have obtained all necessary
clearances or consents from the Spanish and Portuguese
competent merger control authorities and any waiting periods
under applicable merger control laws shall have duly lapsed or
been terminated without there being imposed on the Parties any
condition, requirement or commitment which would impose on
them any limitation to sell or acquire the Cables Business.
10.1.4. EXECUTION OF ANCILLARY AGREEMENTS. The Purchaser and the
Seller shall have executed the Ancillary Agreements.
10.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to consummate the purchase of the Shares is further subject
to the fulfillment, at or prior to the Closing, of the following
additional conditions (all or any of which may be waived in writing in
whole or in part by the Purchaser in its sole discretion):
10.2.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by SAFRAN in this Agreement shall be true and
correct, in all material respects, as of the date hereof and
as of the Closing Date.
10.2.2. PERFORMANCE OF OBLIGATIONS. SAFRAN shall have performed and
complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement.
10.2.3. TRANSFER OF CERTAIN MATERIAL CONTRACTS. The Seller shall have
obtained the consents and authorizations required for the
transfer to the Subsidiary of the Material Contracts listed in
SCHEDULE 5.2.1(xi).
10.2.4. CONTRIBUTION OF THE SUBSIDIARY. The Subsidiary's shareholders'
meeting approving the Contribution shall have been duly held.
10.2.5. NO MATERIAL ADVERSE CHANGE. No Material Adverse Change shall
have occurred between the date of this Agreement and the
Closing Date.
10.3 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the Seller
to consummate the sale of the Shares are further subject to the
satisfaction, at or prior to the Closing, of the following additional
conditions (all or any of which may be waived in writing in whole or in
part by the Seller in its sole discretion):
10.3.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Purchaser in this Agreement shall be
true and correct, in all material respects, as of the date
hereof and the Closing Date.
10.3.2. PERFORMANCE OF OBLIGATIONS. The Purchaser shall have performed
and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement and each
Ancillary Agreement to which it is a party to be so performed
or complied with by it at or prior to the Closing.
35
ARTICLE XI. INDEMNIFICATION
11.1 GENERAL INDEMNIFICATION OBLIGATION OF THE GUARANTOR. From and after the
Closing, and subject to sections 11.2 and 11.3 to 11.11 hereof, the
Guarantor shall reimburse, indemnify, defend and hold harmless the
Purchaser Group against and in respect of any and all damages, losses,
deficiencies, liabilities, costs and expenses (including reasonable
attorney's fees) (a "Loss") incurred or suffered by the Purchaser Group
that result from, relate to or arise out of :
(a) any breach of any of Guarantor's or Seller's representations,
warranties (other than with respect to Section 6.26 as may
relate to Environmental Laws or Section 6.8.1) or covenants
under this Agreement;
(b) any hazard or defect in design, production or warranty
relating to any Products manufactured by the Seller or the
Cables Business prior to the Closing Date (the "Product
Liabilities Losses"); or
(c) the application of the Cutoff Principles in Sections 9.1 And
9.2 hereof.
Matters set forth in 11.1 (a), 11.1 (b) and 11.1 (c) above are
together referred to herein as the "General Indemnification Losses").
11.2 SPECIFIC INDEMNIFICATION OBLIGATIONS OF THE GUARANTOR
11.2.1. FULL INDEMNIFICATION
From and after the Closing, the Guarantor shall reimburse,
indemnify, defend and hold harmless the Purchaser Group
against any Loss that result from, relate to or arise out of :
(a) the Excluded Liabilities,
(b) any and all actions, suits, claims or legal,
administrative, arbitration, or other proceeding or
investigation brought against the Purchaser Group by
any employee of the Seller who is not transferred
(including any former employee) to the Purchaser in
respect of their employment prior to the Closing
Date, any Transferred Employee contesting its
transfer to the Subsidiary, any union, employee
representative or workers' council or Governmental
Entity in each case in connection with the carve-out
of the Cables Business from the SAFRAN group of
companies, including, but not limited to, claims
against the Purchaser Group made in connection with
the application of statutory rules on the automatic
transfer of certain employees (i.e., ---- Article L.
122-12 of the Code du Travail) in each case except
for any Loss as may arises out of a closure of all or
part of the operation of the Cables Business
following the Closing Date (except to the extent
Purchaser or Subsidiary is compelled to such closure
pursuant to the Law or the specific request of a
Governmental Entity); and
(c) any and all actions, suits, claims or legal,
administrative or other proceeding or investigation
brought against the Purchaser Group in
36
connection with the assertion by an interested Third
Party that a municipality had a right of first
refusal (droit de preemption urbain) in relation with
the transfer of the Owned Real Properties to the
Subsidiary (the "Real Estate Liabilities").
Matters set forth in 11.2.1 (a), 11.2.1 (b) and 11.2.1 (c)
above are together referred to as the "Full Indemnification
Losses".
11.2.2. ENVIRONMENT.
From and after the Closing and subject to sections 11.3 to
11.11 hereof, the Guarantor shall reimburse, indemnify, defend
and hold harmless the Purchaser Group against:
(a) any Loss incurred or suffered by the Purchaser Group
that result from, relate to or arise out of any
breach of the representations and warranties set
forth in Section 6.26 hereof, insofar as they relate
to Environmental Law,
(b) any Loss resulting from the obligation for the
Subsidiary to rehabilitate (remise en etat) the Owned
Real Property but only if such Loss is incurred
pursuant a specific written request from the French
authorities in connection with the continuing
operations of the Cables Business, and only insofar
and to the extent such Loss relates to a soil, water
and/or underground contamination which has occurred
prior to the Closing Date,
in each case, (i) except for any Loss that results from,
relates to or arises out of a closure, discontinuation or
significant alteration of all or part of the operation of the
Cables Business following the Closing Date (except to the
extent Purchaser or Subsidiary is compelled to such closure,
discontinuation or significant alteration pursuant to the
specific request of a Governmental Entity), and (ii) except
for any Loss arising out of or in connection with any of the
matters identified in Schedule 4.1.1.
Matters set forth in 11.2.2 (a) and 11.2.2 (b) above are
together referred to as the "Environmental Losses".
11.2.3. UNCOLLECTED RECEIVABLES.
Subject to sections 11.3 to 11.11 and 8.2.1 hereof, the
Guarantor shall reimburse, indemnify, defend and hold harmless
the Purchaser Group against and in respect of :
(a) any Losses suffered by the Purchaser Group that result
from, relate to or arise out of any breach of the
representations and warranties set forth in section 6.8.1
hereof , and
(b) any Uncollected Receivable.
Matters set forth in 11.2.3 (a) and 11.2.3 (b) above are
together referred to as the "Receivable Losses".
37
11.3 CALCULATION OF PURCHASER LOSSES.
(a) In calculating the amount of Purchaser Losses, there shall be
deducted (i) the amount of any indemnification or other
recovery, including, without limitation insurance proceeds,
actually received by the Purchaser Group from any third party
with respect to such Purchaser Losses and/or (ii) the amount
of any reserve, provision or liability included in the Final
Closing Balance Sheet which has been subsequently discharged
or satisfied below the amount attributed directly to such
Purchaser Losses in such financial statement, and/or (iii) an
amount equal to any Tax benefit (including any Tax reduction
or increase in Tax losses) attributable to such Purchaser
Losses which is realized in an income tax return by the
Purchaser Group.
(b) In the event that the amount of any deduction which shall be
applied pursuant to this Section 11.3 is determined after
payment by the Guarantor of the amount otherwise required
pursuant to this Section 11.3 (and, in particular, insurance
proceeds received), the Purchaser Group shall repay the
Guarantor promptly after such determination any amount that
the Guarantor would not have had to pay pursuant to this
Section 11.3 had such determination been made at or prior to
the time of such payment, provided, however, that such
determination occurs within a two (2) year period after the
payment has been made by the Guarantor.
(c) The rules set forth in Sections 11.3 (a) and (b) also apply
for the calculation of the Receivable Losses and the Full
Indemnification Losses.
11.4 LIMITATION OF THE GUARANTOR'S INDEMNIFICATION OBLIGATIONS.
11.4.1. PURCHASER LOSSES.
(a) No reimbursement for Purchaser Losses and Receivable Losses
shall be required unless the amount of each individual
Purchaser Loss or Receivable Loss exceeds Euros 15,000 (it
being specified that multiple Purchaser Losses or Receivable
Losses arising out of the same event and of the same nature
shall be deemed to constitute an individual Purchaser Loss or
Receivable Losses for purposes of determining whether such de
minimis threshold has been reached), and until the cumulative
aggregate amount of such Purchaser Losses and Receivable
Losses exceeds Euros 400,000, in which event the Purchaser
Group may assert its right to indemnification to the full
extent of such Purchaser Losses and Receivable Losses after
shall have been deducted from such amount of Purchaser Losses
and Receivable Losses a global deductible (franchise) in the
amount of Euros 50,000.
(b) In no event shall the Guarantor's aggregate liability for
Purchaser Losses exceed Euros 8,000,000.
11.4.2. ENVIRONMENTAL LOSSES. In no event shall the Guarantor's
aggregate liability for Environmental Losses exceed Euros
4,000,000. Notwithstanding the foregoing, the Guarantor's
share of liability in connection with Environmental Losses
shall in no event exceed (i) 75% in respect of any Claim
Notice notified to the Guarantor between the first and the
third
38
anniversaries of the Closing Date, (ii) 50% in respect of any
a Claim Notice notified to the Guarantor between the Third and
the fourth anniversaries of the Closing Date and (ii) 25% in
respect of any Claim Notice notified to the Guarantor after
the fifth anniversary of the Closing Date
11.4.3. RECEIVABLES LOSSES. The aggregate liability of the Guarantor
resulting from Receivables Losses shall be reduced by (i) the
reserve amount related thereto set forth in the Final Closing
Balance Sheet, (ii) any Contributed Receivables collected by
the Purchaser for an amount exceeding its net book value in
the Closing Balance Sheet and to the extent of such excess. In
no event, shall the Guarantor's aggregate liability for
Receivables Losses, after the deductions set forth above,
exceed Euros 9,000,000.
Each Uncollected Receivable that has been fully indemnified to
Purchaser by SAFRAN at its net book value shall be assigned by
the Subsidiary to SAFRAN for one (1) euro.
11.4.4. FULL INDEMNIFICATION LOSSES. For the avoidance of doubt, the
liability of Guarantor resulting from the Full Indemnification
Losses under Section 11.2.1 is subject to no limitations
except for liabilities arising under Section 11.2.1 (b) which
shall be subject only to the limitations set forth in Section
11.4.1 (a).
11.5 GENERAL INDEMNIFICATION OBLIGATION OF THE PURCHASER. From and after the
Closing, the Purchaser will reimburse, indemnify and hold harmless
SAFRAN, the Seller and their successors and permitted assigns against
and in respect of any and all damages, losses, deficiencies, cost and
expenses incurred or suffered by SAFRAN and/or the Seller that result
from, relate to or arise out of:
(i) any Contributed Liabilities;
(ii) any misrepresentation, breach of representations and
warranties or covenant, and in particular under
ARTICLE VII and Section 8.2 hereof, on the part of
the Purchaser under this Agreement ("Seller Losses");
(iii) any and all actions, suits, claims or legal
administrative, arbitration, governmental or other
proceeding or investigations in connection with
Post-Closing Taxes imposed upon the Seller;
(iv) any and all actions, suits, claims or legal actions
initiated following any action, inaction, or breach
by the Purchaser with regard to its obligations, as
from the Closing Date, towards the Transferred
Employees; and
(v) the material violation by the Purchaser or, after the
Closing by the Subsidiary, of any Law or any material
breach by the Subsidiary after the Closing of any
Contributed Contract or amendment or continuation
thereof.
39
11.6 METHOD OF ASSERTING CLAIMS, ETC.
11.6.1. In the event that (i) any claim or demand or proceeding for
which the Guarantor would be liable to the Purchaser Group
hereunder is asserted against or sought to be collected from
the Purchaser Group by a Third Party which could give rise to
indemnification under this ARTICLE XI, (any such claim, demand
or proceeding, a "Third Party Claim"), or (ii) Purchaser Group
shall have a claim to be indemnified by the Guarantor (any
such claim, a "Direct Claim"), the Purchaser shall as soon as
practicable in view of the circumstances (but in the case of a
Third Party Claim no later than thirty (30) days after the
Purchaser has received written notice of such claim or demand)
notify the Guarantor of such claim or demand specifying in
reasonable detail the nature of such claim or demand, and if
known, the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive
of the final amount of such claim or demand) (a "Claim
Notice"); provided, however, that a failure by the Purchaser
Group to give timely notice shall have no consequences on its
ability to claim under this Agreement, to the extent that such
failure has not caused the indemnification obligations for
which the Guarantor are obligated to it to be greater than
they would have been had the Purchaser Group given timely
notice (it being agreed that the indemnification obligations
for which the Guarantor may be obligated shall be reduced to
the extent of any such prejudice). Following the Claim Notice,
the Purchaser shall make available to the Guarantor, upon the
latter's demand, the supporting documentation or evidence on
which the Third Party Claim or the Direct Claim is based
including any and all documents and/or information in the
Purchaser's possession reasonably necessary to analyze the
factual grounds of the Third Party Claim or the Direct Claim.
(a) The Guarantor shall have fifteen (15) days from the
receipt of the relevant Claim Notice or, in the event
of a Direct Claim and if the amount of the claim has
not been determined at the time of the Claim Notice,
the date on which the amount of the Direct Claim has
been notified by the Purchaser Group (the "Notice
Period") to notify the Purchaser Group whether or not
it disputes its liability to the Purchaser Group
hereunder with respect to such claim or demand. If
the parties agree, on or prior to the expiration of
the Notice Period, upon the validity and amount of
such claim, the Guarantor shall pay to the Purchaser
Group, within five (5) Business Days following the
date of such agreement, the full agreed amount of the
indemnification due on such claim. If the parties are
unable to reach agreement on or prior to the
expiration of the Claim Notice or if the Guarantor
dispute their liability with respect to such claim or
demand or the amount thereof, such dispute shall be
resolved in accordance with Section 14.12 hereof.
(b) In the event that the Guarantor notifies the
Purchaser Group within the Notice Period that it
desires to defend the Purchaser Group against a
particular Third Party Claim then, except as
hereinafter provided, the Guarantor shall have the
right to defend the Purchaser
40
Group by appropriate proceedings, including counsel
of its choice, reasonably acceptable to the Purchaser
Group, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion in such a
manner as to avoid any risk of the Purchaser Group
becoming subject to liability for any other matter
and shall pay all fees and disbursements incurred in
connection with such proceedings; provided however,
that the Guarantor shall not, without the prior
written consent of the Purchaser Group (i) consent to
the entry of any judgment against the Purchaser
Group, (ii) enter into any settlement or compromise
of any claim or demand for other than monetary
damages, or (iii) enter into any settlement or
compromise or any claim or demand for monetary
damages which does not include, as an unconditional
term thereof, the giving by each claimant or
plaintiff to the Purchaser Group of a release, in
form and substance satisfactory to the Purchaser
Group. The Guarantor shall be liable for reasonable
fees and expenses of counsel employed by the
Purchaser Group for any period during which the
Guarantor has not assumed the defense of any Third
Party Claim (other than during any period in which
the Purchaser Group will have failed to give notice
of the Third Party Claim as provided above). The
Purchaser Group shall have the right to participate
in the defense assumed by the Guarantor and to employ
counsel of its choice, reasonably acceptable to the
Guarantor, at its own expense, separate from the
counsel employed by the Guarantor (it being
understood that the Guarantor shall control such
defense). If requested by the Guarantor, the
Purchaser Group agrees to cooperate with the
Guarantor and its counsel (at the cost of the
Guarantor) in contesting any such Third Party Claim
and to refrain from taking any action which
jeopardize or interfere with the defense of such
claims. The Guarantor shall keep the Purchaser Group
fully informed of the progress of any Third Party
Claim and its defense in the event the Purchaser
Group did not elect to participate in the defense
against such Third Party Claim.
(c) Notwithstanding the foregoing, in the event that a
Full Indemnification Loss is asserted by the
Purchaser in a Notice of Claim, the Guarantor shall
be entitled to defend itself or the Seller by
appropriate proceedings, including counsel of its
choice and shall pay all fees and disbursements
incurred in connection with such proceedings. If
requested by the Guarantor, the Purchaser Group
agrees to cooperate with the Guarantor and its
counsel (at the cost of the Guarantor) in contesting
any such Third Party Claims and to refrain from
taking any action which may jeopardize or interfere
with the defense of such claims. The Purchaser shall
provide to Guarantor and its counsel full access to
any documents, information and employees of the
Subsidiary and the Purchaser that Guarantor and its
counsel may reasonably request in connection with
such proceedings.
11.6.2. If the Guarantor elects not to defend the Purchaser Group
against such claim or demand, whether by not giving the
Purchaser Group timely notice as
41
provided above or otherwise, then the full amount of any such
claim or demand, shall be conclusively deemed to be a
liability of the Guarantor hereunder, subject to the
limitations set forth in Section 11.4 hereof.
11.6.3. All claims for indemnification of the Guarantor by the
Purchaser under this Agreement shall be asserted and resolved
under the procedures set forth above substituting as
appropriate the "Guarantor" by the "Purchaser Group" and vice
versa.
11.7 PAYMENT. Upon the determination of the liability under Section 11.1 or
11.5 hereof, the appropriate party shall pay to the other, as the case
may be, within five (5) Business Days after such determination, the
amount of any claim for indemnification made hereunder. In the event
that the indemnified party is not paid in full for any such claim
pursuant to the foregoing provisions promptly after the other party's
obligation to indemnify has been determined in accordance herewith, it
shall have the right, notwithstanding any other rights that it may have
against any other person, firm or corporation, to set off the unpaid
amount of any such claim against any amount owed by it pursuant to this
Agreement. Upon the payment in full of any claim, either by set off or
otherwise, the entity making payment shall be subrogated to the rights
of the indemnified party against any person, firm or corporation with
respect to the subject matter of such claim.
11.8 GENERAL EXCLUSIONS AND LIMITATIONS.
11.8.1. The Guarantor shall have no liability to the Purchaser Group
under any provision of this Agreement:
(a) for any Purchaser Loss or Receivable Loss or Full
Indemnification Loss (excluding those arising out of
Excluded Liabilities and Real Estate Liabilities)
which arises as a result of the passing of, or any
change in, after the Closing Date, any Law in effect
on the Closing Date, or any imposition of any Tax not
in effect on the Closing Date, even if such Law or
Tax imposition has retroactive effect;
(b) to the extent that the facts giving rise to the
relevant Purchaser Losses, Receivable Losses
(excluding the Uncollected Receivables) or Full
Indemnification Losses (excluding those arising out
of Excluded Liabilities and Real Estate Liabilities)
(i) were contained in the Disclosure Schedules and to
the extent of such content or (ii) were covered by
specific provisions or reserves in the Closing
Balance Sheet and to the extent to the amount of such
provisions or reserves;
(c) to the extent that the relevant Purchaser Losses,
Receivable Losses or Full Indemnification Losses
(excluding those arising out of Excluded Liabilities
and Real Estate Liabilities) are due to the
Purchaser's, and with respect to any period following
the Closing, the Subsidiary's willful misconduct,
gross negligence or bad faith;
(d) if and to the extent that (in the event that the
relevant breach can be
42
cured) SAFRAN or the Seller has, within thirty (30)
days following receipt by Seller of Purchaser's
notice, cured such breach by specific performance;
(e) if and to the extent that the Purchaser or the
Subsidiary is entitled without any doubt, to receive
or has received recovery for the relevant Purchaser
Loss from any other person (including under any
insurance policy) or, in the case described above, if
and to the extent that nonrecovery from any other
person is due to the failure of the Purchaser and/or
the Subsidiary to use its or their reasonable efforts
to obtain such recovery; and
(f) if the relevant Loss arises as a result of the
application of accounting principles, procedures or
methods other than the Closing Balance Sheet
Accounting Principles.
11.8.2. EFFECTIVE NATURE OF THE PURCHASER LOSSES, RECEIVABLE LOSSES
AND FULL INDEMNIFICATION LOSSES.
(a) Any liability for indemnification pursuant to this
Agreement shall be determined without duplication of
recovery. In the event that any member of the
Purchaser Group is indemnified for a Purchaser Loss,
Full Indemnification Loss and/or Receivable Loss
pursuant to one provision of this Agreement, no
member of the Purchaser Group shall also be entitled
to indemnification again form the same Purchaser
Loss, Full Indemnification Loss and/or Receivable
Loss in the event another provision or provisions of
this Agreement are also breached. No indemnification
by the Guarantor may be required in respect of any
facts, matters and/or circumstances which have been
taken into account for the purposes of adjustment of
the consideration in accordance with the procedures
set forth in Section 4.3, to the extent of the amount
of the corresponding adjustment.
(b) A Purchaser Loss, Full Indemnification Loss or
Receivable Loss shall be eligible for indemnification
by the Guarantor to the extent and only to the extent
such Purchaser Loss, Full Indemnification Loss or
Receivable Loss has effectively been sustained by the
Purchaser or the Subsidiary.
(c) Any deficiency assessed by the Tax authorities whose
sole effect is to shift a Tax liability from one
fiscal period to another shall give rise to
indemnification by the Seller only insofar as the
Subsidiary is required to pay a penalty or interest
charge in relation thereto.
(d) Any deficiency assessed with regard to a Tax, such as
a value-added Tax, which is recoverable shall give
rise to indemnification by the Guarantor only insofar
as the Subsidiary is required to pay a penalty or
interest charge in relation thereto.
(e) If a claim is based upon a liability which is
contingent only, no indemnification shall be due
unless and until such liability becomes
43
due and payable.
(f) In the event that the Subsidiary is required to make
a payment in connection with a third-party claim, the
Guarantor shall not be required to make any
indemnification payment in connection thereto before
such payment has actually been made by the Subsidiary
to such third party.
44
11.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (i) The indemnification
obligations relating to General Indemnification Losses shall survive
two (2) years following the Closing Date, (ii) Tax Claims shall survive
until the expiration of the applicable statute of limitations plus 90
days, (iii) the indemnification obligations relating to Environmental
Losses shall survive six (6) years following the Closing Date, (iv) the
indemnification obligations relating to the Product Liabilities Losses
shall survive four (4) years following the Closing Date and (v) the
indemnification obligations relating Receivables Losses shall survive
two (2) years following the Closing Date. No indemnification claim for
the recovery of any Purchaser Loss, Receivable Loss or Tax Claims may
be asserted by the Purchaser Group after the expiration of the
applicable indemnification period; provided, however, that
indemnification claims made in writing by the Purchaser Group in good
faith and with reasonable specificity prior to the expiration of the
applicable indemnification period shall not thereafter be barred by the
expiration of the applicable indemnification period. For the avoidance
of doubt, the indemnification obligations relating to Full
Indemnification Losses shall survive until the expiration of the
applicable statute of limitations.
11.10 TAX EFFECT OF INDEMNIFICATION PAYMENTS. All indemnity payments made by
the Guarantor to the Purchaser, or by the Purchaser to the Guarantor
pursuant to this Agreement shall be treated for all Tax purposes as
adjustments to the aggregate consideration paid by the Purchaser to the
Seller.
11.11 EFFECT OF INVESTIGATION. The right to indemnification, payment of
Purchaser Losses, or for other remedies based on any representation,
warranty, covenant or obligation of the Guarantor contained in or made
pursuant to this Agreement shall not be affected by any investigation
conducted with respect to, or any knowledge acquired (with the
exception of the schedules attached to this Agreement) at any time,
whether before or after the execution and delivery of this Agreement or
the Closing Date occurs, with respect to the accuracy or inaccuracy of
or compliance with, any such representation, warranty, covenant or
obligation.
ARTICLE XII. POST-CLOSING COVENANTS
12.1 NON SOLICITATION OF EMPLOYEES. Until the second anniversary of the
Closing Date, (a) Seller and its Affiliates will not solicit, offer
employment to, or employ any Transferred Employee who is then an
employee of the Purchaser Group, or who has left such employment within
one hundred eighty (180) days preceding such solicitation, offer, or
employment, or encourage any Transferred Employee to leave the employ
of the Purchaser Group and (b) the Purchaser will not directly or
indirectly solicit, offer employment to, or employ any person who after
the Closing Date is then an employee of the Seller, or who has left
such employment within one hundred eighty (180) days preceding such
solicitation, offer or employment, subject to Section 9.2.
12.2 MAINTENANCE OF BOOKS AND RECORDS. Each of the Seller, the Purchaser and
the Subsidiary shall preserve until the tenth (10th) anniversary of the
Closing Date all records possessed or to be possessed by such party
relating to any of the assets, liabilities or business of the Cables
Business prior to the Closing Date. After the Closing Date, where there
is a legitimate purpose, such party shall provide the other party with
access, upon prior reasonable written request specifying the need
therefore, during regular business hours, to (i) the officers and
employees of such party, and (ii)
45
the books of account and records of such party, but, in each case, only
to the extent relating to the assets, liabilities or business of the
Cables Business prior to the Closing Date, and the other parties and
their representatives shall have the right to make copies of such books
and records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further
provided that, to the extent such information constitutes trade secrets
or confidential information of such party, the requesting party and its
officers, directors and representatives will use due care to not
disclose such information except (i) as required by law or legal
process (ii) with the prior written consent of such party, which
consent shall not be unreasonably withheld, or (iii) where such
information is or becomes available to the public generally, or is or
becomes generally known to competitors of such party, through sources
other than the requesting party, its affiliates or its officers,
directors or representatives. Such records may nevertheless be
destroyed by a party if such party sends to the other parties written
notice of its intent to destroy records, specifying with particularity
the contents of the records to be destroyed. Such records may then be
destroyed after the thirtieth (30th) day after such notice is given
unless another party object to the destruction in which case the party
seeking to destroy the records shall deliver such records to the
objecting party.
12.3 PAYMENTS RECEIVED. The Seller and the Purchaser each agree that after
the Closing they will hold and will promptly transfer and deliver to
the other party, from time to time and when received by them or by the
Subsidiary, as the case may be, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into
cash), or other property that they may receive on or after the Closing
which properly belongs to the other party, including without
limitation, any insurance proceeds, and will account to the other for
all such receipts.
12.4 NON-COMPETITION / NON SOLICITATION OF CLIENTS.
SAFRAN and its Affiliates agree that for a period of three (3) years
after the Closing Date, it shall not directly or indirectly, (i) own,
manage, operate, control or participate in the ownership, management,
operation or control of (whether in corporate, proprietorship or
partnership form or otherwise), or otherwise assist in any manner, any
corporation, partnership or other business which is engaged in a
business that competes with the Cables Business (ii) solicit, any
business entity which is a client of the Purchaser Group or who has
been a client of the Purchaser Group at any time during the two (2)
years preceding the Closing Date for purposes of offering or selling
products or services which are presently sold or produced by the Cables
Business ; nor shall it assist any person in doing so; nor shall it
request or advise any present or future customer of the Cables Business
to withdraw, curtail or cancel its business dealings with the Cables
Business ; provided, however, that nothing herein shall prohibit SAFRAN
or its Affiliates from (x) acquiring an interest of less than 5 % of
the shares capital and voting rights of publicly listed companies
having activities that competes with the Cables Business representing
not more than 25% of their revenues nor (y) owning, managing,
operating, controlling or participating in the ownership, management,
operation or control of any entity in which less than 5 % of the
revenues arise from a business that competes with the Cables Business
12.5 INVALIDITY OR NON-ENFORCEABILITY. The invalidity or non-enforceability
of the provisions set forth in Section 12.1 and Section 12.4, in whole
or in part, shall not
46
affect the validity or enforceability of any other provision of this
ARTICLE XII or of any other provision of this Agreement, all of which
shall, to the full extent consistent with law, continue in full force
and effect. In addition, if any provision shall be adjudged by a court
to be excessively broad as to duration, geographical scope, activity or
subject, unless the court provides in its decision the minimum degree
necessary to make such provision valid and enforceable under applicable
law, the parties shall open good faith discussions to determine the
minimum degree necessary to make such provision valid and enforceable
under applicable law. The existence of any claim that the Guarantor may
allege against the Purchaser Group, whether based on this Agreement or
otherwise, will not prevent the enforcement of Section 12.1 and Section
12.4. The Purchaser shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of Section 12.1 and Section 12.4
and to enforce specifically the terms and provisions hereof, in
addition to any other remedy to which the Purchaser Group may be
entitled.
12.6 SAFRAN NAMES AND TRADEMARKS.
As of the Closing Date, the Purchaser and the Subsidiary shall be
allowed to use, for a period of twelve (12) months after Closing, the
stock of labels, technical and commercial documentation and Movable
Property held by the Cables Business as existing at the Closing Date
and bearing the "SAGEM" names, trademarks or logos in connection with
the Cables Business, and the consideration for such use shall be deemed
to be included in the consideration paid by the Purchaser pursuant to
Section 4.1 hereof.
The Purchaser and the Subsidiary shall be authorized to market and sell
directly or through its distributors the Contributed Inventory marked
with "SAGEM" names, trademarks or logos.
During a three (3) month period from the Closing Date, the Purchaser
shall also be entitled to engrave the name "SAGEM" on new products
manufactured through molds or tools (outillage specifique) listed in
SCHEDULE 12.6 provided that the Purchaser and the Subsidiary shall, in
order to facilitate the Purchaser and the Subsidiary, reset such molds
and tools as promptly as is commercially reasonable with such three (3)
month period so that the name "SAGEM" is no longer engraved on new
products manufactured by the Subsidiary or the Purchaser.
12.7 EFFORTS TO MITIGATE DAMAGES.
The Purchaser and the Subsidiary shall use their reasonable efforts
("obligation de moyens") to mitigate any indemnifiable damages caused
by a breach by the Seller of a representation, warranty or covenant as
set forth in this Agreement.
12.8 ENVIRONMENT.
SAFRAN agrees and undertakes to indemnify, promptly upon presentation
of appropriate justification, the Purchaser for 50 % of any costs
incurred by the Seller, and after Closing by the Subsidiary, in
relation to carrying out environmental, health and safety remediation
which result from matters described in SCHEDULE 4.1.1 in excess of
3,543,000 euros and up to 5,750,000 euros. For avoidance of doubt,
SAFRAN's obligation under this Section 12.8 is limited to a maximum
amount of
47
1,103,500 euros and shall end on December 31, 2007.
ARTICLE XIII. TERMINATION
13.1 TERMINATION. The Transaction may be terminated or abandoned by written
notice of termination at any time before the Closing Date only as
follows:
(a) by mutual consent of the Seller and the Purchaser;
(b) by the Purchaser, upon written notice to the Seller given at any
time after a period of 180 days following the date hereof (or such
later date as shall have been specified in a written instrument
signed by the Seller and the Purchaser) if all of the conditions
precedent set forth in Section 10.2 hereof have not been met,
provided;
(c) by the Seller, upon written notice to the Purchaser given at any
time after a period of 180 days following the date hereof (or such
later date as shall have been specified in a written instrument
signed by the Seller and the Purchaser) if all of the conditions
precedent set forth in Section 10.3 hereof have not been met;
(d) by the Purchaser or the Seller if any Governmental Entity in Spain
or Portugal shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the
parties hereto shall use their best commercial efforts to lift)
which restrains, enjoins or otherwise prohibits the acquisition by
the Purchaser of all or a material portion of the Cables Business.
In such a case, the Parties shall enter into good faith
negotiations in order to amend the terms and conditions of the
Transaction in order to proceed to Closing in a manner consistent
with the terms of the order, decree, ruling or action.
13.2 CONSEQUENCES. In the event of the termination and abandonment hereof
pursuant to the provisions of Section 13.1, this Agreement (except for
Section 8.3.1 which shall continue) shall become void and have no
effect, without any liability on the part of any of the parties or
their directors or officers or stockholders in respect of this
Agreement, unless the termination was the result of a breach by a party
of any representation, warranty or covenant hereunder in which event
the party whose representation, warranty or covenant was breached shall
be liable to the other party for any and all Losses of the other party.
ARTICLE XIV. MISCELLANEOUS PROVISIONS
14.1 AMENDMENT. This Agreement may not be amended except by a written
instrument signed by each of the parties hereto.
14.2 WAIVERS. Except as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, covenant or agreement
contained herein may be waived only by a written notice from the party
entitled to the benefits thereof. No failure by any party hereto to
exercise, and no delay in exercising, any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise
of any rights
48
hereunder preclude any other or future exercise of that right by that
party.
14.3 APPOINTMENT OF THE SELLER'S AGENT - NOTICES.
14.3.1. SAFRAN and the Seller hereby irrevocably appoint, for the
entire duration of this Agreement and its consequences, SAFRAN
as their agent for the purpose of this Agreement. As a result,
all actions, claims, objections or decisions on the part of
SAFRAN and the Seller provided for hereunder or in connection
herewith must, in order to be valid, be notified in their name
by SAFRAN. Likewise, all notifications or communications to
SAFRAN and the Seller provided for hereunder or in connection
herewith shall validly be made by the Purchaser to SAFRAN.
14.3.2. Subject to Section 11.6 and notice provisions expressly
specified elsewhere in this Agreement, all notices and other
communications hereunder shall be deemed sufficiently given to
a person if given in writing and shall become effective when
delivered by hand, by overnight service which requires a
delivery receipt therefor (such as DHL), by facsimile
transmission with confirmation of receipt, by registered or
certified mail (return receipt requested), postage fees
prepaid, at such person's address set forth below (or at such
other address as may from time to time be designated by such
party to the other in accordance with this Section 14.3.2):
If to SAFRAN and the Seller, to: SAFRAN SA
2, boulevard Martial-Valin
75724 Paris Cedex 15
France
Facsimile: + 33 1 40 60 58 61
Marked for the attention of: Herve Philippe
with copies to: Skadden, Arps, Slate, Meagher & Flom LLP
68 rue du Faubourg Saint-Honore
75008 Paris
France
Facsimile: +33 1 55 27 11 99
Marked for the attention of: Christopher
L. Baker
If to the Purchaser, to: GRUPO GENERAL CABLE SISTEMAS, S.A., Sociedad
Unipersonal
calle Casanova 150, Barcelona
Spain
Facsimile:
Marked for the attention of: Domingo Goenaga
with copies to: Norton Rose
Washington Plaza
42 rue Washington
75008 Paris
France
Facsimile: +33 1 53 89 56 56
Marked for the attention of: Jean-Francois
Mercadier
49
14.4 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other parties, provided,
however, that without such prior consent the Purchaser may at any time
prior to the Closing Date, assign, in its sole discretion, all or any
part of its rights and interests hereunder to any wholly owned
Affiliate of the Purchaser; provided, however, that the Purchaser shall
remain jointly and severally liable for the performance of all
obligations so assigned and that the assignee shall remain a wholly
owned Affiliate of the Purchaser.
14.5 NO THIRD PARTY BENEFICIARIES.
Subject to the provisions of Section 14.4, neither this Agreement or
any provision hereof, nor any Schedule, certificate or other instrument
delivered pursuant hereto, nor any agreement to be entered into
pursuant hereto or any provision hereof, is intended to create any
right, claim or remedy in favor of any person or entity, other than the
parties hereto and their respective successors and permitted assigns.
14.6 NO SET-OFF.
Except as provided in Section 11.6, all payments to be made by the
Purchaser under this Agreement shall be made in full without any
set-off, restriction or condition and without any deduction for or on
account of any counterclaim.
14.7 EXPENSES.
Each party shall pay its own fees and expenses incurred by it in
connection with this Agreement and other documents to be delivered
hereunder or thereunder, except as specifically provided to the
contrary in this Agreement. It is agreed by the Parties that (i) all
fees, costs and expenses excluding Taxes(including the fees of M.
Legorju and Skadden, Arps, Slate, Meagher & Flom LLP, but excluding the
fees of M. Hommel, Norton Rose and Purchaser's counsel) incurred in
connection with the Contribution, including the setting-up of the
Subsidiary, shall be borne by the Seller, and (ii) all necessary
registration and renewal fees in connection with the re-registrations
of the Intellectual Property in the name of the Subsidiary shall be
borne by the Seller. For the avoidance of doubt, it is specified that
Lazard Freres' fees shall be borne by the Seller and Financiere de
Courcelles fees shall be borne by the Purchaser. Anti-trust filings
required in connection with the Transaction will be managed and
supervised by the Purchaser's counsel and the costs related thereto
shall be borne by the Purchaser.
14.8 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and any
party hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument.
14.9 HEADINGS, ETC.
The article and section headings contained in this Agreement are solely
for convenience of reference, are not part of the agreement of the
parties and shall not be used in construing this Agreement or in any
way affect the meaning or interpretation
50
of this Agreement.
14.10 ENTIRE AGREEMENT; SEVERABILITY.
This Agreement and the Schedules and Exhibits, the Contribution
Agreements, the Ancillary Agreements, the certificates and other
instruments and documents delivered pursuant hereto embody the entire
agreement of the parties hereto in respect of, and there are no other
agreements or understandings, written or oral, among the parties
relating to, the subject matter hereof. This Agreement supersedes all
prior agreements and understandings, written or oral, between the
parties with respect to the subject matter hereof. The invalidity,
illegality or unenforceability for any reason of any one or more
provisions of this Agreement shall not affect the validity, legality or
enforceability of the remainder of this Agreement.
14.11 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of France.
14.12 DISPUTE RESOLUTION
14.12.1. Except as provided in Section 4.3.2, the Parties shall do
their best effort to settle amicably any dispute, controversy
or claim arising out of or in connection with this Agreement
or the breach, termination or validity thereof (a "Dispute")
within 30 days following the notification by one of the Party
to the other of such Dispute.
14.12.2. Should the Parties fail to reach such settlement, the Dispute
shall be referred to and finally resolved by arbitration under
the Rules of Arbitration of the International Chamber of
Commerce ("ICC") (the "Rules"), which Rules are deemed to be
incorporated by reference into this clause except as expressly
modified herein. The seat of the arbitration shall be Paris
(France). The arbitration proceedings shall be conducted in
English and documentary exhibits may be admissible in English
or in any other language so long as an English translation is
provided. The arbitral tribunal shall consist of three
arbitrators and shall not have the power of ex aequo et bono.
14.12.3. As the present Agreement is multipartite, the Parties'
agreement to arbitrate is subject to the presence of all
parties in the arbitration proceedings. The arbitral
proceedings may only be initiated by the claimant(s) provided
that all the other parties to the present Agreement are named
either as claimant(s) or as respondent(s). Except where
subsequently agreed otherwise, the Parties agree that the
Purchaser on the one hand, and Safran and the Seller on the
other hand, represent two separate sides for the formation of
the arbitral tribunal as claimant(s) and respondent(s)
respectively (or vice versa). The Purchaser shall nominate one
(1) arbitrator and Safran and the Seller shall nominate one
(1) arbitrator, respectively, within twenty (20) calendar days
from the effective date of the notice, made pursuant to
Section 14.3.3, sent by one Party to the other Party notifying
to such Party the beginning of arbitration proceedings. The
two
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arbitrators thus appointed shall jointly select the third
arbitrator to act as Chair of the tribunal within twenty (20)
calendar days of the selection of the second arbitrator. If
any arbitrator has not been appointed within the time limits
specified herein, such appointment shall be made by the ICC
upon the written request of either party within twenty (20)
calendar days of such request. Each arbitrator shall be fluent
in both English and French.
14.12.4. The parties hereby waive any rights of application or appeal
to any other court having jurisdiction to the fullest extent
permitted by law in connection with any question of law
arising in the course of the arbitration or with respect to
any award made, except for actions to enforce an arbitral
award and actions seeking interim, interlocutory or other
provisional relief in any court of competent jurisdiction.
14.12.5. The award shall be final and binding upon the parties, and
shall be the sole and exclusive remedy between the parties
regarding any claims, counterclaims, issues, or accounting
presented to the arbitral tribunal. Judgment upon any award
may be entered in any court having jurisdiction.
14.12.6. Except as provided by Section 14.12.4, the parties shall each
bear their own costs and expenses and an equal share of the
arbitrators' fees and expenses and administrative fees of the
arbitration.
14.12.7. Any monetary award shall be made and promptly payable in Euro
and the arbitral tribunal shall be authorized in its
discretion to grant pre-award and post-award interest at
commercial rates. Any costs, fees, or taxes incident to
enforcing the award shall, to the maximum extent permitted by
law, be charged against the party resisting such enforcement.
14.12.8. This Agreement and the rights and obligations of the parties
shall remain in full force and effect pending the award in any
arbitration proceeding hereunder.
14.12.9. All notices by one party to another party in connection with
the arbitration shall be in accordance with the provisions of
Section 14.3 except that no notice may be transmitted solely
by facsimile.
14.12.10. This agreement to arbitrate shall be binding upon the
successors and assigns of each party.
14.13 EXHIBITS AND SCHEDULES. All Exhibits and Schedules hereto are hereby
incorporated by reference into this Agreement and are hereby made a
part hereof.
14.14 INTERPRETATION.
14.14.1. When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of
this Agreement unless otherwise clearly indicated to the
contrary.
14.14.2. A reference to any party to this Agreement or any other
agreement or document shall include such party's successors
and permitted assigns.
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14.14.3. A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any
modification or re-enactment thereof, any legislative
provision substituted therefore and all regulations and
statutory instruments issued thereunder or pursuant thereto.
14.15 CONFLICT. In the event of any conflict between the provisions of the
Contribution Agreement, on the one hand, and the provisions of this
Agreement, on the other hand, then, the provisions of this Agreement
shall prevail as between the parties. The Parties acknowledge and agree
that the execution of the Contribution Agreement contemplated in this
transaction, will not represent a novation nor an amendment to this
Agreement.
Nothing contained in the Contribution Agreement, shall be construed to
expand nor to restrict the representations, warranties and covenants of
the parties set forth in this Agreement.
14.16 SALES, TRANSFER AND DOCUMENTARY TAXES. All documentary, value added,
and other transfer Taxes, if any, due as a result of the Transaction in
accordance herewith shall be paid by the Purchaser, and the Purchaser
shall indemnify, reimburse and hold harmless the Seller in respect of
the liability for payment of or failure to pay any such taxes or the
filing of or failure to file any reports required in connection
therewith.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written in Paris.
GRUPO GENERAL CABLE SISTEMAS, S.A.,
By: [_________________________]
(duly authorized pursuant to a power of attorney)
SAFRAN SA
By: [_________________________]
(duly authorized pursuant to a power of attorney)
SAGEM Communication
By: [_________________________]
(duly authorized pursuant to a power of attorney)
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SCHEDULE A
DEFINITIONS
"ACCRUED EMPLOYEE LIABILITIES" has the meaning ascribed to it in
Section 9.2.
"ADJUSTMENT" has the meaning set forth in Section 4.4.2.
"AFFILIATE" of any corporate person means any other person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person. A
person shall be deemed to control another person if such first mentioned persons
owns, directly or indirectly, 50 % or more of the voting rights of the second
mentioned person.
"AFFILIATED COMPANIES" means the entities in which the relevant party
owns, directly or indirectly, more than 50 % of the outstanding equity interest
and voting rights.
"AGENCIES" has the meaning set forth in Section 6.11.2.
"AGREEMENT" has the meaning set forth in the Recitals.
"ANCILLARY AGREEMENTS" means the agreements, listed in SCHEDULE
5.2.1(viii), to be executed on the Closing Date either substantially in the form
attached in SCHEDULE 5.2.1(viii) or, where no form is attached, in a form and
substance reasonably satisfactory to the Purchaser and the Seller.
"BASE CONSIDERATION" has the meaning set forth in Section 4.2.
"BRANCH" has the meaning set forth in the Recitals.
"BUILDING AND ZONING LAWS" has the meaning set forth in Section
6.11.1(b)(v)
"BUSINESS DAY(s)" means days on which banks in France and in the United
Sates are open for business, not being a Saturday or a Sunday or a public/bank
holiday.
"CABLES BUSINESS" has the meaning set forth in the Recitals.
"CLAIM NOTICE" has the meaning set forth in Section 11.6.1.
"CLOSING BALANCE SHEET ACCOUNTING PRINCIPLES" means the accounting
principles set forth in SCHEDULE 4.3.1.
"CLOSING BALANCE SHEET" has the meaning set forth in Section 4.3.1.
"CLOSING DATE" has the meaning set forth in Section 5.1.
"CLOSING STATEMENT" has the meaning set forth in Section 4.3.1.
"CLOSING" has the meaning set forth in Section 5.1.
"CONSENT" has the meaning set forth in Section 6.16.
"CONTRIBUTED ASSETS" has the meaning set forth in Section 1.1.
"CONTRIBUTED CONTRACTS" has the meaning set forth in Section 1.2.
"CONTRIBUTED INTELLECTUAL PROPERTY" has the meaning set forth in
Section 6.13.10(iv).
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"CONTRIBUTED INVENTORY" has the meaning set forth in Section 1.1.
"CONTRIBUTED LIABILITIES" has the meaning set forth in Section 2.1.
"CONTRIBUTED RECEIVABLES" has the meaning set forth in Section 1.1.
"CONTRIBUTION AGREEMENT" means the form of Contribution Agreements
attached in EXHIBITS A(i) AND (ii).
"CONTRIBUTION" has the meaning set forth in the Recitals.
"DATA ROOM DOCUMENTS" has the meaning set forth in ARTICLE VI.
"DIRECT CLAIM" has the meaning set forth in Section 11.6.1.
"DISCLOSURE SCHEDULES" has the meaning set forth in ARTICLE VI
"DISPUTE" has the meaning set forth in Section 14.12.1.
"DISPUTED ITEMS" has the meaning set forth in Section 4.3.2.
"EFFECTIVE DATE" means the date of execution of this Agreement.
"ENCUMBRANCES" has the meaning set forth in ARTICLE III.
"ENFORCEABILITY EXCEPTION" means any limit to enforceability of a
contract under bankruptcy, reorganization and similar losses affecting
enforcement of creditors' rights generally.
"ENVIRONMENTAL LAW" mean any Law governing pollution, the protection of
the environment and health and safety matters.
"ENVIRONMENTAL LOSSES" has the meaning set forth in Section 11.4.2
"EXCLUDED LIABILITIES" has the meaning set forth in Section 1.5.
"FINAL CLOSING BALANCE SHEET AND CLOSING STATEMENT" has the meaning set
forth in Section 4.4.1.
"FINAL CONSIDERATION" has the meaning set forth in Section 4.1.1.
"GENERAL INDEMNIFICATION LOSSES" has the meaning set forth in Section
11.1
"GOVERNMENTAL APPROVAL" has the meaning set forth in Section 10.1.2.
"GOVERNMENTAL ENTITY" means a court, arbitral tribunal, administration
agency or other regulatory authority, including social security and tax
authorities.
"GUARANTOR" means SAFRAN.
"BONDS" shall mean any performance bonds, payment bonds, warranty
bonds, advance payment bonds and bid bonds, or other liabilities or obligations,
contingent or otherwise issued by the Seller's banks and guaranteed by the
Seller, SAFRAN or any Affiliate of SAFRAN.
"CLOSING NET EQUITY" means the net equity shown in the Closing Balance
Sheet.
"ICC" has the meaning set forth in Section 14.12.2.
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"INDEPENDENT ACCOUNTING FIRM" has the meaning set forth in Section
4.3.2.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section
6.13.10(i).
"KEY EMPLOYEES" means Bernard Ernot, Eric Develey, Daniel Vincent, Marc
Leblanc, Philippe Trombert, Max de Broglie, Marie-Therese Blanot and Pierre
Argaut.
"LAW" means any statute, rule, regulation, ordinance, code, judgment,
order, writ, injunction, decree or other requirement of any court or of any
governmental body, agency or administration, including European Union's
Regulations and directives.
"LEASE" means all leases pursuant to which the Cables Business leases
any real or personal property (excluding leases relating solely to personal
property calling for rental or similar periodic payments not exceeding Euros
50,000 per annum).
"LICENSED INTELLECTUAL PROPERTY" has the meaning set forth in Section
6.13.10(ii).
"LOSS" has the meaning set forth in Section 11.1.
"MATERIAL ADVERSE CHANGE" means any event (but excluding general
economic events or a measure of general application taken by any
Governmental Entity (i.e.: any measure other than one principally
affecting companies carrying on a business the same as or similar to
the Cables Business) as well as catastrophic events not readily
determinable in economic terms) which occurs prior to Closing and has
prior to Closing or will have after Closing a material adverse effect
on the business, operations, or financial condition of the Cables
Business, taken as a whole.
"MATERIAL CONTRACTS" has the meaning set forth in Section 6.15.1.
"MATERIAL CONTRIBUTED INTELLECTUAL PROPERTY" has the meaning set forth
in Section 6.13.10(v).
"MATERIAL LICENSED INTELLECTUAL PROPERTY" has the meaning set forth in
Section 6.13.10(iii).
"MOVABLE PROPERTY" has the meaning set forth in Section 6.12.1.
"NET EQUITY" has the meaning set forth in Section 4.1.2.
"NOTICE PERIOD" has the meaning set forth in Section 11.6.1(a).
"PAYROLL BENEFITS" has the meaning set forth in Section 9.2.
"PERMITS" means all consents, licenses, permits or authorizations
granted or required for the conduct of the Cables Business.
"PERMITTED LIENS" means encumbrances for current taxes or assessments,
not delinquent, clause de reserve de propriete, and all encumbrances arising and
continuing in the ordinary course of business, for obligations which are not
delinquent, and which do not materially affect the value of the assets of the
Cables Business or the Subsidiary, as the case may be.
"PERMITTED REAL PROPERTY ENCUMBRANCES" means any Permitted Lien related
to any real property and any easement, right of use or other third party adverse
right which does not materially affect the conduct of the Cables Business as
conducted as of the date hereof.
"PERSON" means any natural person, partnership, corporation, limited
liability company,
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business trust, joint stock company, unincorporated association, joint venture,
Governmental Entity or other entity or organization.
"POST-CLOSING TAXES" has the meaning set forth in Section 9.1.1.
"PRE-CLOSING TAXES" has the meaning set forth in Section 9.1.1.
"PROCEEDING" has the meaning set forth in Section 9.1.5.
"PRODUCTS" has the meaning set forth in the Recitals.
"PURCHASER GROUP" shall mean the Purchaser and each of its Affiliated
Companies specifically operating in the field of the Cables Business (including
the Subsidiary after Closing).
"PURCHASER LOSSES" shall mean the General Indemnification Losses and
the Environmental Losses.
"PURCHASER" means GRUPO GENERAL CABLE SISTEMAS, S.A.
"REAL PROPERTY ENCUMBRANCES" has the meaning set forth in Section
6.11.1(a).
"RECEIVABLE LOSSES" has the meaning set forth in Section 11.2.3.
"REVIEW PERIOD" has the meaning set forth in Section 4.3.2.
"RULES" has the meaning set forth in Section 14.12.2.
"SAFRAN" has the meaning set forth in the preamble.
"SELLER" means SAGEM Communication.
"SELLER LOSSES" has the meaning set forth in Section 11.5(ii).
"SHARES" has the meaning set forth in the Recitals.
"SUBSIDIARY" has the meaning set forth in the Recitals.
"SUBSIDIARY" means the French Subsidiary described in SCHEDULE 2.1.
"TAX CLAIMS" means any and all actions, suits, claims or legal
administrative, arbitration, governmental or other proceeding or investigations
in connection with Pre-Closing Taxes imposed upon the Purchaser Group.
"TAX RETURNS" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any such
document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"TAXES" shall mean any taxes and more generally any mandatory levies
(including their principal amount and, as the case may be, penalties, surcharges
and interest thereon). Taxes include, without limitation, (i) corporation taxes,
equalization taxes on dividend distributions, withholding taxes, Value Added Tax
(V.A.T.), excise taxes, property taxes, business taxes, custom duties, transfer
and contribution taxes, stamp duty, registration taxes and any taxes based on
salaries, (ii) any liability of the Cables Business or the Subsidiary,
determined on the basis of any Tax or by reference to any taxable basis, (iii)
any Tax due by a person other than the Cables Business or the Subsidiary and for
which the Cables Business or the Subsidiary would be liable, in particular as a
result of any joint and
57
several obligation with such person, any obligation to hold harmless and
indemnify such person, any obligation to bear the Taxes of such person (in
particular as a result of a tax consolidation or any similar agreement); Taxes
shall also include social charges, which shall mean any social security
contributions and any other charges and liabilities relating to employment
including contributions relating to unemployment, medical costs, disability,
death and retirement.
SELLER'S KNOWLEDGE refers to actual knowledge of the Key Employees
after having made due enquiries with their staff and after having also consulted
appropriate information and documentation and to the actual knowledge of Herve
Philippe and Gregoire Olivier and for Herve Philippe after having made due
inquiries with the Key Employees such Key Employees having made due enquiries
with their staff and after having also consulted appropriate information and
documentation..
"THIRD PARTY CLAIM" has the meaning set forth in Section 11.6.1.
"THIRD PARTY" means any Person other than the parties hereto and their
respective Affiliates.
"TRANSACTION" means all the transactions provided for or contemplated
in this Agreement, the Contribution Agreement and the Ancillary Agreements.
"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 6.24.1.
"UNCOLLECTED RECEIVABLES" has the meaning set forth in Section 8.2.1.
"SUBSIDIES" means any grants made to the Cables Business by a French
Governmental Entity for purposes of sustaining research by the Cables Business.
59