EXHIBIT 2
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ASSET PURCHASE AGREEMENT
by and among
INTERNATIONAL STEEL GROUP INC.,
ISG ACQUISITION INC.,
BETHLEHEM STEEL CORPORATION
AND
THE OTHER SELLERS NAMED HEREIN
Dated as of March 12, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE 1. PURCHASE AND SALE OF THE ACQUIRED ASSETS...............................................................2
Section 1.1. Transfer of Acquired Assets..................................................................2
Section 1.2. Excluded Assets..............................................................................4
Section 1.3. Assumption of Liabilities....................................................................5
Section 1.4. Retention of Liabilities.....................................................................6
Section 1.5. Non-Assignment of Contracts..................................................................7
Section 1.6. Identification of Additional Excluded Contracts; Addition of Acquired Contracts..............8
Section 1.7. Transition Services Agreement................................................................9
ARTICLE 2. CONSIDERATION..........................................................................................9
Section 2.1. Purchase Price...............................................................................9
Section 2.2. Amount and Form of Purchase Price............................................................9
Section 2.3. Return of Excess Purchase Price.............................................................10
ARTICLE 3. CLOSING AND DELIVERIES................................................................................10
Section 3.1. Closing.....................................................................................10
Section 3.2. Sellers' Deliveries.........................................................................10
Section 3.3. Buyer's Deliveries..........................................................................11
Section 3.4. Purchase Price Adjustment...................................................................11
Section 3.5. Buyer's Right to Conduct an Audit of Inventory..............................................13
ARTICLE 4. REPRESENTATIONS AND WARRANTIES........................................................................13
Section 4.1. Representations and Warranties of Sellers...................................................13
Section 4.2. Representations and Warranties with Respect to Buyer........................................22
Section 4.3. Representations and Warranties with Respect to ISG..........................................24
Section 4.4. Warranties Exclusive........................................................................28
ARTICLE 5. COVENANTS AND OTHER AGREEMENTS........................................................................29
Section 5.1. Pre-Closing Covenants of Sellers............................................................29
Section 5.2. Pre-Closing Covenants of ISG and Buyer......................................................32
Section 5.3. Other Covenants of Sellers, ISG and Buyer...................................................34
Section 5.4. Employment Covenants and Other Undertakings.................................................36
Section 5.5. Covenants Relating to Public Offering and the Financing.....................................38
Section 5.6. Covenants Relating to Railroad Subsidiaries.................................................39
Section 5.7. Consideration Shares........................................................................41
ARTICLE 6. TAXES.................................................................................................42
Section 6.1. Taxes Related to Purchase of Acquired Assets................................................42
Section 6.2. Cooperation on Tax Matters..................................................................42
Section 6.3. Purchase Price Allocation...................................................................43
ARTICLE 7. CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES........................................................43
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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Section 7.1. Conditions Precedent to Performance by Sellers..............................................43
Section 7.2. Conditions Precedent to the Performance by ISG and Buyer....................................44
ARTICLE 8. TERMINATION...........................................................................................46
Section 8.1. Conditions of Termination...................................................................46
Section 8.2. Effect of Termination; Remedies.............................................................47
Section 8.3. Exclusive Remedy............................................................................48
ARTICLE 9. SURVIVAL AND INDEMNIFICATION..........................................................................48
Section 9.1. Survival; Indemnification...................................................................48
Section 9.2. Specific Performance........................................................................49
Section 9.3. Remedy for Deferred Purchase Price Payment..................................................49
Section 9.4. Exclusive Remedy............................................................................49
ARTICLE 10. BIDDING PROCEDURES....................................................................................49
Section 10.1. Bidding Procedures..........................................................................49
Section 10.2. Sale Hearing and Entry of Bankruptcy Sale Order.............................................50
ARTICLE 11. MISCELLANEOUS.........................................................................................51
Section 11.1. Allowed Administrative Expenses.............................................................51
Section 11.2. Alternative Transaction.....................................................................51
Section 11.3. Further Assurances..........................................................................51
Section 11.4. Successors and Assigns......................................................................51
Section 11.5. Governing Law; Jurisdiction.................................................................51
Section 11.6. Expenses....................................................................................52
Section 11.7. Broker's and Finder's Fees..................................................................52
Section 11.8. Severability................................................................................52
Section 11.9. Notices.....................................................................................52
Section 11.10. Amendments; Waivers.........................................................................53
Section 11.11. Public Announcements........................................................................53
Section 11.12. Entire Agreement............................................................................54
Section 11.13. No Third Party Beneficiaries................................................................54
Section 11.14. Headings....................................................................................54
Section 11.15. Counterparts................................................................................54
Section 11.16. Joint and Several...........................................................................54
Section 11.17. Joint Drafting..............................................................................54
Section 11.18. Construction................................................................................54
Section 11.19. Performance Deposit.........................................................................54
ARTICLE 12. DEFINITIONS...........................................................................................55
Section 12.1. Certain Terms Defined.......................................................................55
Section 12.2. All Terms Cross-Referenced..................................................................62
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EXHIBITS
Exhibit A..................................................................................................... Bankruptcy Sale Order
Exhibit B.........................................................................................Bidding Procedures and Sale Motion
Exhibit C...................................................................................................Bidding Procedures Order
Exhibit D.............................................................................................ISG Class B Common Stock Terms
Exhibit E....................................................................................................Reference Balance Sheet
SCHEDULES
Schedule 1.1(b) - Real Property
Schedule 1.1(d) - Acquired Contracts
Schedule 1.1(f) - Inventory and Supply Locations
Schedule 1.1(h) - Intellectual Property
Schedule 1.1(j) - Information Technology
Schedule 1.1(k) - Permits
Schedule 1.1(m) - Subsidiaries
Schedule 1.1(p) - Prepaid Deposits and Expenses
Schedule 1.1(r) - Acquired Benefit Plans
Schedule 1.2(a) - Excluded Assets
Schedule 1.3(e) - Real and Personal Property Taxes
Schedule 1.6(c) - Term Sheet Assumed Contracts
Schedule 1.7 - Transition Services Assets
Schedule 2.2(a) - Principal Payments
Schedule 3.4(a) - Ancillary Assets
Schedule 4.1(f) Subsidiaries
Schedule 4.1(g) - Sellers' Consents
Schedule 4.1(h)(i) - Compliance with Laws
Schedule 4.1(h)(ii) - Financial Obligations
Schedule 4.1(i) - Litigation
Schedule 4.1(j)(ii) - Joint Venture Benefit Plans
Schedule 4.1(k)(ii) - Excluded Joint Venture Assets
Schedule 4.1(l) - Acquired Intellectual Property Information
Schedule 4.1(o) - Material Contracts, Cure Costs and Prepaid Expenses and Deposits
Schedule 4.1(p) - Environmental Matters
Schedule 4.1(q) - Insurance
Schedule 4.1(r) - Real Property Matters
Schedule 4.1(s) - Accounts Receivable
Schedule 4.1(t) - Inventories
Schedule 4.1(u) - Absence of Certain Changes
Schedule 4.1(v) - Absence of Undisclosed Liabilities
Schedule 4.1(y) - Joint Venture Information
Schedule 4.2(e) - Buyer's Consents
Schedule 4.3(f) - ISG Subsidiaries
Schedule 4.3(g) - ISG's Consents
Schedule 4.3(h) - Compliance with Laws
Schedule 4.3(i) - Litigation
Schedule 4.3(k) - ISG Environmental Matters
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Schedule 4.3(l) - ISG Insurance
Schedule 4.3(m) - Capital Stock of ISG
Schedule 4.3(p) - ISG Undisclosed Liabilities
Schedule 4.3(q) - ISG Tax Matters
Schedule 5.1(a) - Exceptions to Sellers' Conduct of Business
Schedule 5.2(a) - Conduct of Business of ISG Before the Closing Date
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of March
12, 2003 (the "EXECUTION DATE"), is made by and among Bethlehem Steel
Corporation, a Delaware corporation ("PARENT"), the other Sellers, ISG
Acquisition Inc., a Delaware corporation ("BUYER"), and International Steel
Group Inc., a Delaware corporation ("ISG"). Capitalized terms used in this
Agreement are defined or cross-referenced in Article 12.
BACKGROUND INFORMATION
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A. On October 15, 2001 (the "PETITION DATE"), Parent and certain of
its Affiliates (collectively, the "DEBTORS") commenced voluntary cases for
reorganization (the "BANKRUPTCY CASES") under chapter 11 of the Bankruptcy Code,
11 U.S.C. ▇▇.▇▇. 101-1330 (the "BANKRUPTCY CODE"), in the United States
Bankruptcy Court for the Southern District of New York (the "BANKRUPTCY COURT").
B. The Joint Venture Sellers are the owners of certain equity
interests in the Joint Ventures.
C. Buyer desires to purchase the Acquired Assets and assume the
Assumed Liabilities from Sellers, and Sellers desire to sell, convey, assign and
transfer to Buyer, the Acquired Assets together with the Assumed Liabilities,
all in the manner and subject to the terms and conditions set forth in this
Agreement and in accordance with sections 105, 363, 365 and 1146 and other
applicable provisions of the Bankruptcy Code.
D. The Acquired Assets and Assumed Liabilities are assets and
liabilities of Sellers that are to be purchased and assumed by Buyer pursuant to
an order, in the form attached as Exhibit A or such other form satisfactory to
Buyer in its sole discretion (the "BANKRUPTCY SALE ORDER"), approving such sale
pursuant to sections 105, 363 and 365 of the Bankruptcy Code, which order will
include the authorization for the assumption by Sellers and assignment to Buyer
of the Acquired Contracts and liabilities thereunder under section 365 of the
Bankruptcy Code, all in the manner and subject to the terms and conditions set
forth in this Agreement and the Bankruptcy Sale Order and in accordance with
other applicable provisions of the Bankruptcy Code.
E. Concurrently with the execution of this Agreement, Buyer, Parent,
on behalf of Sellers, and The Huntington National Bank, as escrow agent (the
"ESCROW AGENT"), have entered into a performance escrow agreement (the
"PERFORMANCE ESCROW AGREEMENT") pursuant to which Buyer has deposited
$10,000,000 (the "PERFORMANCE DEPOSIT") with the Escrow Agent as security for
the performance of its obligations hereunder. The Performance Deposit shall be
held and disbursed in accordance with the terms of the Performance Escrow
Agreement and this Agreement.
F. The transactions contemplated by this Agreement are essential and
necessary to the confirmation of the Debtors' plan of liquidation.
STATEMENT OF AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing and their
respective representations, warranties, covenants and agreements herein
contained, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, Sellers, ISG and Buyer hereby agree as
follows:
ARTICLE 1. PURCHASE AND SALE OF THE ACQUIRED ASSETS
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Section 1.1. Transfer of Acquired Assets. At the Closing, and upon
the terms and conditions herein set forth, Sellers shall sell to Buyer, and
Buyer shall acquire from Sellers, all right, title and interest of Sellers in,
to and under the Acquired Assets, free and clear of all Liens other than
Permitted Liens. "ACQUIRED ASSETS" shall mean all of the properties and assets
of Sellers, wherever located, whether real or personal, tangible or intangible,
existing or hereafter acquired and whether or not reflected on the books or
financial statements of Sellers, excluding only the Excluded Assets, including,
without limitation:
(a) all Cash of any Seller;
(b) all owned real property ("OWNED REAL PROPERTY") and leased real
property (the "LEASED REAL PROPERTY," together with the Owned Real Property, the
"REAL PROPERTY") of any Seller, together with all appurtenant, subsurface and
mineral rights, licenses, rights-of-way, privileges and easements belonging to,
appertaining to or benefiting the Real Property in any way and all Improvements
erected thereon, including, without limitation, the Real Property listed on
Schedule 1.1(b);
(c) all (i) owned equipment, machinery, furniture, fixtures and
improvements, tooling and spare parts of any Seller (the "OWNED MACHINERY AND
EQUIPMENT"), including, without limitation, all Owned Machinery and Equipment
that is being stored, repaired, refurbished, modified or updated at a location
other than the Real Property and (ii) rights of any Seller to the warranties and
licenses received from manufacturers and sellers of the Owned Machinery and
Equipment;
(d) all (i) Sales Orders, (ii) Purchase Orders, (iii) except as set
forth on Schedule 1.2(a), all Contracts entered into by any Seller after the
Petition Date having post-Closing obligations not in excess of $100,000 and (iv)
all those Contracts to which any Seller is a party that are listed on Schedule
1.1(d) (such Sales Orders, Purchase Orders and other Contracts described in this
Section 1.1(d), collectively, the "ACQUIRED CONTRACTS");
(e) all accounts receivable and notes receivable of any Seller (the
"ACCOUNTS RECEIVABLE");
(f) all (i) Inventory of any Seller, including, without limitation,
all (A) Inventory held by third parties on a consignment basis, (B) Inventory
held by third-party processors, and (C) Inventory located on any Real Property,
including Inventory located at the locations listed on Schedule 1.1(f) and (ii)
rights of any Seller to the warranties received from suppliers with respect to
such Inventory (to the extent assignable) and related Claims;
(g) all Supplies of any Seller, including, without limitation, the Supplies
located on any Real Property or at the locations listed on Schedule 1.1(f);
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(h) all Intellectual Property and Technology of any Seller
(collectively, the "ACQUIRED INTELLECTUAL PROPERTY"), including, without
limitation, all rights to the name "Bethlehem Steel Corporation" and the
Intellectual Property and Technology listed on Schedule 1.1(h);
(i) all cars, trucks, fork lifts, railcars, other industrial vehicles
and other motor vehicles owned by any Seller ("OWNED MOTOR VEHICLES");
(j) all computer hardware and software owned by any Seller
(including, without limitation, process control software), including, without
limitation, the hardware and software listed on Schedule 1.1(j);
(k) to the extent assignable, all permits, authorizations and
licenses (collectively, the "PERMITS") issued to any Seller by any Government
and all pending applications therefor, including, without limitation, those
Permits set forth on Schedule 1.1(k);
(l) except for the Employment Records or as covered by the
attorney-client privilege, copies or originals of all books, files, documents
and records owned by any Seller (in whatever format they exist, whether in hard
copy or electronic format), including, without limitation, customer lists,
historical customer files, accounting records, test results, product
specifications, plans, data, studies, drawings, diagrams, training manuals,
engineering data, safety and environmental reports and documents, maintenance
schedules and operating and production records, inventory records, business
plans, credit records of customers, marketing materials and archival materials
relating to the history of Parent (including, without limitation, originals of
photographs, where available, paintings, china and memorabilia relating to
Parent);
(m) except as otherwise provided in Section 5.3(f) and Section
5.3(i), all (i) of the equity interests listed on Schedule 1.1(m) as joint
venture equity interests (collectively, the "JOINT VENTURE INTERESTS") and to
the extent in the possession of Sellers, corporate seals, minute books, charter
documents, record books, copies of Tax and financial records and such other
files, books and records of Sellers relating to the organization, existence and
capitalization of the Joint Ventures;
(n) all goodwill of Sellers, but excluding any goodwill related to
the Ship Business;
(o) to the extent assignable, all air emissions credits, allowances,
allotment trading units and other creditable emission reductions that Sellers
have, are entitled to or applied for, including, without limitation, any air
emissions where Sellers have credit for or have banked, applied to bank or
agreed to sell or trade;
(p) all prepaid expenses and deposits made by or on behalf of any
Seller, including, without limitation, those set forth on Schedule 1.1(p);
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(q) except as provided in Section 1.2(c) and Section 1.2(d), all
Claims of any Seller;
(r) all Employee Benefit Plans listed on Schedule 1.1(r) and all
insurance policies, fiduciary liability policies, benefit administration
Contracts, actuarial Contracts, surety bonds, letters of credit and other
Contracts primarily relating to the Employee Benefit Plans listed on Schedule
1.1(r) (collectively, the "ACQUIRED BENEFIT PLANS"); and
(s) all of Sellers' rights arising prior to Closing in all proceeds
(whenever received) under any Contract of insurance or indemnity (or similar
agreement) relating to any Acquired Assets or any Assumed Liability.
Section 1.2. Excluded Assets. Notwithstanding anything to the
contrary in this Agreement, Sellers shall retain only the properties and assets
of Sellers set forth below (all such assets not being acquired by Buyer being
herein referred to as the "EXCLUDED ASSETS"):
(a) the assets of Sellers set forth on Schedule 1.2(a) (and any
proceeds from the disposition thereof);
(b) other than as set forth in Section 1.1(s), all of Sellers' rights
to insurance proceeds or other Contracts of insurance or indemnity (or similar
agreement) recoveries;
(c) all rights to or Claims for refunds, overpayments or rebates of
Taxes for periods (or portions thereof) ending on or prior to the Closing Date;
(d) all Claims (i) arising under the Bankruptcy Code or under similar
state law, (ii) filed or commenced in any court by any Seller as a plaintiff or
(iii) not relating to any Acquired Assets or any Assumed Liability;
(e) any asset of Sellers that otherwise would constitute an Acquired
Asset but for the fact that it is conveyed, leased or otherwise disposed of
during the time from the Execution Date until the Closing Date;
(f) except for the Acquired Contracts, all of the Contracts to which
any Seller is a party;
(g) all amounts due to Sellers from any Affiliate of Sellers (other
than amounts due to Sellers from any Joint Venture);
(h) all books, files and records owned by any Seller that relate to
current or former employees and other personnel, including, without limitation,
books, files and records that are related to medical history, medical insurance
or other medical matters and to workers' compensation and to the evaluation,
appraisal or performance of current or former employees and other personnel of
any Seller (collectively, the "EMPLOYMENT RECORDS");
(i) all of (i) Sellers' equity or other ownership interest in the
Ship Business (other than any interest in the M/V ▇▇▇▇▇▇▇ ▇▇▇▇ and the M/V ▇▇▇▇▇
Harbor), (ii) Sellers' right, title and interest in any assets currently or
formerly used primarily in the Ship Business and (iii) the goodwill relating to
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the Ship Business and any rights to represent to third parties that any Person
is the successor to the Ship Business;
(j) all (i) shares of capital stock of Sellers, (ii) shares of
capital stock or equity or other ownership interest of Sellers in any other
Person (other than the Joint Ventures) and (iii) corporate seals, minute books,
charter documents, stock transfer records, record books, original Tax and
financial records and such other files, books and records relating to any of the
Excluded Assets or to the organization, existence or capitalization of Sellers
or of any other Person (other than the Joint Ventures); and
(k) other than the Acquired Benefit Plans, all Employee Benefit Plans
sponsored by Sellers or any of Sellers' ERISA Affiliates (other than any Joint
Venture) (collectively, the "SELLER CONTROLLED GROUP") or their respective
predecessors or with respect to which the Seller Controlled Group or their
respective predecessors has made or is required to make payments, transfers or
contributions in respect of any present or former employees, directors,
officers, shareholders, consultants or independent contractors of Sellers or any
of Sellers' ERISA Affiliates or their respective predecessors (collectively, the
"SELLER BENEFIT Plans") and all insurance policies, fiduciary liability
policies, benefit administration contracts, actuarial contracts, trusts,
escrows, surety bonds, letters of credit and other contracts primarily relating
to any Seller Benefit Plan.
Section 1.3. Assumption of Liabilities. At the Closing, Buyer shall
assume, and thereafter pay, perform and discharge when due, all of the following
liabilities (the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations of Sellers arising after the
Closing relating to the Acquired Contracts, including, without limitation, all
cure costs required to be paid pursuant to section 365 of the Bankruptcy Code in
connection with the assumption and assignment of the Acquired Contracts (such
cure costs are, collectively, the "CURE COSTS");
(b) all liabilities and obligations arising after the Closing
relating to the Acquired Assets;
(c) except as set forth in Section 1.4(a), all liabilities and
obligations of any Seller relating to the Acquired Assets and arising under any
Environmental Law;
(d) the accounts payable of Sellers that exist at the Closing Date of
the type set forth on the Reference Balance Sheet (the "ACCOUNTS PAYABLE");
(e) all liabilities and obligations of Sellers as of the Closing Date
for real and personal property Taxes that are set forth on Schedule 1.3(e);
provided, however, that in no event shall the liabilities assumed under this
Section 1.3(e) exceed $42,000,000;
(f) all liabilities and obligations of Sellers as of the Closing Date
for vacation pay for any hourly employees of Seller in excess of $10,000,000;
provided, however, that in no event shall the liabilities assumed under this
Section 1.3(f) exceed $20,000,000;
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(g) fifty percent of all liabilities and obligations of Sellers as of
the Closing Date for vacation pay for any salaried employees of Sellers;
provided, however, that in no event shall the liabilities assumed under this
Section 1.3(g) exceed $6,500,000 (the liabilities described in this Section
1.3(g), together with the liabilities described in Section 1.3(e) and Section
1.3(f), are hereinafter collectively referred to as the "SPECIFIED
LIABILITIES");
(h) the operating liabilities of the Railroad Subsidiaries, Columbus
Coatings Company and Columbus Processing Company, LLC (excluding any collective
bargaining agreement or employee benefit plan not listed on Schedule 1.1(d) or
Schedule 1.1(r));
(i) all liabilities and obligations of the Railroad Subsidiaries
arising out of, or relating to, public or private street, bridge, underpass or
other crossings imposed by the regulations or orders of any regulatory or
licensing agency, or by agencies or governmental bodies responsible for
preserving the public health or safety; and
(j) all liabilities and obligations arising from or relating to the
Acquired Benefit Plans; and
(k) all liabilities and obligations for damages to Persons or
property (including, without limitation, liabilities and obligations to repair
or replace, or to refund the sales price (or any other related expenses))
relating to alleged defects in (i) products sold by Sellers after the Petition
Date or arising under warranties issued by Sellers after the Petition Date or
(ii) buildings or structures that have been manufactured by Sellers after the
Petition Date or that incorporate products sold or manufactured by Sellers after
the Petition Date.
Section 1.4. Retention of Liabilities. Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of
whatever nature, whether presently in existence or arising hereafter. All such
other liabilities and obligations shall be retained by and remain liabilities
and obligations of Sellers (all such liabilities are, collectively, the
"EXCLUDED LIABILITIES"). The Excluded Liabilities include, without limitation,
the following liabilities and obligations:
(a) all liabilities and obligations of Sellers for (i) any
environmental, health or safety matter (including, without limitation, any
liability or obligation arising under any Environmental Law) (A) relating to any
property or assets other than the Acquired Assets; (B) resulting from the
transport, disposal or treatment of any Hazardous Materials by any Seller on or
prior to the Closing Date to or at any location other than the Real Property;
and (C) relating to any personal injury of any Person resulting from exposure to
Hazardous Materials or otherwise, where such exposure or other event or
occurrence occurred on or prior to the Closing Date and (ii) any fine or other
monetary penalty imposed on or prior to the Closing Date by any Government for
acts or omissions of any Seller or any Joint Venture relating to any
environmental, health or safety matter;
(b) all liabilities and obligations for damages to Persons or
property (including, without limitation, liabilities and obligations to repair
or replace, or to refund the sales price (or any other related expenses))
relating to alleged defects in (i) products sold by Sellers on or prior to the
Petition Date or arising under warranties issued by Sellers on or prior to the
Petition Date or (ii) buildings or structures that have been manufactured by
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Sellers on or prior to the Petition Date or that incorporate products sold or
manufactured by Sellers on or prior to the Petition Date;
(c) except as set forth on Schedule 1.1(d), all liabilities and
obligations of Sellers under any collective bargaining Contract or other
Contract with any labor union or any employment Contract or severance Contract;
(d) except as provided in Section 1.3(f), Section 1.3(g), Section
1.3(h) and Section 1.3(j), all liabilities and obligations of Sellers to all
present and former employees of any Seller (and their respective spouses and
dependents), including, without limitation, (i) all liabilities for welfare
benefits as listed in Section 3(1) of ERISA, including medical insurance and
life insurance, worker's compensation and retirement, deferred compensation and
pension benefits and (ii) all liabilities in connection with the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN ACT"), the
continuation coverage requirements of Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA ("COBRA") and the Coal Act;
(e) all liabilities and obligations of Sellers or the Seller
Controlled Group relating to any Seller Benefit Plan;
(f) all liabilities and obligations of Sellers (or any predecessor
owner of all of the Acquired Assets) relating to the Ship Business (other than
any liability under any Acquired Contract with respect to the M/V ▇▇▇▇▇▇▇ ▇▇▇▇
or the M/V ▇▇▇▇▇ Harbor);
(g) all Asbestos Claims;
(h) all liabilities and obligations of Sellers (or any predecessor
owner of the Acquired Assets) arising under the Coal Act; and
(i) all liabilities and obligations of Sellers of whatever nature
whether presently in existence or hereafter arising, other than the Assumed
Liabilities.
Section 1.5. Non-Assignment of Contracts. Anything contained herein
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to assign any Acquired Contract or any Permit, if, notwithstanding the
provisions of sections 363 and 365 of the Bankruptcy Code, an attempted
assignment thereof, without the consent of any other Person party thereto, would
constitute a breach thereof or in any way negatively affect the rights of
Sellers or Buyer (unless the restrictions on assignment would be rendered
ineffective pursuant to Sections 9-406 through 9-409, inclusive, of the Uniform
Commercial Code, as amended (the "UCC")), as the assignee of such Acquired
Contract or Permit, as the case may be, thereunder. If, notwithstanding the
provisions of sections 363 and 365 of the Bankruptcy Code, such consent or
approval is required but not obtained, Sellers shall cooperate with Buyer
without further consideration in any reasonable arrangement designed to provide
Buyer with the benefits of or under any such Acquired Contract or Permit,
including, without limitation, enforcement (at Buyer's expense) for the benefit
of Buyer of any and all rights of Sellers against any Person party to the
Acquired Contract or Permit arising out of the breach or cancellation thereof by
such Person; provided, however, that after Closing Buyer shall be responsible
for all payment and other obligations under, and for all costs of enforcing
rights under, such Acquired Contract or Permit. Any assignment to Buyer of any
Acquired Contract or Permit that shall, notwithstanding the provisions of
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sections 363 and 365 of the Bankruptcy Code, require the consent or approval of
any Person for such assignment as aforesaid shall be made subject to such
consent or approval being obtained.
Section 1.6. Identification of Additional Excluded Contracts;
Addition of Acquired Contracts.
(a) Sellers shall, as promptly as possible and in any event no later
than March 31, 2003, supplement Schedule 1.1(d) to list any Recorded Cure Cost
not provided on such schedule on the Execution Date.
(b) At any time prior to the Closing Date, Buyer may designate as an
Excluded Asset any Acquired Contract that was entered into by Sellers on or
prior to the Petition Date (any Contract so designated pursuant to this Section
1.6, an "EXCLUDED CONTRACT").
(c) If at any time the Bankruptcy Court determines, pursuant to the
procedures set forth in the Bankruptcy Sale Order or otherwise, or any party to
an Acquired Contract asserts in any motion or pleading with the Bankruptcy Court
that, the Cure Cost required to be paid in connection with the assumption and
assignment of any Acquired Contract that is not set forth on Schedule 1.6(c)
exceeds the Cure Cost set forth on Schedule 1.1(d) for such Acquired Contract,
then Buyer on or prior to the date that is the earlier of (i) 60 days after the
Closing Date and (ii) the date that is 20 days prior to the scheduled date of
the hearing to confirm Debtors' plan of liquidation or reorganization (each as
defined in chapter 11 of the Bankruptcy Code) may designate such Acquired
Contract as an Excluded Contract.
(d) If the Consent to the assignment of any Joint Venture Interest is
not obtained by the Closing, then any Contract between such Joint Venture and
any Seller shall automatically become an Excluded Contract.
(e) Promptly upon designation of an Excluded Contract as an Excluded
Asset pursuant to Section 1.6(b), Section 1.6(c) or Section 1.6(d), (i) Schedule
1.1(d) shall be amended to exclude the Excluded Contract, (ii) the Excluded
Contract shall become an Excluded Asset for all purposes of this Agreement and
(iii) all liabilities and obligations under the Excluded Contract shall be
Retained Liabilities for all purposes of this Agreement.
(f) Buyer shall have the right to, at any time prior to Closing,
designate either or both of the CCC Loan and the CCR Loan as an Acquired
Contract. In the event of such designation, (i) Section 1.1(d) shall be amended
to include the Acquired Contract, (ii) the CCC Loan or the CCR Loan, as the case
may be, shall become an Acquired Contract for all purposes of this Agreement;
provided, that, as of the Closing, all consents necessary to assign the CCC Loan
or the CCR Loan, as the case may be, to Buyer shall have been obtained and
Sellers shall have been released from all liabilities and obligations under the
CCC Loan or the CCR Loan, as the case may be, and (iii) payment of all amounts
due under, and the satisfaction of all liabilities and obligations arising after
the Closing with respect to, the CCC loan or the CCR Loan, as the case may be,
shall be Assumed Liabilities for all purposes of this Agreement.
8
(g) The parties will act in a commercially reasonable manner to
identify Contracts which by mutual agreement will be added to Schedule 1.1(d)
between the Execution Date and the Closing.
(h) Sellers shall make such filings with the Bankruptcy Court as may
be necessary or desirable to effect the provisions of this Section 1.6.
Section 1.7. Transition Services Agreement. The parties shall
negotiate in good faith, agree on and execute prior to Closing the Transition
Services Agreement, which Transition Services Agreement shall set forth the
nature, scope, extent and duration of (i) Sellers' access to and use of the
Acquired Assets (including, without limitation, access to and use of the
Acquired Assets listed in Schedule 1.7) as may be necessary to conduct Sellers'
business and meet its legal obligations after Closing and consistent with
Buyer's ability to use the Acquired Assets to operate the business being
acquired pursuant to this Agreement and (ii) such Sellers' services, if any, as
may be reasonably requested by Buyer. The Transition Services Agreement shall
provide that the party receiving the services under the Transition Services
Agreement shall reimburse the party providing the services for all third-party
costs incurred by the providing party in performing the requested services. All
services under the Transition Services Agreement shall be provided without
representation or warranty or liability to the other party.
ARTICLE 2. CONSIDERATION
Section 2.1. Purchase Price. The aggregate consideration for the sale
and transfer of the Acquired Assets will be (a) the amounts set forth in Section
2.2 (the "PURCHASE PRICE"), which will be payable in the form provided in
Section 2.2 and subject to adjustment as provided elsewhere in this Agreement
and (b) the assumption by Buyer of the Assumed Liabilities (such assumption,
together with the Purchase Price, the "TOTAL CONSIDERATION"). The Purchase Price
shall be payable in accordance with Section 3.3(b).
Section 2.2. Amount and Form of Purchase Price. Buyer shall pay the
Purchase Price in the following amounts and form:
(a) an amount in cash equal to $798,600,000; provided, however, that
(i) such amount shall be increased on a dollar-for-dollar basis by an amount
equal to all principal payments on the Capital Leases and all payments on the
Operating Leases as set forth on Schedule 2.2(a) that are actually made by
Sellers on or after December 31, 2002 through the Closing Date (the
"AMORTIZATION Amount"), if the Bankruptcy Court determines, pursuant to the
procedures set forth in the Bankruptcy Sale Order or otherwise, that the
aggregate Cure Costs required to be paid in connection with the assumption and
assignment of the Acquired Contracts set forth on Schedule 1.6(c) exceeds
$40,108,345, then such amount shall be reduced by the amount of such excess,
(iii) if the outstanding principal amount under the DIP Facility as of the
Closing Date (the "DIP PAYOFF AMOUNT") as set forth in the Liabilities
Certificate is less than $280,720,962, then such amount shall be decreased by
the shortfall and (iv) such amount shall be decreased on a dollar-for-dollar
basis by an amount equal to any indebtedness of any Seller assumed by Buyer in
accordance with Section 1.6(f) under either (x) the Loan and Security Agreement,
dated as of November 18, 1999, between Columbus Coatings Company and Columbus
Steel Facility, LLC, as amended from time to time in accordance with its terms
(the "CCC LOAN") or (y) the Credit Agreement, dated as of March 14, 1996, among
9
Chicago Cold Rolling, LLC, the Lenders named therein and Bank of America, N.A.
(f/k/a Nationsbank, N.A.), as Agent (the "CCR LOAN");
(b) an amount in cash, not to exceed $36,000,000, equal to the
Payroll Liabilities, as such amount is set forth in the Liabilities Certificate;
(c) subject to Section 2.3, $120,000,000, which ISG shall cause to be
paid, as follows: (i) $40,000,000 on the 15th day after the Closing Date, (ii)
$40,000,000 on the 45th day after the Closing Date and (iii) $40,000,000 on the
75th day after the Closing Date; and
(d) a number of shares of ISG Class B Common Stock equal to the
quotient obtained by dividing (i) $15,000,000 by (ii) (x) in the event that ISG
completes a private placement of ISG Class B Common Stock on or prior to the
Closing Date, the per share price used in such private placement or (y) in the
event that ISG does not complete such a private placement on or prior to the
Closing Date, $92,500 (such shares, and any shares of ISG Common Stock into
which such shares convert, the "CONSIDERATION SHARES"); it being acknowledged
that the ISG Class B Common Stock is convertible into ISG Common Stock and that,
if the ISG Class B Common Stock is so converted while held by Sellers, such
shares of ISG Common Stock so received shall be deemed to have been received by
Sellers as the Consideration Shares pursuant to this Section 2.2(d), in lieu of
the ISG Class B Common Stock.
Section 2.3. Return of Excess Purchase Price. If after payment of all
Claims against Debtors in the Bankruptcy Cases that are entitled to secured or
priority treatment pursuant to sections 506 or 507 of the Bankruptcy Code,
Sellers possess any Cash or assets other than the Consideration Shares or
Avoidance Assets, then Sellers shall promptly, (a) in the case of Cash, repay
such amounts to Buyer by wire transfer of immediately available funds to an
account designated by Buyer and (b) in the case of any other assets (other than
any Avoidance Assets or any asset referred to in Section 1.2(g), Section 1.2(h),
Section 1.2(i), Section 1.2(j) and Section 1.2(k), or any other asset as
directed by Buyer), convey such assets to Buyer by delivery of instruments of
assignment and conveyance reasonably satisfactory to Buyer.
ARTICLE 3. CLOSING AND DELIVERIES
Section 3.1. Closing. The consummation of the transactions
contemplated hereby (the "CLOSING") shall take place at the offices of ▇▇▇▇▇
Day, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the third
Business Day following the satisfaction or waiver by the appropriate party of
all the conditions contained in Article 7, or on such other date or at such
other place and time as may be mutually agreed to by the parties (the "CLOSING
DATE"). All proceedings to be taken and all documents to be executed and
delivered by all parties at the Closing shall be deemed to have been taken and
executed simultaneously and no proceedings shall be deemed to have been taken
nor documents executed or delivered until all have been taken, executed and
delivered.
Section 3.2. Sellers' Deliveries.
(a) The sale, transfer, assignment and delivery by Sellers of the
Acquired Assets to Buyer shall be effected on the Closing Date by special or
limited warranty deeds (except in the case of Real Property owned by the
Railroad Subsidiaries, in which case, Sellers shall deliver quit claim deeds),
bills of sale, endorsements, assignments and other instruments of transfer and
conveyance (including an assignment of insurance proceeds from Sellers as
10
contemplated by Section 1.1(s)), reasonably satisfactory in form and substance
to counsel for Buyer.
(b) At the Closing, Parent, on behalf of Sellers, shall deliver:
(i) three executed counterparts of the Transition Services
Agreement;
(ii) a certificate (the "LIABILITIES CERTIFICATE") of the Chief
Financial Officer of Parent, dated as of the Closing Date,
setting forth as of the Closing and in sufficient detail
reasonably acceptable to Buyer, the aggregate amount of each
of (A) the DIP Payoff Amount, (B) the Payroll Liabilities
and (C) the Amortization Amount; and
(iii) a certificate, dated the Closing Date and signed by each of
the Chairman and Chief Executive Officer and the Secretary
of the Parent, certifying to the accuracy of the matters set
forth in Section 7.2(a) and Section 7.2(b).
Section 3.3. Buyer's Deliveries.
At the Closing:
(a) ISG and Buyer shall cause the Escrow Agent to pay the Performance
Deposit to Parent, on behalf of Sellers in accordance with the terms of the
Performance Escrow Agreement, by wire transfer of immediately available funds to
Parent's Account.
(b) ISG shall cause Buyer to pay, and Buyer shall pay by delivery to
Parent, on behalf of all Sellers and at the direction of all Sellers other than
Parent, and in the form provided in Section 2.2, (i) the cash portion of the
Purchase Price determined in accordance with Section 2.2(a) and Section 2.2(b),
reduced by the amount of the Performance Deposit, and (ii) a certificate
representing the Consideration Shares duly executed by ISG.
(c) Buyer shall deliver three executed counterparts of the Transition
Services Agreement.
(d) Buyer shall execute and deliver to Parent, on behalf of Sellers,
an instrument of assignment and assumption of liabilities with respect to the
Assumed Liabilities, reasonably satisfactory in form and substance to counsel
for Sellers.
(e) Buyer and ISG shall deliver a certificate, dated the Closing
Date, signed by the President and the Secretary of each of ISG and Buyer,
certifying to the accuracy of the matters set forth in Section 7.1(a) and
Section 7.1(b).
Section 3.4. Purchase Price Adjustment.
(a) As promptly as practicable, but no later than 90 days after the
Closing Date, Buyer shall cause to be prepared and delivered to Parent a closing
statement (the "CLOSING STATEMENT") and a certificate based on the Closing
Statement setting forth Buyer's good faith calculation of the Net Working
Capital as of the close of business on the Closing Date (the "CLOSING WORKING
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CAPITAL"), with appropriate supporting documentation. "NET WORKING CAPITAL"
means the excess of the (i) sum of Sellers' Cash, Inventory and Accounts
Receivable over (ii) the Accounts Payable, in each case as determined in
accordance with Parent's historic accounting practices, consistently applied
between December 31, 2002 and the Closing Date; provided, however, that for
purposes of determining Closing Working Capital, there shall be (x) added to
Sellers' Cash an amount equal to the sum of any amount expended by Sellers
between December 31, 2002 and the Closing Date (A) as a payment to a third party
to obtain a Consent; (B) in payment of real and personal property Taxes of any
Seller; (C) in severance payments to salaried employees of any Seller or (D) in
vacation payments to salaried employees of any Seller in connection with their
severance and (y) excluded from the relevant components of Net Working Capital
the amount of such relevant components comprising part of the Net Proceeds of
any sales of assets made by any Seller (other than sales of products, inventory
and obsolete equipment in the ordinary course of business and the sales of
assets identified on Schedule 3.4(a)).
(b) If Parent disagrees with Buyer's calculation of Closing Working
Capital delivered pursuant to Section 3.4(a), Parent, on behalf of Sellers, may,
within 30 days after receipt of the documents referred to in Section 3.4(a),
deliver a notice to Buyer disagreeing with such calculation and setting forth
Parent's calculation of such amount. Any such notice of disagreement shall
specify those items or amounts as to which Parent disagrees and the reasons for
Parent's disagreements, and Sellers shall be deemed to have agreed with all
other items and amounts contained in the Closing Statement and the calculation
of Closing Working Capital delivered pursuant to Section 3.4(a).
(c) If a notice of disagreement is duly delivered pursuant to Section
3.4(b), Buyer and Parent shall, during the 30 days following receipt of such
notice by Buyer, use their commercially reasonable efforts to reach agreement on
the disputed items or amounts in order to determine, as may be required, the
amount of Closing Working Capital, which amount shall not be less than the
amount thereof shown in Buyer's calculation delivered pursuant to Section 3.4(a)
nor more than the amount thereof shown in Parent's calculation delivered
pursuant to Section 3.4(b). If during such period, Buyer and Parent are unable
to reach such agreement, they shall promptly thereafter cause Ernst & Young, LLP
(the "ACCOUNTING REFEREE") to review this Agreement and the disputed items or
amounts and calculate Closing Working Capital, which amount shall not be less
than the amount thereof shown in Buyer's calculation delivered pursuant to
Section 3.4(a) nor more than the amount thereof shown in Parent's calculation
delivered pursuant to Section 3.4(b). In making such calculation, the Accounting
Referee shall consider only those items or amounts in the Closing Statement with
which Parent has disagreed and shall be guided by the provisions of this Section
3.4. The Accounting Referee shall deliver to Buyer and Parent, as promptly as
practicable (but in any case no later than 30 days from the date of engagement
of the Accounting Referee), a report setting forth such calculation. Such report
shall be final and binding upon Buyer and Sellers. The cost of such review and
report shall be borne by Buyer.
(d) Buyer and Sellers shall, and shall cause their respective Related
Persons to, cooperate and assist in the preparation of the Closing Statement and
the calculation of Closing Working Capital and in the conduct of the reviews
referred to in this Section 3.4, including, without limitation, the making
12
available to the extent necessary of books, records, work papers and personnel.
(e) "FINAL WORKING CAPITAL" means Closing Working Capital (i) as
shown in Buyer's calculation delivered pursuant to Section 3.4(a) if no notice
of disagreement with respect thereto is duly delivered pursuant to Section
3.4(b) or (ii) if such a notice of disagreement is delivered, (A) as agreed by
Buyer and Parent pursuant to Section 3.4(c) or (B) in the absence of such
agreement, as shown in the Accounting Referee's calculation delivered pursuant
to Section 3.4(c).
(f) If the Final Working Capital is greater than or equal to
$981,000,000, then no adjustment shall be made to the Purchase Price pursuant to
this Section 3.4. If the Final Working Capital is less than $981,000,000 then
the Purchase Price shall be reduced by the amount of the difference. Such
reduction shall be effected (i) first, by reducing the amounts due pursuant to
Section 2.2(c) and unpaid at the time of the reduction, in the reverse order in
which such payments are to be made, and (ii) to the extent the reduction
described in clause (i) is less than the difference between $981,000,000 and
Final Working Capital, by payment of the balance by Parent by wire transfer of
immediately available funds to an account designated by Buyer, within three
Business Days of the determination of the Final Working Capital.
Section 3.5. Buyer's Right to Conduct an Audit of Inventory. Buyer
shall have the right to conduct, or cause to be conducted, at its expense, an
audit of the Inventory prior to the Closing Date solely for the purpose of
counting the Inventory for use in connection with Section 3.4. If Buyer elects
to conduct such an audit, (a) such audit shall be scheduled so as to minimize
unreasonable interference with Sellers' production, (b) Sellers shall make
available such personnel, records, systems, machinery, equipment and assistance
as Buyer shall reasonably request to undertake such audit and (c) Sellers'
representatives shall have the right to observe such audit. Buyer shall have the
right to use the results of any such audit of the Inventory in the preparation
of the Closing Working Capital.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Sellers. Sellers,
jointly and severally, represent and warrant to ISG and Buyer as follows:
(a) Corporate Organization. Each Seller and, to the Knowledge of
Sellers, each Joint Venture is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization (other than with
respect to the payment of prepetition franchise and similar Taxes). Each Seller
and, to the Knowledge of Sellers, each Joint Venture has all requisite
corporate, general partnership, limited partnership or limited liability company
(each a "BUSINESS ENTITY"), as applicable, power and authority to own its
properties and assets and to conduct its businesses as now conducted.
(b) Qualification to Conduct Business. Schedule 1.1(m) sets forth all
jurisdictions in which each Seller and, to the Knowledge of Sellers, each Joint
Venture is qualified to do business. Except as set forth on Schedule 1.1(m),
each Seller and, to the Knowledge of Sellers, each Joint Venture is duly
qualified to do business as a foreign Business Entity and is in good standing in
13
every jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification
necessary.
(c) Authorization and Validity. Each Seller has, or on the Closing
Date will have, as applicable, all requisite corporate or limited liability
company power and authority to enter into this Agreement and any Ancillary
Agreements to which such Seller is or will become a party and, subject to the
(i) Bankruptcy Court's entry of the Orders, (ii) receipt of or the effectiveness
of the approvals or exemptions from the Surface Transportation Board of the
transactions contemplated by this Agreement and (iii) receipt of all Consents,
to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and each Ancillary Agreement to which each Seller is or will
become a party and the performance of such Seller's obligations hereunder and
thereunder, has been, or on the Closing Date will be, duly authorized by all
necessary corporate or limited liability company action of such Seller, and no
other corporate or limited liability company proceedings on the part of such
Seller are necessary to authorize such execution, delivery and performance. This
Agreement has been, and each Ancillary Agreement to which any Seller is or will
become a party has been, or on the Closing Date will be, duly executed by such
Seller, and, subject to the Bankruptcy Court's entry of the Orders, constitute,
or will when executed and delivered constitute, such Seller's valid and binding
obligation, enforceable against such Seller in accordance with their respective
terms except as may be limited by bankruptcy or other laws affecting creditors'
rights and by equitable principles. The board of directors or board or managers
or members, as the case may be, of each Seller has resolved to request that the
Bankruptcy Court approve this Agreement and the transactions contemplated hereby
and each Ancillary Agreement to which any Seller is or will become a party.
Subject to the entry of the Bidding Procedures Order, Parent has full power and
authority to grant the Breakup Fee and the Expense Reimbursement.
(d) Reports; Financial Statements. Since January 1, 2002, Parent has
filed all reports, registration statements, proxy statements and other
materials, together with any amendments required to be made with respect
thereto, that were required to be filed with the SEC under the Securities Act or
the Exchange Act (all such reports and statements are, collectively, the "PARENT
REPORTS"). As of their respective dates, the Parent Reports complied in all
respects with all of the statutes and published rules and regulations enforced
or promulgated by the SEC and did not as of the date of filing thereof (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) with the SEC contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(ii) Each of the financial statements (including the related
notes) included in the Parent Reports presents fairly, in all material respects,
the consolidated financial position and consolidated results of operations and
cash flows of Parent and its consolidated subsidiaries as of the respective
dates or for the respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods involved except as otherwise noted
therein, and subject, in the case of the unaudited interim financial statements,
to the absence of notes and normal year-end adjustments that have not been and
are not expected to be material in amount. All of such Parent Reports, as of
their respective dates (and as of the date of any amendment to the respective
14
Parent Report), complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(iii) The Net Working Capital of the Business at December 31,
2002 was $991,000,000.
(e) No Conflict or Violation. Subject to the (i) receipt of all
Consents, (ii) Bankruptcy Court's entry of the Orders and (iii) receipt of or
the effectiveness of the approvals or exemptions from the Surface Transportation
Board of the transactions contemplated by this Agreement, the execution,
delivery and performance by each Seller of this Agreement and each Ancillary
Agreement to which it is or will become a party do not and will not (A) violate
or conflict with any provision of the Certificate or Articles of Incorporation,
the Certificate of Formation, By-laws or Operating Agreement (or equivalent
documents), as applicable, of such Seller, (B) violate any provision of law, or
any order, judgment or decree of any Government applicable to such Seller, (C)
result in or require the creation or imposition of any Liens (other than
Permitted Liens) on any of the Acquired Assets, (D) violate or result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contract (x) entered into after the Petition Date and to which any
Debtor Seller is a party, by which any Debtor Seller is bound or to which the
assets of any Debtor Seller is subject, (y) to which any non-Debtor Seller is a
party, by which any non-Debtor Seller is bound or to which the assets of any
non-Debtor Seller is subject and (E) to the Knowledge of Sellers, violate or
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contract to which any Joint Venture is a party, by which any
Joint Venture is bound or to which the assets of any Joint Venture is subject.
(f) Subsidiaries. Schedule 1.1(m) sets forth a true and complete (i)
list of each Person in which Parent owns, directly or indirectly, any equity
interests other than any equity interests (A) held by any Employee Benefit Plans
or (B) held by any Joint Venture and (ii) for each such Person, a list of all
equity owners and the amount of equity owned by each such owner. Schedule 4.1(f)
lists each non-Debtor Seller and each Joint Venture in which any Seller had an
equity interest in excess of 50% as of July 20, 1992.
(g) Consents and Approvals. Schedule 4.1(g) sets forth a true and
complete list of each consent, waiver, authorization or approval of any Person
and each declaration to or filing or registration with any such Government that
is required in connection with the execution and delivery by Sellers of this
Agreement and each Ancillary Agreement to which any Seller is or will become a
party or the performance by Sellers of their obligations hereunder or
thereunder, including, without limitation, any and all consents and approvals
that are required to be obtained, or rights of first refusal, first offer or
other similar preferential rights to purchase that are required to be complied
with, in connection with the assignment or transfer of any Acquired Contracts,
Permits, Joint Venture Interests or Information Technology to Buyer in
accordance with the terms of this Agreement, provided, however, that Sellers
shall not be required to comply with any bulk sale rule that relates to any
Taxes of Sellers (collectively, the "CONSENTS").
(h) Compliance with Laws. Except as set forth on Schedule 4.1(h)(i),
each Seller and, to the Knowledge of Sellers, each Joint Venture is in
compliance with all applicable laws, regulations, orders or other legal
requirements to which such Seller or such Joint Venture is subject. Except as
15
set forth on Schedule 4.1(h)(i), neither Sellers nor, to the Knowledge of
Sellers, the Joint Ventures have received written notice of any violation of any
law, regulation, order or other legal requirement and are not in default with
respect to any order, writ, judgment, award, injunction or decree of any
Government. Except as set forth on Schedule 4.1(h)(ii), no Seller nor, to the
Knowledge of Sellers, any Joint Venture is required to maintain any bond, letter
of credit or other similar financial assurance instrument or to satisfy any
financial assurance obligation.
(i) Litigation. Except as set forth on Schedule 4.1(i), there are no
claims, actions, suits, proceedings or investigations pending or, to the
Knowledge of Sellers, threatened, before any Government (i) that could
reasonably be expected to affect the ability of any Seller to consummate the
transactions contemplated by this Agreement and each Ancillary Agreement or (ii)
that could reasonably be expected to affect the ability of Buyer to conduct its
business and to operate the Acquired Assets or the Joint Ventures after the
Closing in substantially the same manner as currently conducted and operated by
Sellers. Except as set forth on Schedule 4.1(i), to the Knowledge of Sellers,
there are no claims, actions, suits proceedings or investigations pending or
threatened before any Government brought by or against any Joint Venture.
(j) Employee Benefits.
(i) Parent has provided to Buyer a true and complete list of all
employees of the Sellers as of January 1, 2003, who are not subject to a
collective bargaining agreement, together with their job titles and annual
salary and target annual bonus, if any.
(ii) To the Knowledge of Sellers, Schedule 4.1(j)(ii) sets forth
a true and complete list of all Employee Benefit Plans maintained by a Joint
Venture in respect of any present or former employees, directors, officers,
shareholders, consultants or independent contractors of such Joint Venture (or
its respective predecessors) and with respect to which such Joint Venture (or
its respective predecessors) has any obligation or liability (contingent or
otherwise) (collectively, the "JOINT VENTURE BENEFIT PLANS").
(iii) Except as set forth on Schedules 1.1(r) and 4.1(j)(ii), (A)
the PBGC has not instituted proceedings to terminate any Acquired Benefit Plan,
Joint Venture Benefit Plan or an Employee Benefit Plan sponsored by the Joint
Venture Controlled Group that is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA) or to appoint a trustee or administrator of any such
defined benefit plan, (B) no circumstances exist that constitute grounds under
Section 4042 of ERISA entitling the PBGC to institute any such proceeding, (C)
no liability to the PBGC or under Title IV of ERISA has been incurred or is
expected with respect to any such defined benefit plan that could result in
liability to any member of the Joint Venture Controlled Group or Buyer other
than for premiums pursuant to Section 4007 of ERISA which are not yet due and
payable and (D) no such defined benefit plan has been terminated by any member
of the Seller Controlled Group or Joint Venture Controlled Group. "JOINT VENTURE
CONTROLLED GROUP" shall include any trade or business (whether or not
incorporated) under common control within the meaning of Section 4001(b)(1) of
ERISA with the Joint Ventures or which together with the Joint Ventures is
treated as a single employer under Sections 414(b), (c), (m), (n) and (o) of the
Code, except that the Joint Venture Controlled Group shall not include any
member of the Seller Controlled Group. With respect to Employee Benefit Plans of
16
the Joint Venture Controlled Group, the foregoing representation contained in
this Section 4.1(j)(iii) shall be limited to the Knowledge of Sellers.
(iv) Columbus Processing Company, LLC, Columbus Coatings Company,
Chicago Cold Rolling, L.L.C. and, to the Knowledge of Sellers, the Joint
Ventures do not have nor have not had an obligation to contribute (whether
contingent or otherwise) to a "multiemployer plan" within the meaning of Section
3(37) or 4001(a)(13) of ERISA or Section 414(f) of the Code or to a "multiple
employer plan" described in Section 413(c) of the Code.
(v) With respect to each group health plan benefiting any current
or former employee of Sellers or any member of the Seller Controlled Group or,
to the Knowledge of Sellers, the Joint Ventures or any member of the Joint
Venture Controlled Group, each member of the Seller Controlled Group and, to the
Knowledge of Sellers, the Joint Venture Controlled Group has complied with the
requirements of COBRA.
(vi) Except as set forth on Schedules 1.1(r) and 4.1(j)(ii),
neither any Acquired Benefit Plan nor, to the Knowledge of Sellers, any Joint
Venture Benefit Plan has or has incurred an accumulated funding deficiency
within the meaning of Section 302 of ERISA or Section 412 of the Code, nor has
any waiver of the minimum funding standards of Section 302 of ERISA and Section
412 of the Code been requested of or granted by the IRS with respect to any
Acquired Benefit Plan or, to the Knowledge of Sellers, any Joint Venture Benefit
Plan, nor has any lien in favor of any Acquired Benefit Plan or, to the
Knowledge of Sellers, any Joint Venture Benefit Plan arisen under Section 412(n)
of the Code or Section 302(f) of ERISA.
(vii) Except as set forth on Schedules 1.1(r) and 4.1(j)(ii), no
Acquired Benefit Plan nor, to the Knowledge of Sellers, any Joint Venture
Benefit Plan provides benefits, including, without limitation, death or medical
benefits, beyond termination of service or retirement other than (A) coverage
mandated by law, (B) death or retirement benefits under any qualified Employee
Benefit Plan or (C) deferred compensation benefits reflected on the books of the
Sellers.
(viii) Each Acquired Benefit Plan and, to the Knowledge of
Sellers, each Joint Venture Benefit Plan has been maintained, operated and
administered in compliance with its terms and any related documents or
agreements and in compliance with all applicable laws.
(ix) Each Acquired Benefit Plan and, to the Knowledge of Sellers,
each Joint Venture Benefit Plan intended to be qualified under Section 401(a) of
the Code is so qualified and has heretofore been determined by the IRS to be so
qualified, and, except as set forth on Schedules 1.1(r) and 4.1(j)(ii), each
trust created thereunder has heretofore been determined by the IRS to be exempt
from Tax under the provisions of Section 501(a) of the Code, and nothing has
occurred since the date of any such determination that could reasonably be
expected to give the IRS grounds to revoke such determination.
(x) There are no claims, actions, suits, proceedings or
investigations pending or, to the Knowledge of Sellers, threatened, before any
federal or state court, Government or Person brought by or against any Acquired
Benefit Plan or, to the Knowledge of Sellers, any Joint Venture Benefit Plan or
affecting or relating to any Acquired Benefit Plan or, to the Knowledge of
Sellers, any Joint Venture Benefit Plan.
17
(k) Title to Acquired Assets.
(i) Subject to the entry of the Bankruptcy Sale Order, at the
Closing, Sellers will obtain good and marketable title to (subject to the
transfer by quit claim deeds of Real Property owned by the Railroad
Subsidiaries), or a valid and enforceable right by Contract to use, the Acquired
Assets which shall be transferred to Buyer free and clear of all Liens other
than Permitted Liens. Except for the Excluded Assets, the Acquired Assets
constitute all of the assets of Sellers and are adequate to conduct the
respective businesses of each of the Sellers as currently conducted.
(ii) Except as set forth on Schedule 4.1(k)(ii), to the Knowledge
of Sellers, the assets used or held for use in the respective businesses of each
of the Joint Ventures are adequate to conduct such businesses as currently
conducted.
(l) Intellectual Property. Schedule 1.1(h) is a report generated from
the computer system used by Sellers as of the Execution Date to manage the
registered or pending registration forms of the Acquired Intellectual Property,
and such report is a complete and correct description of the owner, title (in
the case of patents and copyrights) or trademark (in the case of trademarks),
registration or application number, if in existence, and country of registration
or application of each such form of Acquired Intellectual Property. Except as
set forth on Schedule 4.1(l) any and all renewal and maintenance fees, annuities
or other similar fees due and payable in respect of the Acquired Intellectual
Property required to have been listed on Schedule 1.1(h) are not overdue.
(ii) To the Knowledge of Sellers, the use of any Technology (in
the businesses conducted by Sellers and the Joint Ventures (other than the Ship
Business)) does not infringe, constitute an unauthorized use of or otherwise
violate any Intellectual Property of any other Person. Except as set forth on
Schedule 4.1(i), to the Knowledge of Sellers, no other Person is infringing,
misappropriating or violating any of the Acquired Intellectual Property owned by
Sellers.
(iii) Except as set forth on Schedule 4.1(i), there has not been
and there are no claims or investigations pending or, to the Knowledge of
Sellers, threatened that (A) challenge the rights of any Seller in respect of
any Acquired Intellectual Property owned by Sellers or otherwise challenge the
registration, validity, enforceability, scope or sole and exclusive ownership of
the Acquired Intellectual Property owned by Sellers or (B) assert that the
operation of the businesses conducted by Sellers (other than the Ship Business)
or the use of Technology therein is or will be infringing or otherwise in
violation of any Intellectual Property of any other Person.
(iv) Except as set forth on Schedule 4.1(i), to the Knowledge of
Sellers, there has not been and there are no claims or investigations pending or
threatened that (A) challenge the rights of any Joint Venture in respect of any
Intellectual Property owned by any Joint Venture or otherwise challenge the
registration, validity, enforceability, scope or sole and exclusive ownership of
the Intellectual Property owned by any Joint Venture or (B) assert that the
operation of the businesses conducted by the Joint Ventures (other than the Ship
Business) or the use of Technology therein is or will be infringing or otherwise
in violation of any Intellectual Property of any other Person.
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(m) Information Technology. Schedule 1.1(j) sets forth a true and
complete list of all hardware, software, databases, computer equipment and other
information technology, owned, leased or licensed by Sellers (collectively, the
"INFORMATION Technology"). Schedule 1.1(j) includes a true and complete list of
all Contracts to which any Seller is a party relating to the current use of the
Information Technology. Subject to receipt of the Consents, and except for the
Excluded Assets, upon consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, Buyer will own, or have a valid and
enforceable right by Contract to use, all of the Information Technology that is
necessary to operate the businesses conducted by Sellers (other than the Ship
Business).
(n) Permits. Schedule 1.1(k) sets forth a true and complete list of
all Permits, and all pending applications therefor held by the Sellers. Except
as set forth on Schedule 1.1(k), each such Permit has been duly obtained, is
valid and in full force and effect, and is not subject to any pending or, to the
Knowledge of Sellers, threatened administrative or judicial proceeding to
revoke, cancel, suspend or declare such Permit invalid in any respect. None of
the operations of the businesses conducted by Sellers or, to the Knowledge of
Sellers, the Joint Ventures (other than the Ship Business) is being conducted in
a manner that violates any of the terms or conditions under which any Permit was
granted. Subject to the receipt of the Consents, the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements will
not result in the termination or suspension of any such Permit.
(o) Contracts. For each Acquired Contract set forth on Schedule
1.1(d), Schedule 1.1(d) also sets forth an estimate of (i) the cure cost, if
any, shown on Seller's records as a prepetition account payable (the "RECORDED
CURE COST") and (ii) all prepaid expenses and deposits made in connection with
such Acquired Contract. A copy of each material Contract to which any Seller is
a party (other than the Sale Orders identified on Schedule 4.1(o), which will be
furnished to Buyer after the date hereof) was provided or made available to
Buyer more than 10 days prior to the Execution Date. Except as set forth on
Schedule 4.1(o) and except for those defaults that will be cured in accordance
with the Bankruptcy Sale Order, neither Sellers nor any other party to any
Acquired Contract has commenced any action against any of the parties to such
Acquired Contract or given or received any written notice of any default or
violation under any Acquired Contract that has not been withdrawn or dismissed.
Except as set forth on Schedule 4.1(o), each Acquired Contract is, or will be at
the Closing, valid, binding and in full force and effect as against any Seller
party thereto, enforceable against such Seller in accordance with its terms,
except as may be limited by bankruptcy or other laws affecting creditors' rights
and by equitable principles.
(p) Environmental Matters. To the Knowledge of Sellers, except as set
forth on Schedule 4.1(p):
(i) There has been no release, threatened release, spill, leak,
discharge or emission of any Hazardous Materials to the air, surface water,
groundwater or soil of the Real Property or any real property now or previously
owned or leased by any non-Debtor Seller or Joint Venture requiring corrective
action under, or that is a violation of, any applicable Environmental Laws.
19
(ii) There are no pending or threatened Claims or investigations
that affect or apply to the Real Property, the Acquired Assets or the Joint
Ventures and that relate in any way to any Environmental Laws.
(iii) Sellers have provided or made available to Buyer copies of
all information in possession of Sellers or the Joint Ventures or under the
control of Sellers or the Joint Ventures necessary for an understanding of the
presence or migration of Hazardous Materials on, in or under the Real Property
or any real property now or previously owned or leased by any non-Debtor Seller
or Joint Venture.
(q) Insurance. Schedule 4.1(q) sets forth a correct and complete list
of all current insurance policies covering Sellers and a summary of each such
policy, including any limits of coverage, deductibles and premiums applicable to
such policy. Except as set forth on Schedule 4.1(q), all premiums required to be
paid under each insurance policy required to be set forth on Schedule 4.1(q)
have been paid when due, and all such policies are in full force and effect.
(r) Real Property. Except as set forth on Schedule 4.1(r), none of
Sellers have received any notice of (i) default from a landlord of any Leased
Real Property that might adversely affect the use of any Leased Real Property as
currently used by Sellers or (ii) threatened or contemplated condemnation or
eminent domain proceedings that might adversely affect the use of any Real
Property as currently used by Sellers. Sellers are not "foreign persons" within
the meaning of Section 1445(f)(3) of the Code.
(s) Accounts Receivable. Except as set forth on Schedule 4.1(s), all
Accounts Receivable of Sellers have been properly recorded on the Reference
Balance Sheet in accordance with GAAP consistently applied.
(t) Inventories. Except as set forth on Schedule 4.1(t), the
inventories of Sellers have been properly recorded on the Reference Balance
Sheet in accordance with GAAP consistently applied.
(u) Absence of Certain Changes. Except as set forth on Schedule
4.1(u) hereto, since December 31, 2002, the respective businesses of Sellers
and, to the Knowledge of Sellers, the Joint Ventures have been conducted in all
respects in the ordinary course, and there has not been:
(i) any damage, destruction or other casualty or loss (whether
or not covered by insurance) affecting any of the Acquired Assets or any portion
thereof that has not been repaired;
(ii) any Lien other than Permitted Liens placed or imposed on
any portion of the Acquired Assets of any non-Debtor Seller or, to the Knowledge
of Sellers, any assets or property of the Joint Ventures; or
(iii) any sale or other disposition of any assets used or useful
in the respective businesses of Sellers, other than sales of products, inventory
and obsolete equipment in the ordinary course of business.
20
(v) Absence of Undisclosed Liabilities. Composite Schedule
4.1(v) contains the most recent unaudited balance sheet of each Joint Venture in
the possession of any Seller. To the Knowledge of Sellers, for each Joint
Venture, except (i) as set forth in such balance sheet or in Parent's Reports,
(ii) as set forth on Schedule 4.1(v) or (iii) as both (A) is consistent with the
kinds and amounts of liabilities that have previously arisen in the businesses
of such Joint Venture and (B) has arisen in the ordinary course of business
since the date of such balance sheet, such Joint Venture has no liabilities,
whether or not required by GAAP to be recorded on a balance sheet, whether fixed
or contingent, known or unknown.
(w) Ship Business. No asset listed on any Schedule to Section 1.1 of
this Agreement is currently or was at any time in the past primarily used in the
Ship Business. Neither Parent nor any of its subsidiaries has been held liable
for any Asbestos Claims, other than for workers' compensation, by any
Government, or for violating any applicable asbestos threshold limit values or
permissible exposure limits by any Government. To the Knowledge of Sellers, none
of the Joint Ventures has been held liable for any Asbestos Claims, other than
for workers' compensation, by any Government or for violating any applicable
asbestos threshold limit values or permissible exposure limits by any
Government. Other than certain Claims, Interocean Shipping Company does not have
any assets or liabilities.
(x) Public Utility Matters.
(i) Other than Parent's status as a power marketer licensed by
the Federal Energy Regulatory Commission and other than the Railroad
Subsidiaries, no Seller is subject to regulation by any Government as a "public
utility," an "electric utility," a "gas utility," a "public utility holding
company," a "holding company," an "electrical corporation" or as a subsidiary or
affiliate of any of the foregoing, under (A) the Public Utility Holding Company
Act of 1935, as amended, the Federal Power Act, as amended and the Public
Utility Regulatory Policies Act of 1978, as amended ("PURPA") or (B) any similar
Government requirement.
(ii) (A) The Pennwood Power Station, located at Sparrows Point;
(B) the ▇▇▇▇▇ Harbor Generating Facility No. 1, located at Parent's ▇▇▇▇▇ Harbor
site and (C) the ▇▇▇▇▇ Harbor Generating Facility No. 2, located at Parent's
▇▇▇▇▇ Harbor site meet, and at all times have met, the requirements under PURPA
and the regulations promulgated thereunder including, without limitation, 18
C.F.R. Section 292.207, for classification as a Qualifying Facility (as such
term is defined in PURPA), since initially being certified as a Qualifying
Facility.
(y) Joint Ventures. To the Knowledge of Sellers, except as set forth
on Schedule 4.1(y), (i) there are no defaults under, or breaches by any of the
Joint Venture Sellers of, the organizational documents of any of the Joint
Ventures, (ii) the parties to the Joint Venture organizational documents have no
right to dissolve, liquidate, wind-up or otherwise terminate the Joint Ventures,
and such parties have not exercised any such dissolution, liquidation or winding
up or termination right and (iii) no such defaults or breaches will occur or
rights to dissolve or terminate will arise as a result of the consummation of
the transactions contemplated by this Agreement. Schedule 4.1(y) sets forth a
complete and accurate list of all Contracts to which any Joint Venture and any
Seller are parties or pursuant to which any Seller guaranteed the obligations of
any Joint Venture.
21
(z) Securities Law Matters.
(i) Parent acknowledges that the shares of ISG Class B Common
Stock to be issued as part of the Purchase Price have not been and will not be
registered under the Securities Act or any applicable state securities laws and
that the contemplated sale is being made in reliance on a private placement
exemption to accredited investors (as such term is defined in Rule 501(a)
promulgated under the Securities Act).
(ii) Parent has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the ISG Class B Common Stock and is able to bear the economic
risks of such investment.
(iii) Parent is an "accredited investor" as defined in Rule
501(a) promulgated under the Securities Act.
(iv) Parent acknowledges that upon the original issuance
thereof, and until such time as the same is no longer required under applicable
requirements of the Securities Act or applicable state securities laws or under
section 1145 of the Bankruptcy Code (at which time ISG shall remove such legends
promptly upon request of Parent), certificates representing the ISG Class B
Common Stock, and all certificates issued in exchange therefor or in
substitution thereof, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR BLUE SKY
LAWS. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SHARES UNDER THE SECURITIES ACT AND ANY STATE SECURITIES OR
BLUE SKY LAWS, UNLESS, IN THE OPINION (WHICH SHALL BE IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER)
OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, SUCH
REGISTRATION IS NOT REQUIRED.
In addition, such certificates shall also bear such other legends as counsel for
ISG reasonably determines are required under the applicable laws of any state or
necessary or desirable to perfect the security interest to be granted pursuant
to Section 5.7, until such time as the same is no longer required (at which time
ISG shall remove such legends upon request of Parent).
Section 4.2. Representations and Warranties with Respect to Buyer.
ISG and Buyer hereby, jointly and severally, represent and warrant to Sellers as
follows:
(a) Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
22
and has all requisite corporate power and authority to own its properties and
assets and to conduct its businesses as now conducted.
(b) Qualification to Conduct Business. Buyer is duly qualified to do
business as a foreign corporation and is in good standing in every jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business conducted by it makes such qualification necessary.
(c) Authorization and Validity. Buyer has, or on the Closing Date
will have, all requisite corporate power and authority to enter into this
Agreement and any Ancillary Agreement to which Buyer is or will become a party
and to perform its obligations hereunder and thereunder. The execution and
delivery of this Agreement and any Ancillary Agreement to which Buyer is or will
become a party and the performance of Buyer's obligations hereunder and
thereunder have been, or on the Closing Date will be, duly authorized by all
necessary corporate action by the Board of Directors of Buyer, and no other
corporate proceedings on the part of Buyer are necessary to authorize such
execution, delivery and performance. This Agreement has been, and any Ancillary
Agreement to which Buyer is or will become a party has been, or on the Closing
Date will be, duly executed by Buyer and constitute, or will constitute, when
executed and delivered, Buyer's valid and binding obligations, enforceable
against it in accordance with their respective terms except as may be limited by
bankruptcy or other laws affecting creditors' rights and by equitable
principles.
(d) No Conflict or Violation. The execution, delivery and performance
by Buyer of this Agreement and any Ancillary Agreement to which Buyer is or will
become a party do not and will not (i) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws of Buyer, (ii) violate any provision
of law, or any order, judgment or decree of any court or Government applicable
to Buyer and (iii) violate or result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contract to which Buyer is
party or by which Buyer is bound or to which any of Buyer's properties or assets
is subject.
(e) Consents and Approvals. Schedule 4.2(e) sets forth a true and
complete list of each consent, waiver, authorization or approval of any Person
and each declaration to or filing or registration with any such Government that
is required in connection with the execution and delivery by Buyer of this
Agreement and each Ancillary Agreement to which Buyer is or will become a party
or the performance by Buyer of its obligations hereunder or thereunder.
(f) Adequate Assurances Regarding Acquired Contracts. Buyer is
capable of satisfying the conditions contained in sections 365(b)(1)(C) and
365(f)(2)(B) of the Bankruptcy Code with respect to the Acquired Contracts.
(g) Investment Intent. Buyer is acquiring the Joint Venture Interests
for Buyer's own account for investment and not with a view to or for sale in
connection with any distribution thereof other than in compliance with the
Securities Act. Buyer shall not transfer any of the Joint Venture Interests,
except in compliance with the Securities Act. Buyer further acknowledges that
the Joint Venture Interests have not been registered under the Securities Act
and may not be transferred unless such transfer (i) is pursuant to an effective
registration statement under the Securities Act or (ii) is exempt from the
provisions of Section 5 of the Securities Act.
23
(h) Ability to Bear Risk. The financial situation of Buyer is such
that it can afford to (i) bear the economic risk of holding the Joint Venture
Interests for an indefinite period and (ii) suffer the complete loss of its
investment in the Joint Ventures.
Section 4.3. Representations and Warranties with Respect to ISG. ISG
and Buyer, jointly and severally, represent and warrant to Sellers as follows:
(a) Corporate Organization. ISG is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
ISG has all requisite corporate power and authority to own its properties and
assets and to conduct its businesses as now conducted.
(b) Qualification to Conduct Business. ISG is duly qualified to do
business as a foreign corporation and is in good standing in every jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business conducted by it makes such qualification necessary.
(c) Authorization and Validity. ISG has, or on the Closing Date will
have, all requisite corporate power and authority to enter into this Agreement
and any Ancillary Agreements to which ISG is or will become a party and to
perform its obligations hereunder and thereunder. The execution and delivery of
this Agreement and each Ancillary Agreement to which ISG is or will become a
party and the performance of ISG's obligations hereunder and thereunder, have
been, or on the Closing Date will be, duly authorized by all necessary corporate
action by the shareholders and Board of Directors of ISG, and no other corporate
proceedings on the part of ISG are necessary to authorize such execution,
delivery and performance. This Agreement has been, and each Ancillary Agreement
to which ISG is or will become a party has been, or on the Closing Date will be,
duly executed by ISG and constitute, or will constitute, when executed and
delivered, ISG's valid and binding obligation, enforceable against ISG in
accordance with its respective terms except as may be limited by bankruptcy or
other laws affecting creditors' rights and by equitable principles.
(d) Financial Statements. Prior to the Execution Date, ISG has
provided Sellers with its unaudited consolidated balance sheet as at December
31, 2002 and the related consolidated statement of operations and statement of
cash flows for the fiscal year then ended (the "ISG FINANCIAL STATEMENTS"). The
ISG Financial Statements were prepared in accordance with GAAP and fairly
present the financial position and the results of operations and cash flows of
ISG and its subsidiaries as of the dates and for the periods indicated, except
that the ISG Financial Statements are subject to normal year-end adjustments and
exclude footnote disclosures.
(e) No Conflict or Violation. The execution, delivery and performance
by ISG of this Agreement and each Ancillary Agreement to which ISG is or will
become a party do not and will not (i) violate or conflict with any provision of
the Certificate of Incorporation or the Bylaws of ISG, (ii) do not and will not
violate any provision of law, or any order, judgment or decree of any court or
Government applicable to ISG and (iii) violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contract to which ISG is a party or by which it is bound or to which any of its
properties or assets is subject.
24
(f) Subsidiaries. As of the Execution Date, Schedule 4.3(f) sets
forth a true and complete list of each Person in which ISG owns, directly or
indirectly, more than five percent of the equity (each an "ISG SUBSIDIARY"). As
of the Execution Date, except as disclosed on Schedule 4.3(f), ISG owns 100% of
the equity of each ISG Subsidiary.
(g) Consents and Approvals. Schedule 4.3(g) sets forth a true and
complete list of each consent, waiver, authorization or approval of any Person
and each declaration to or filing or registration with any such Government that
is required in connection with the execution and delivery by ISG of this
Agreement and each Ancillary Agreement to which ISG is, or will become, a party
or the performance of its obligations hereunder or thereunder.
(h) Compliance with Laws. Except as set forth on Schedule 4.3(h),
each of ISG and the ISG Subsidiaries is in compliance with all applicable laws,
regulations, orders or other legal requirements to which ISG or any ISG
Subsidiary is subject. Except as set forth on Schedule 4.3(h), neither ISG nor
any ISG Subsidiary has received written notice of any violation of any law,
regulation, order or other legal requirement and is not in default with respect
to any order, writ, judgment, award, injunction or decree of any national, state
or local court or Government or arbitrator, domestic or foreign, applicable to
the business, assets or properties of ISG or the ISG Subsidiaries. ISG is not
required to maintain any bond, letter of credit or other similar financial
assurance instrument or to satisfy any financial assurance obligation related to
the business of ISG and the ISG Subsidiaries or to the assets or properties of
ISG or the ISG Subsidiaries.
(i) Litigation. Except as set forth on Schedule 4.3(i), there are no
claims, actions, suits, proceedings or investigations pending or, to the
Knowledge of ISG, threatened, before any federal or state court, Government or
Person (i) brought by or against ISG, any of the ISG Subsidiaries or any Related
Person of ISG or any ISG Subsidiary, (ii) affecting or relating to the business
or any assets of ISG or any of the ISG Subsidiaries or (iii) that could
reasonably be expected to affect the ability of ISG or Buyer to consummate the
transactions contemplated by this Agreement and each Ancillary Agreement.
(j) Permits. ISG and the ISG Subsidiaries have obtained or have
pending applications for all Permits that are necessary to conduct the business
of ISG and the ISG Subsidiaries as currently conducted. Each Permit held by ISG
or any ISG Subsidiary has been duly obtained, is valid and in full force and
effect and is not subject to any pending or, to the Knowledge of ISG, threatened
administrative or judicial proceeding to revoke, cancel, suspend or declare such
Permit invalid in any respect. The Permits held or applied for by ISG and the
ISG Subsidiaries are sufficient and adequate to permit the continued lawful
conduct of the business of ISG and the ISG Subsidiaries as currently conducted
and none of the operations of the business of ISG and the ISG Subsidiaries is
being conducted in a manner that violates any of the terms or conditions under
which any Permit was granted. The consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements will not result in the
termination or suspension of any such Permit.
(k) Environmental Matters. To the Knowledge of ISG, except as set
forth on Schedule 4.3(k):
25
(i) There has been no release, threatened release, spill, leak,
discharge or emission of any Hazardous Materials to the air, surface water,
groundwater or soil of any real property owned or leased by ISG or the ISG
Subsidiaries requiring corrective action under, or that is a violation of, any
applicable Environmental Laws.
(ii) There is no pending or, to the Knowledge of ISG, threatened
civil, criminal or administrative action, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter that affects or
applies to any real property owned or leased by ISG or the ISG Subsidiaries and
that relates in any way to any Environmental Laws.
(iii) ISG has made available to Sellers copies of all
information in possession or control of ISG necessary for an understanding of
the presence or migration of Hazardous Materials on, in or under any real
property owned or leased by ISG or the ISG Subsidiaries.
(l) Insurance. Schedule 4.3(l) sets forth a correct and complete list
of all current insurance policies covering the assets and properties of ISG and
the ISG Subsidiaries. All premiums required to be paid under each insurance
policy required to be set forth on Schedule 4.3(l) have been paid when due, and
all such policies are in full force and effect.
(m) Capital Stock of ISG. (i) As of the Execution Date, the
capitalization of ISG consists of (A) 30,000 authorized shares of ISG Common
Stock, of which (1) 19,244 shares were issued and outstanding and (2) 2,573
shares were reserved for future issuance to employees pursuant to outstanding
stock options under the Stock Option Plans and (B) 5,000 authorized shares of
preferred stock.
(ii) Except upon the exercise of options issued in the ordinary
course pursuant to the Stock Option Plans as in effect on the Execution Date,
since November 23, 2002, no shares of ISG Common Stock have been issued. All of
the issued and outstanding shares of capital stock of ISG have been duly
authorized, validly issued and are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights. As of the Execution
Date, there are no outstanding agreements or commitments obligating ISG to
repurchase, redeem or otherwise acquire any outstanding shares or other equity
interests of ISG. At the Closing, Buyer will convey good and valid title to the
Consideration Shares constituting part of the Purchase Price to Parent, free and
clear of any Liens.
(iii) ISG has delivered to the Sellers copies of the documents
identified on Schedule 4.3(m) (collectively, the "STOCK OPTION PLANS"). Except
as set forth on Schedule 4.3(m), and other than (A) the 2,573 shares reserved
for issuance upon the exercise of awards granted under the Stock Option Plans
and (B) the awards granted pursuant to the Stock Option Plans, there are no
preemptive or similar rights on the part of any holders of any class of
securities of ISG. As of the Execution Date and except as contemplated by this
Agreement or as set forth on Schedule 4.3(m), there are no outstanding
subscriptions, options, warrants, calls, conversion or other rights, agreements
or commitments relating to the sale, issuance or voting of any shares of the
capital stock of ISG or to any securities or other instruments convertible into,
exchangeable for or evidencing the right to purchase any shares of capital stock
of ISG. Except as set forth on Schedule 4.3(m), the transactions contemplated by
this Agreement will not trigger the anti-dilution provisions or other price
adjustment mechanisms of any outstanding subscription, options, calls, warrants,
26
commitments, preemptive rights, rights of first refusal, demands, conversion
rights or other Contracts of any character or nature whatsoever under which ISG
is or may be obligated to issue or acquire shares of any of its capital stock.
(n) Validity of Equity Consideration. The Consideration Shares
issuable as part of the Purchase Price have been duly authorized for issuance
and, when issued and delivered in accordance with the provisions of this
Agreement, will be validly issued and fully paid and non-assessable, and the
issuance of such shares will not be subject to preemptive or other similar
rights. The shares of ISG Common Stock to be issued upon the conversion of the
Consideration Shares when issued and delivered in accordance with the terms of
the Consideration Shares will be validly issued and fully paid and nonassessable
and the issuance of such shares will not be subject to preemptive or similar
rights.
(o) Adverse Change. Since December 31, 2002, there has not been any
change or development in or affecting the business or operations of ISG or any
of the ISG Subsidiaries that has had, or would reasonably be expected to have,
an adverse effect on the business, properties or financial condition of ISG and
the ISG Subsidiaries.
(p) Absence of Undisclosed Liabilities. ISG and the ISG Subsidiaries
have no liabilities, other than liabilities (i) reflected or reserved against in
the ISG Financial Statements, disclosed in the notes thereto or not required by
GAAP to be so reflected, reserved or disclosed, (ii) arising after the date of
the ISG Financial Statements in the ordinary course of business consistent with
past practices, (iii) disclosed on Schedule 4.3(p) or (iv) that would not
reasonably be expected to have an adverse effect on the business, properties or
financial condition of ISG and the ISG Subsidiaries.
(q) Tax Matters. Except as set forth in Schedule 4.3(q), all Tax
Returns required to be filed by or on behalf of ISG and the ISG Subsidiaries
have been or shall be timely filed (subject to permitted extensions applicable
to such filing), all such Tax Returns are correct and complete and all Taxes
shown as due or payable on such Tax Returns have been or shall be paid within
the prescribed period or any extension thereof other than Taxes that are being
contested in good faith for which adequate reserves have been established in
accordance with GAAP and are reflected on ISG Financial Statements. ISG and the
ISG Subsidiaries have disclosed on their federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the Code. ISG and the
ISG Subsidiaries have no material Tax obligation (whether or not contingent)
with respect to any prior transaction. Neither ISG nor any of the ISG
Subsidiaries has constituted a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of shares qualifying for tax-free treatment under Section 355 of
the Code (i) in the two years prior to the Execution Date or (ii) in a
distribution that could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code), in
conjunction with the transactions contemplated by this Agreement.
(r) Intellectual Property. (i) To the Knowledge of ISG, the use of
any Technology (in the businesses conducted by ISG and the ISG Subsidiaries)
does not infringe, constitute an unauthorized use of or otherwise violate any
Intellectual Property of any other Person. To the Knowledge of ISG, no other
27
Person is infringing, misappropriating or violating any of the Intellectual
Property owned by ISG and the ISG Subsidiaries.
(ii) There are no claims or investigations pending or, to the
Knowledge of Sellers, threatened that (A) challenge the rights of ISG or any ISG
Subsidiary in respect of any Intellectual Property owned by ISG or any ISG
Subsidiary or otherwise challenge the registration, validity, enforceability,
scope or sole and exclusive ownership of the Intellectual Property owned by ISG
or any ISG Subsidiary or (B) assert that the operation of the businesses
conducted by ISG and the ISG Subsidiaries or the use of Technology therein is,
was or will be infringing or otherwise in violation of any Intellectual Property
of any other Person.
(s) Investment Intent. Buyer is acquiring the Joint Venture Interests
for Buyer's own account for investment and not with a view to or for sale in
connection with any distribution thereof other than in compliance with the
Securities Act. ISG shall not permit the transfer any of the Joint Venture
Interests, except in compliance with the Securities Act. ISG further
acknowledges that the Joint Venture Interests have not been registered under the
Securities Act and may not be transferred unless such transfer (i) is pursuant
to an effective registration statement under the Securities Act or (ii) is
exempt from the provisions of Section 5 of the Securities Act.
(t) Ability to Bear Risk. The financial situation of ISG is such that
it can afford to (i) bear the economic risk of holding the Joint Venture
Interests for an indefinite period and (ii) suffer the complete loss of its
investment in the Joint Ventures.
Section 4.4. Warranties Exclusive. The parties acknowledge that the
representations and warranties contained in Article 4 are the only
representations or warranties given by the parties and that all other express or
implied warranties are disclaimed. Without limiting the foregoing, ISG and Buyer
acknowledge that, except for the representations and warranties contained in
Section 4.1, the Acquired Assets are conveyed "AS IS," "WHERE IS" and "WITH ALL
FAULTS" and that all warranties of merchantability or fitness for a particular
purpose are disclaimed. WITHOUT LIMITING THE FOREGOING, ISG AND BUYER
ACKNOWLEDGE THAT, except for the representations and warranties contained in
Section 4.1, SELLERS AND SELLERS' AFFILIATES AND THEIR RESPECTIVE RELATED
PERSONS HAVE MADE NO REPRESENTATION OR WARRANTY CONCERNING ANY (A) USE TO WHICH
THE ACQUIRED ASSETS MAY BE PUT, (B) FUTURE REVENUES, COSTS, EXPENDITURES, CASH
FLOW, RESULTS OF OPERATIONS, FINANCIAL CONDITION OR PROSPECTS THAT MAY RESULT
FROM THE OWNERSHIP, USE OR SALE OF THE ACQUIRED ASSETS OR THE ASSUMPTION OF THE
ASSUMED LIABILITIES OR (C) OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE TO ISG
OR BUYER OR THEIR AFFILIATES OR RELATED PERSONS. ISG AND BUYER FURTHER
ACKNOWLEDGE THAT SELLERS AND SELLERS' AFFILIATES AND RELATED PERSONS HAVE MADE
NO REPRESENTATIONS OR WARRANTIES IN ANY ANCILLARY AGREEMENT.
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ARTICLE 5. COVENANTS AND OTHER AGREEMENTS
Section 5.1. Pre-Closing Covenants of Sellers. Sellers, jointly and
severally, covenant to ISG and Buyer that, during the period from the Execution
Date through and including the Closing Date:
(a) Conduct of Business Before the Closing Date. Unless otherwise
agreed by Sellers and Buyer, Sellers shall conduct each of their respective
businesses in all material respects in the ordinary course and shall use
commercially reasonable efforts to preserve intact their business or
organizations and relationships with third parties. Without the prior consent of
Buyer, Sellers shall not authorize any Joint Venture to take any action not in
the ordinary course of business. Except as set forth on Schedule 5.1(a) or as
required pursuant to the terms of this Agreement, without obtaining prior
consent of Buyer to take any actions not permitted or required by the following
clauses (i) - (xv), Sellers:
(i) shall not take or agree to commit to take any action that
would make any representation or warranty of Sellers inaccurate in any material
respect at, or as of any time prior to, the Closing Date;
(ii) shall not offer credit terms or trade promotions to any
customers except in all material respects in the ordinary course of business
consistent with past practices with respect to the applicable product lines of
any Seller or any Affiliate of Sellers or except to the extent reasonably
necessary to be competitive with competitors' product offerings;
(iii) shall not enter into any Contract that would have been
required to be listed on Schedule 4.1(o) had it been in existence on the date of
this Agreement (other than in the ordinary course of business);
(iv) shall not borrow funds from any Person or declare or pay
dividends, or make advances, to any Person, except for (A) intercompany
borrowing and related cash management practices in all material respects in the
ordinary course of business consistent with past practices and (B) borrowing
under the DIP Facility;
(v) shall keep in full force and effect, and pay all premiums
and other amounts due under, the insurance policies set forth on Schedule
4.1(q);
(vi) shall not make any payment (including any optional
prepayment) under the Secured Financings, the Capital Leases or the Operating
Leases, other than payments required to be made under the terms of such
Contracts, payments under the DIP Facility and adequate protection payments.
(vii) shall continue to take all actions consistent with past
practice and existing plans to comply, in all material respects, with
Environmental Laws, including, without limitation, disposal of all Hazardous
Materials;
(viii) shall not make any change in their general pricing
practices or policies or any material change in their credit or allowance
practices or policies, except to the extent reasonably necessary to be
competitive;
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(ix) shall not enter into any material amendment, modification,
termination (partial or complete) or grant any material waiver under or give any
material consent with respect to any Contract that is required (or had it been
in effect on the Execution Date would have been required) to be disclosed in the
Schedules to this Agreement;
(x) shall not commence or terminate any line of business;
(xi) shall not place or impose any Lien other than Permitted
Liens on any material portion of the Acquired Assets;
(xii) except as otherwise provided in Section 5.3(f) and Section
5.3(i), shall not sell or dispose of any Acquired Assets (including any asset of
Ontario Iron Company) other than (A) sales of products, inventory and obsolete
equipment in the ordinary course of business and (B) sales of the assets set
forth on Schedule 3.4(a);
(xiii) shall not enter into, amend, modify or terminate, in any
material respect, any Contract with respect to the Intellectual Property rights
of any Person;
(xiv) shall not, other than (A) as required by any Contract in
effect as of the Execution Date or (B) as required by law, amend any Acquired
Benefit Plan; and
(xv) subject to Section 11.2, shall not take any other action or
enter into any other transaction (including any transactions with Affiliates)
other than in the ordinary course of business or other than the transactions
contemplated by this Agreement or any Ancillary Agreement to which any Seller is
party.
(b) Cooperation. Sellers shall use commercially reasonable efforts to
(i) obtain the Consents, (ii) take, or cause to be taken, all action and to do,
or cause to be done, all things necessary or proper, consistent with applicable
law, to consummate and make effective as soon as possible the transactions
contemplated hereby and (iii) assist Buyer in the transfer of or obtaining any
Permits required to own the Acquired Assets. Sellers acknowledge that Buyer has
the right, in cooperation with Sellers, to take any and all commercially
reasonable actions in order to obtain the Consents without the incurrence of
cost or obligation to Sellers. In addition, Sellers shall use commercially
reasonable efforts to obtain, and assist Buyer in obtaining, such Consents;
provided, however, that (A) Buyer has no obligation to obtain the Consents
(other than to sign an assumption agreement, pay cure costs and provide adequate
assurances as contemplated by this Agreement), (B) Buyer will not incur any
liability under this Agreement or otherwise for Buyer's failure to take any
actions to obtain such Consents and (C) in no event will any failure of Buyer to
obtain such Consents be construed as a waiver by Buyer of any of the conditions
set forth in Section 7.2. Sellers shall use commercially reasonable efforts to
cause any assets sold pursuant to Section 5.1(a)(xii) (other than realty) to be
removed from the Real Property prior to the Closing Date.
(c) Access to Records and Properties. Buyer shall be entitled, at its
expense, and Sellers shall permit Buyer, to conduct such investigation of the
condition (financial or otherwise), business, assets, properties or operations
of Sellers and the Joint Ventures as Buyer shall reasonably deem appropriate.
Sellers shall (i) provide Buyer and its Related Persons full and complete access
at any reasonable time to all the facilities, offices and personnel of Sellers
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and the Joint Ventures and to all of the books and records of Sellers and the
Joint Ventures; (ii) cause Sellers' and the Joint Ventures' respective Related
Persons to furnish Buyer with such financial and operating data and other
information with respect to the condition (financial or otherwise), business,
assets, properties or operations as Buyer shall reasonably request; (iii)
provide Buyer and the Title Company with all customary documents, certificates
and instruments required by the Title Company to issue the title insurance
contemplated by Section 7.2(i); and (iv) permit Buyer to make such inspections
and copies thereof as Buyer may require, including, without limitation, to
conduct such environmental assessments and investigations of the Real Property
and surrounding real property as Buyer or its advisors and consultants may deem
reasonably necessary or appropriate and to conduct sampling and analysis of
environmental media to detect the presence or confirm the absence of
contamination, including any contamination which may be present in groundwater
and the sources of any such contamination; provided, however, that ISG and Buyer
shall (A) use commercially reasonable efforts to prevent any such investigation
from unreasonably interfering with the operation of the businesses of the
Sellers and the Joint Ventures and (B) solely in the case of the matters
identified in clause (iv) above, (x) ISG and Buyer shall indemnify and save
Sellers harmless from and against any and all loss, cost, expense or other
liability that they shall suffer arising out of such matter and (y) prior to
such entry on any Real Property, ISG or Buyer shall provide to Sellers
certificates of insurance verifying that ISG or Buyer and their respective
agents are insured under a policy of commercial general liability insurance
which has a single limit coverage of not less than $1,000,000 for wrongful death
or injury to any Person or Persons and not less than $200,000 for property
damage, and which policy names Sellers as additional insured parties. In
addition, at Buyer's expense, Sellers shall (I) consistent with their anti-trust
guidelines, provide Buyer and its Related Persons with full and complete access
to their customers and suppliers and the opportunity to make cooperative and
investigative sales calls on their customers; (II) provide Buyer and its Related
Persons office space at their facilities and access to such office space at all
times; and (III) permit Buyer and its Related Persons to talk to any employees
as Buyer deems appropriate for the purpose of determining the suitability of
such employees for employment by Buyer after the Closing Date; provided,
however, that ISG and Buyer shall use reasonable efforts to prevent any such
conversations from unreasonably interfering with the operations of Sellers'
business and such employee's duties with Sellers. Notwithstanding the foregoing,
Sellers shall provide access to any and all assets and information of the Joint
Ventures only to the extent that Sellers are permitted to do so by the Joint
Ventures and only to the extent that Sellers have possession of any such
information.
(d) Notice of Certain Events. Sellers shall promptly notify Buyer of,
and furnish Buyer any information it may reasonably request with respect to, the
occurrence of any event or condition or the existence of any fact that would
reasonably be expected to cause any of the conditions to Buyer's obligations to
consummate the transaction(s) contemplated by this Agreement or by any Ancillary
Agreement not to be fulfilled.
(e) Buyer Right to Advise. Buyer shall have the right to consult
with, and make specific recommendations to, Sellers regarding all aspects of
management and operations of Sellers and potential cost-cutting measures that
may be implemented prior to the Closing Date. Sellers agree to seriously
consider any such recommendations in good faith, to discuss such recommendations
and, where necessary, explain the reasons for not accepting them.
Notwithstanding the foregoing, nothing in this Agreement shall give Buyer or its
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Affiliates, directly or indirectly, the right to control or direct the
management and operations of any Seller or any Joint Venture prior to the
Closing Date. Prior to the Closing Date, Sellers shall exercise, consistent with
the terms and conditions of this Agreement, complete control, supervision and
decision-making authority over the management and operations of the Sellers.
(f) EDS Contract. Parent hereby waives each provision in the
Information Technology Partnership Agreement, dated as of May 2, 2002, by and
among Parent, Electronic Data Systems Corporation and EDS Information Services
LLC (collectively, "EDS") that prevents EDS or its Affiliates from negotiating
or entering into any Contract with ISG or Buyer or from transferring after the
Closing Date any or all personnel of EDS or its Affiliates assigned to Parent to
ISG or Buyer.
Section 5.2. Pre-Closing Covenants of ISG and Buyer. ISG and Buyer
covenant to Sellers that, during the period from the Execution Date through and
including the Closing Date:
(a) Conduct of Business Before the Closing Date. ISG shall, and shall
cause each of the ISG Subsidiaries to, conduct the business in all material
respects in the ordinary course and shall use commercially reasonable efforts to
preserve intact the business or organizations and relationships with third
parties and to keep available the services of the present employees of the
business. Except as set forth on Schedule 5.2(a) and as required or contemplated
pursuant to the terms of this Agreement, without obtaining the prior consent of
Parent to take any action not permitted by the following clauses (i) - (viii),
ISG shall not, and shall cause each of the ISG Subsidiaries not to:
(i) (A) declare or pay any dividends or make any other
distributions on its capital stock, except for dividends by an ISG Subsidiary in
the ordinary course of business or (B) split, combine or reclassify the ISG
Common Stock except in connection with the Public Offering or any Other
Offering;
(ii) sell, otherwise dispose of (including by way of merger,
consolidation, asset or stock disposition, joint venture or otherwise) or
encumber assets or businesses that are, individually or in the aggregate,
material to ISG, except for (A) dispositions in the ordinary course of business,
(B) other dispositions that would not impair or delay the consummation of the
transactions contemplated by this Agreement and (C) encumbrances contemplated by
the Financing;
(iii) acquire (whether by merger, consolidation, asset or stock
acquisition, joint venture or otherwise) any corporation or other business
organization, or any other material assets, other than (A) asset acquisitions in
the ordinary course of business and (B) other acquisitions that would not impair
or delay the consummation of the transactions contemplated by this Agreement;
(iv) (A) merge or consolidate with or into any Person (other
than mergers or consolidations among wholly owned ISG Subsidiaries or described
in clause (iii)) or (B) adopt a plan of liquidation, reorganization or
dissolution of ISG;
32
(v) incur, assume or guarantee long-term debt obligations, other
than the Financing and other long-term debt obligations that would not impair or
delay the consummation of the transactions contemplated by this Agreement and
that would not reasonably be expected to cause an ISG Material Adverse Change;
(vi) make any material change in the accounting methods or
practices followed by ISG and its consolidated ISG Subsidiaries (other than such
changes that have been required by law or GAAP);
(vii) make any amendment to the Certificate of Incorporation or
Bylaws of ISG or the comparable organizational documents of any ISG Subsidiary,
other than amendments (A) to create the ISG Class B Common Stock to be issued in
an Other Offering or in accordance with the terms hereof, or (B) that would not
in any way be adverse to the Sellers; or
(viii) agree or commit to do any of the foregoing.
(b) Financial Statements. ISG shall provide to Parent, as soon as
available, audited financial statements for the period ended December 31, 2002
and, as soon as reasonably practicable and in any event within 20 days after the
end of each month, an unaudited consolidated balance sheet of ISG and the ISG
Subsidiaries as of the end of such month and the related consolidated statement
of operations and statement of cash flows for the month then ended and for the
period from the beginning of such fiscal year to the end of such month, prepared
in accordance with GAAP, except for normal year-end audit adjustments and the
absence of footnote disclosures.
(c) Cooperation. Buyer, at its expense, shall use commercially
reasonable efforts to (i) obtain all consents and approvals of all Governments
and all other Persons, required to be obtained by Buyer to effect the
transactions contemplated by this Agreement or any Ancillary Agreement to which
Buyer is party and (ii) take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary or proper, consistent with applicable
law, to consummate and make effective as soon as possible the transactions
contemplated hereby.
(d) Adequate Assurances Regarding Acquired Contracts and Required
Orders. With respect to each Acquired Contract, Buyer shall provide adequate
assurance of the future performance of such Acquired Contract by Buyer. Buyer
shall promptly take all actions as are reasonably requested by Sellers to assist
in obtaining the Bankruptcy Court's entry of the Sale Order, including, without
limitation, furnishing affidavits, financial information or other documents or
information for filing with the Bankruptcy Court and making Buyer's Related
Persons available to testify before the Bankruptcy Court.
(e) Cure of Defaults. At Closing, Buyer shall pay the amount required
to cure all defaults and breaches of each Acquired Contract.
(f) Financing. ISG shall use its commercially reasonable efforts to
close the Financing contemplated by the Commitment Letter and obtain funds
thereunder necessary to consummate the transactions contemplated by this
Agreement. If for any reason ISG cannot obtain the Financing on the terms set
forth in the Commitment Letter, ISG shall use its commercially reasonable
33
efforts to obtain the Financing from other sources. In no event shall ISG be
required to accept overall terms and conditions for any such replacement
Financing that are substantially less favorable to ISG and Buyer than those set
forth in the Commitment Letter.
(g) Listing of Shares of ISG Common Stock. If the Public Offering
shall occur, ISG shall use its commercially reasonable efforts to cause the
shares of ISG Common Stock to be issued upon conversion of the ISG Class B
Common Stock to be approved for listing on the New York Stock Exchange, Inc. or
the National Association of Securities Dealers Automated Quotation System,
subject to official notice of issuance, prior to the conversion of the ISG Class
B Common Stock.
(h) Release of USWA Claims. Prior to the Closing, ISG shall obtain
the release of all claims in the Bankruptcy Cases for retiree welfare benefits
held by retirees (including their spouses and dependents) represented by the
USWA.
(i) Management of Expenses. Buyer and ISG shall use commercially
reasonable efforts to assist Sellers in minimizing the actual amount of the
Specified Liabilities and the Payroll Liabilities.
(j) Notice of Certain Events. ISG and Buyer shall promptly notify
Parent of, and furnish Parent any information it may reasonably request with
respect to, the occurrence of any event or condition or the existence of any
fact that would reasonably be expected to cause any of the conditions to
Sellers' obligations to consummate the transactions contemplated by this
Agreement or by any Ancillary Agreement not to be fulfilled.
(k) Environmental Permits. ISG shall periodically notify Sellers of
the status of ISG's efforts in obtaining or consummating the transfer to Buyer
of any Permit required to operate the Acquired Assets under applicable
Environmental Laws.
Section 5.3. Other Covenants of Sellers, ISG and Buyer.
(a) Litigation Assistance. From and after the Closing Date, at the
request and at the sole expense of Sellers, Buyer shall use commercially
reasonable efforts to secure the cooperation of Buyer's employees in Sellers'
defense of any Asbestos Claims and any postpetition Claims and in Sellers'
prosecution of any Claims.
(b) Improper Receipt of Payment. From and after the Closing Date, (i)
Sellers shall promptly forward to Buyer any and all payments received by Sellers
from customers or any other Persons, which constitute part of the Acquired
Assets and (ii) Buyer and ISG shall promptly forward to Sellers any and all
payments received by Buyer or ISG from customers or any other Persons, which
constitute part of the Excluded Assets.
(c) PBGC Release. Buyer and Sellers shall use commercially reasonable
efforts to obtain, effective as of the Closing, a written release, court order
or other document having similar effect of (i) all Claims, Liens and other
rights of the PBGC, any Seller Benefit Plan that is subject to Title IV of
ERISA, or any trustee thereof, against (A) the Acquired Assets; (B) the assets
of the Joint Ventures; (C) Buyer and its Affiliates; and (D) all non-Debtor
Sellers and (ii) all secured Claims and all Claims against Debtors and Debtors'
34
estates under the Bankruptcy Cases entitled to priority under section 507 of the
Bankruptcy Code, which Claims, Liens or other rights arise or may in the future
arise under Title II or Title IV of ERISA, the Code or otherwise, by reason of
any fact or circumstance related to the underfunding or termination of any
Seller Benefit Plan (the "PBGC RELEASE"). Buyer's commercially reasonable
efforts to obtain the PBGC Release shall include its negotiation and entry into
an agreement with the PBGC providing for Buyer's (i) delivery to the PBGC, at
the Closing, of ISG Class B Common Stock having a value of not less than
$25,000,000 and (ii) agreement that, if the Consideration Shares are not
distributed to the Prepetition Claimholders, then Buyer shall deliver to the
PBGC a number of shares of ISG Class B Common Stock at least equal to the number
of shares of ISG Class B Common Stock that the PBGC would have received upon
such distribution (as determined by the PBGC and Buyer).
(d) Management of Expenses. Sellers shall use commercially reasonable
efforts to minimize the actual amount of the Specified Liabilities and the
Payroll Liabilities.
(e) Disclosure Supplements. Sellers, on the one hand, shall promptly
notify Buyer of, and Buyer and ISG, on the other hand, shall promptly notify
Sellers of, and shall promptly supplement or amend the Schedules to this
Agreement with respect to, any matter that (i) may arise after the Execution
Date and that, if existing or occurring at or prior to the Execution Date, would
have been required to be set forth or described in the Schedules to this
Agreement or (ii) makes it necessary to correct any information in the Schedules
to this Agreement or in any representation and warranty of Sellers, or ISG and
Buyer, as applicable, that has been rendered inaccurate thereby. No supplement
or amendment to the Schedules to this Agreement or any delivery of Schedules
after the Execution Date, unless expressly acknowledged by Buyer or Parent, on
behalf of Sellers, as applicable, as a cure or modification, shall be deemed to
cure any inaccuracy of any representation or warranty made in this Agreement or
modify, affect or diminish Buyer's right to adjust the Purchase Price as
provided in Section 2.2(a)(ii), Buyer's right to exclude Contracts as provided
in Section 1.6(c) or Buyer's or Sellers' right to terminate this Agreement
pursuant to Section 8.1.
(f) Joint Ventures. Except as provided in Section 5.3(i) with respect
to Parent's interests in Hibbing Land Corporation and Bethlehem Hibbing
Corporation, Buyer shall use commercially reasonable efforts to secure, and
Parent shall use commercially reasonable efforts to assist Buyer in securing,
all Consents necessary to the transfer of Parent's and its subsidiaries'
interests in all Joint Ventures to Buyer at the Closing. If any such Consent is
not obtained by the Closing, then (i) the Closing shall nonetheless occur and
(ii) with respect to any Joint Venture where a Person has exercised its right to
acquire or any Person has otherwise purchased Parent's or any subsidiaries'
interest in a Joint Venture, Parent shall pay to Buyer, on or after the Closing
Date upon receipt thereof, any Net Proceeds received by Parent or its
subsidiaries from the transfer of such Joint Venture Interest. If for any reason
a Joint Venture Interest cannot be sold or transferred to Buyer or any other
Person, Sellers shall cause such Joint Venture Interest to be held in a
liquidating trust for the benefit of Buyer.
(g) Tax Appeals. As promptly as practicable after the Closing,
Sellers shall withdraw all Tax appeals pending against the Town of ▇▇▇▇▇ Harbor,
Indiana and ▇▇▇▇▇▇ County, Indiana.
35
(h) Bulk Sale Compliance. Notwithstanding anything contained in this
Agreement, ISG and Buyer hereby waive compliance with any bulk sale rule that
relates to any Taxes of Sellers.
(i) Transfer of Hibbing Entities. Sellers shall use commercially
reasonable efforts to (x) negotiate and conclude a transfer of either (i) all of
Parent's equity interests in Hibbing Land Corporation and Bethlehem Hibbing
Corporation or (ii) all or substantially all of Hibbing Land Corporation's and
Bethlehem Hibbing Corporation's assets to Cleveland-Cliffs Inc, an Ohio
corporation, or any of its Affiliates in exchange for consideration consisting
solely of cash or the assumption of certain liabilities (the "HIBBING SALE") on
terms satisfactory to Parent, Buyer and the Bankruptcy Court and (y) obtain any
Consent that may be necessary in connection therewith. Buyer shall promptly upon
request by Sellers directly pay or reimburse all expenses of Sellers in
negotiating and concluding the Hibbing Sale, including, without limitation, all
of Sellers' legal fees and expenses, whether or not the Hibbing Sale is
consummated. Sellers shall use commercially reasonable efforts to conclude the
Hibbing Sale on the Closing Date and to assist Buyer in any negotiations between
Buyer and Cleveland-Cliffs Inc or other parties ancillary to the Hibbing Sale.
If the Hibbing Sale is not concluded on the Closing Date, Sellers shall assign
all of Parent's equity interest in Hibbing Land Corporation and either (i) all
of Parent's equity interest in Bethlehem Hibbing Corporation or (ii) all or
substantially all of Bethlehem Hibbing Corporation's assets to Buyer and shall
assign any agreements related to the Hibbing Sale to Buyer. Sellers shall not
obligate themselves to conclude the Hibbing Sale or to agree to any payment to
Cleveland-Cliffs Inc in lieu of the Hibbing Sale absent the prior written
approval of Buyer and the Bankruptcy Court.
(j) Chapter 11 Filings. At Buyer's request, Sellers shall file cases
under chapter 11 of the Bankruptcy Code for any non-Debtor Seller; provided,
however, that in the case of any non-Debtor Seller other than a Railroad
Subsidiary, such request must be made within 15 days of the Execution Date (any
non-Debtor Seller with respect to which a chapter 11 filing is made pursuant to
this Section 5.3(j), a "NEWLY FILED ENTITY"). In such an event, Buyer shall pay
all costs and expenses of the estates of any Newly Filed Entity, as applicable,
entitled to treatment as administrative expenses pursuant to section 503 of the
Bankruptcy Code, including the funding of any pre-filing retainers. In
connection with Buyer's request to file any case and thereafter during the
pendency of any such case, Buyer and Sellers will keep each other reasonably
informed of facts relevant to the cases and their management, and Sellers shall
use commercially reasonable efforts to achieve Buyer's objectives in any such
case.
Section 5.4. Employment Covenants and Other Undertakings.
(a) Employee Benefits. Sellers shall retain all liabilities and
obligations in respect of their past, present and future employees under
applicable laws and the Seller Benefit Plans (which, for the avoidance of doubt,
do not include the Acquired Benefit Plans). Without limiting the generality of
the foregoing or of Section 1.4(d) or Section 1.4(e), Buyer shall have no
liability or obligation whatsoever under the Seller Benefit Plans nor shall
Buyer assume the sponsorship of the Seller Benefit Plans. Sellers shall retain
sponsorship and all of their rights and obligations under all of the Seller
Benefit Plans. Prior to or upon commencement of employment with Buyer of any
employees of Sellers hired by Buyer as of or after the Closing, Buyer shall
offer such employees and their dependents employee benefits on such terms and
36
conditions as Buyer may, in its sole discretion, determine, including, without
limitation, such terms and conditions as Buyer may in its sole discretion agree
with the USWA or with any other labor organization representing such employees.
(b) Future Employment. Buyer, in its sole discretion, may offer
employment from and after the Closing to such employees or former employees of
any Seller, and on such terms and conditions as required by an Acquired Contract
or as Buyer may determine, in its sole discretion, including, without
limitation, such terms and conditions as Buyer may in its sole discretion agree
with the USWA or with any other labor organization representing such employees.
(c) No Right to Employment. Nothing herein expressed or implied shall
confer upon any of the employees of the Sellers, the Buyer or any of their or
its respective Affiliates, any rights or remedies, including any right to
employment or continued employment for any specified period, of any nature or
kind whatsoever under or by reason of this Agreement. Except as required by law
or labor agreement, Buyer shall not be required to hire any employee of Sellers
after the Closing, and the employment of any such employees may be terminated
after the Closing in accordance with the applicable law or labor agreement.
(d) Employment Records. Except as otherwise provided in the
Transition Services Agreement and for those records required by law to be
maintained by Buyer, Sellers shall use commercially reasonable efforts to remove
the Employment Records from the Real Property as soon as practicable after
Sellers no longer require the use of such Employment Records. Any Employment
Records remaining on the Real Property after Sellers no longer require the use
of such Employment Records may be disposed of or destroyed by Buyer and without
any notice to any Person, except as otherwise required by law.
(e) Labor Matters. During the period between the Execution Date and
the Closing Date, Buyer and Sellers shall reasonably cooperate on labor matters
to effect the transactions contemplated by this Agreement and the orderly
transition of the operations of the Acquired Assets from Sellers to Buyer.
(f) Plant Closing Laws. Sellers shall provide a contingent notice to
all affected employees of Sellers in compliance with the WARN Act in a form
subject to the review and comment of Buyer.
(g) Other Obligations. Except as otherwise required by law, neither
Buyer nor its Affiliates shall be obligated to provide any severance, separation
pay, or other payments or benefits to any employee of any Seller on account of
any termination of such employee's employment on or before the Closing Date, and
such benefits (if any) shall be payable by Sellers.
(h) COBRA Notices. Sellers shall, either directly or through a third
party at Sellers' expense, provide all notices required to be provided by
Sellers under COBRA, subject to the review and comment of Buyer, including, but
not limited to, notices required as a result of the event described under Code
Section 4980B(f)(3)(F). Such notices shall include information with regard to an
individual's ability to receive the tax credit provided under Code Section 35.
Sellers shall at Buyer's reasonable request include with any notice described in
this Section 5.4(h) any materials requested by Buyer in a timely manner, which
materials shall be subject to Parent's review and comment. If the materials
37
included at Buyer's request with the notice described in this Section 5.4(h)
increase the cost of such notice, Buyer shall be responsible for paying the
amount equal to such increase in cost.
(i) Employee and Retiree Information. In connection with any
obligation Buyer may have to any employees, former employees and retirees of
Sellers after the Closing Date, Sellers shall provide to Buyer, in a format
reasonably acceptable to Buyer, the name, social security number and years of
service, most recent job position, seniority and most recent annual salary or
wage rate of each employee, retiree and any former employee with reemployment or
recall rights of Sellers and the name or names of each such employee's,
retiree's and former employee's spouse and dependents. Sellers shall provide to
Buyer additional information with regard to employees, former employees and
retirees of Sellers as Buyer may reasonably request in connection with any
obligation Buyer may have to such employees, former employees and retirees of
Sellers after the Closing Date.
(j) COBRA Continuation Coverage. Subject to the following sentence,
Sellers (or their designee) shall provide the continuation coverage pursuant to
COBRA, through a plan reasonably acceptable to ISG, to any of Sellers' former
employees who elect such coverage, if entitled to do so, under COBRA. Such
coverage shall continue until the earliest of (i) September 30, 2003, (ii) the
date on which the maximum coverage period ends pursuant to Sections
4980B(f)(2)(B)(i), (iii), (iv) and (v) of the Code and (iii) the date on which
ISG directs Sellers (or their designee) to stop providing such coverage;
provided, however, that such direction shall not cause Sellers to be in
violation of any agreement with the USWA. During the period that Sellers (or
their designee) provide continuation coverage pursuant to COBRA, Sellers (or
their designee) shall charge persons who elect such coverage the maximum premium
permitted under COBRA. ISG shall, as promptly as practical and in any event
within 15 days of receipt of the information described in the next sentence,
reimburse Sellers (or their designee) for the difference between the Sellers'
cost of providing the continuation coverage pursuant to this Section 5.4(j) in
connection with any claims arising after the Closing (including, without
limitation, the administrative cost) and the premiums for such coverage. Sellers
(or their designee) shall provide ISG with data sufficient to permit ISG to
provide the reimbursement in accordance with the foregoing sentence.
Section 5.5. Covenants Relating to Public Offering and the Financing.
From and after the Motion Date, in connection with (i) the Financing, (ii) the
Public Offering, and (iii) any Other Offering, Sellers shall cooperate with ISG
and Buyer in all reasonable respects in connection with efforts by ISG and Buyer
to complete the Financing, the Public Offering and any Other Offering, including
with respect to (x) the preparation and filing with the SEC of the Registration
Statement or, in the case of any private placement, a private placement
memorandum or similar document (an "OFFERING MEMORANDUM") and (y) access to all
financial and other information in possession of Sellers reasonably necessary in
connection therewith upon reasonable advance notice; (b) make available, upon
reasonable advance notice, the senior management of Sellers for their
participation in any "road shows" or other meetings with potential financing
sources or investors for the Financing, the Public Offering and any Other
Offering and assist with responding to questions and inquiries of financing
sources and investors regarding the Financing, the Public Offering and any Other
Offering; (c) upon the discovery or occurrence of any event which causes any
prospectus included in the Registration Statement or the Offering Memorandum (or
amendment or supplement thereto) to contain any untrue statement of a material
38
fact or to omit any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, promptly
notify ISG and Buyer of such event and use their commercially reasonable efforts
to assist ISG and Buyer in preparing and filing with the SEC an appropriate
amendment or supplement to the Registration Statement (and any prospectus
contained therein) or the Offering Memorandum and, in the case of the
Registration Statement, filing the same with the SEC; (d) deliver to ISG and
Buyer all financial statements of Sellers, including historical audited and
unaudited consolidated balance sheets and related combined statements of net
income and cash flows (including selected financial data), to be included or
incorporated into the Registration Statement, to the extent required by the
rules and regulations of the SEC (as interpreted by the SEC) to be included
therein (or in the case of a private placement, as would be required for a
registered offering of similar securities) which financial statements and other
information shall comply with the requirements of Regulation S-X and GAAP, and
such other financial statements and information as otherwise may be reasonably
requested by any financing source in connection with the Financing, the Public
Offering and any Other Offering for inclusion in the Registration Statement or
the Offering Memorandum not later than the date such financial statements and
information are so required; (e) if the rules and regulations of the SEC require
financial statements (including pro forma financial statements) to be provided
in the Registration Statement (or in the case of a private placement, as would
be required for a registered offering of similar securities) that do not conform
to the historical financial statements prepared by Sellers, deliver such
financial information and provide ISG and Buyer with such reasonable assistance,
as is required to prepare the additional financial statements required by the
SEC rules and regulations not later than the date such financial statements are
so required; (f) use commercially reasonable efforts to cause Sellers'
independent public accountants to conduct all reviews and provide all financial
reports and information required by the SEC rules and regulations, or as may
otherwise be customary for transactions such as the Financing, the Public
Offering and any Other Offering, including customary "comfort" letters, to be
completed in connection with the preparation of, or incorporated into, the
Registration Statement or the Offering Memorandum and to provide ISG and Buyer
with access to all work papers and documents used to conduct such reviews and
provide such financial reports and information; (g) reasonably assist ISG and
Buyer with the hosting of one or more meetings with ISG and Buyer's prospective
arrangers, agents and lenders in connection with the Financing, the Public
Offering and any Other Offering; (h) reasonably assist with the preparation of
one or more confidential memoranda and other marketing materials to be used in
connection with the syndication of the credit facilities contemplated by the
Financing, the Public Offering and any Other Offering; and (i) use commercially
reasonable efforts to assist ISG and Buyer in obtaining ratings of the credit
facilities contemplated by the Financing or any debt securities to be issued in
any Other Offering, including, without limitation, to cause Sellers' senior
management to meet with such ratings agencies. Sellers shall pay all
out-of-pocket expenses incurred by Sellers in taking any actions contemplated by
this Section 5.5.
Section 5.6. Covenants Relating to Railroad Subsidiaries.
(a) Buyer shall make or cause to be made all filings with and submissions to the
Surface Transportation Board under the ICC Termination Act, and all notices that
may be required in connection therewith, that are required in connection with
the consummation of the transactions contemplated by this Agreement in respect
of the acquisition of the Railroad Subsidiaries' assets. Sellers shall have the
39
right to review and approve all documents prior to filing. Buyer, at its own
expense, shall oppose any petition to reopen, reconsider or stay a regulatory
order or authorization approving or exempting the transactions contemplated
hereby, and shall defend any related judicial action (including any appeal of a
regulatory order or exemption). Buyer shall pay 100% of the filing fees in
connection with such filings and submissions. Sellers, at their own expense,
shall assist and support, and shall cause the Railroad Subsidiaries to assist
and support Buyer in the preparation of such filings and submissions, opposition
to any petition to reopen, reconsideration or stay or regulatory order or
authorization approving or exempting the transactions contemplated hereby, and
defense in any judicial action.
(b) The parties have entered into this Agreement on the premise that
the acquisitions of the Railroad Subsidiaries' assets will not be subject to
labor protective provisions imposed by the Surface Transportation Board. In the
event labor protective conditions should be imposed, subject to Buyer's right to
appeal and its rights under Section 5.6(a), Buyer shall be responsible for the
costs of, and shall reimburse Sellers for, any payments required to be made to
employees of Buyer or Sellers under the imposed conditions.
(c) If, as of the Closing Date, (x) the Railroad Subsidiaries can
convey all of their respective Acquired Assets free and clear of all Liens (and
the condition contained in Section 7.2(k) has been satisfied), but the approvals
or exemptions from the Surface Transportation Board of the transaction
contemplated by this Agreement in respect of the Railroad Subsidiaries' assets
shall not have been obtained or shall not have become effective with conditions
that are acceptable to Buyer in its reasonable discretion, or (y) if Buyer
exercises its right under Section 5.3(j) to cause Sellers to file a case under
chapter 11 of the Bankruptcy Code for any Railroad Subsidiary and Sellers have
not obtained the release described in Section 7.2(k)(i) or, alternatively, are
not able to convey the Railroad Subsidiaries' assets as contemplated by Section
7.2(k)(ii), then Buyer shall elect by notice to Sellers, with respect to any
Railroad Subsidiary, either to eliminate the assets of such Railroad Subsidiary
from the Acquired Assets without any adjustment to the Purchase Price, in which
event such Railroad Subsidiary shall cease to be a Seller or (ii) until the
later of the election in Section 5.6(c)(ii)(C) below or the first anniversary of
the Closing Date, require Sellers to (A) continue to operate the Railroad
Subsidiary in the ordinary course of business or as otherwise reasonably
directed by Buyer (which reasonable directions may include any staffing changes
not violative of any collective bargaining Contract to which any Railroad
Subsidiary is a party, but which may not constitute common control of the
Railroad Subsidiary and any railroads under the control of Buyers, under
regulations and decisions of the Surface Transportation Board); (B) enter into
any reasonable arrangement designed to provide Buyer with the benefits of
Sellers' ownership of the Railroad Subsidiaries' assets (which benefits shall
include both use of, and income from, Sellers' ownership of the Railroad
Subsidiaries' assets) and have Buyer bear the costs and expenses relating
thereto; and at Buyer's request, convey the Railroad Subsidiaries' assets, for
aggregate consideration of one dollar, to Buyer, any Affiliate of Buyer or any
other Person as Buyer may request immediately following the receipt or the
effectiveness of the required approvals or exemptions from the Surface
Transportation Board (or removal of any condition on the approval or exemption
that was not acceptable to Buyer) allowing for such conveyance to such Person,
by delivery of such bills of sale, instruments of assignment and assumption or
other instruments or documents in form and substance mutually acceptable to
Sellers and Buyer; provided, however, that in the case where Section 7.2(k)(ii)
40
is applicable, such actions by the Railroad Subsidiary shall be subject to such
Railroad Subsidiary obtaining any requisite Bankruptcy Court approvals.
Notwithstanding anything to the contrary herein, this Agreement shall not
constitute an agreement to assign the Railroad Subsidiaries' assets prior to the
receipt or the effectiveness of the required approvals or exemptions from the
Surface Transportation Board. In the event Buyer does not make the election
under Section 5.6(c)(ii)(C) on or before the first anniversary of the Closing
Date, then Buyer will be deemed to have made the election under Section
5.6(c)(i).
(d) Transition of Railroad Subsidiaries Operations. Each of the
Railroad Subsidiaries will make an inventory of all cars on their respective
lines as of 12:01 a.m. on the Closing Date (or such later closing date as may be
scheduled pursuant to Section 5.6(c)(ii)(C)), and shall have possession of all
of such cars transferred to the respective Buyer via the RMI car record system.
Section 5.7. Consideration Shares.
(a) The parties intend this Agreement to constitute a "plan" within
the meaning of Section 368(a)(1)(G) of the Code with respect to the transfer of
each Debtor Seller's Acquired Assets and Assumed Liabilities to Buyer.
(b) The Debtors will use their best efforts to, and Buyer shall use
commercially reasonable efforts to assist the Debtors to, formulate and obtain
confirmation of a plan of liquidation (as defined in chapter 11 of the
Bankruptcy Code) providing that, after payment in full of all Claims that are or
will be entitled to secured or priority treatment under sections 506 or 507 of
the Bankruptcy Code, the Consideration Shares and the Avoidance Assets shall be
distributed to the holders of prepetition general unsecured claims (the
"PREPETITION CLAIMHOLDERS") in satisfaction of such claims (a "POL").
(c) Sellers shall have the right to (i) transfer the Consideration
Shares solely to the Prepetition Claimholders pursuant to a POL at any time
prior to July 1, 2004, (ii) transfer the Consideration Shares to Buyer as
provided in Section 5.7(d) and (iii) grant the rights granted under Section
5.7(e). Except as provided in the prior sentence, Sellers shall not sell,
assign, transfer or otherwise convey, grant or suffer to exist any Lien on, or
any right of any Person in respect of, the Consideration Shares, or any interest
therein or any of them.
(d) If the Consideration Shares are not distributed solely to the
Prepetition Claimholders prior to July 1, 2004, or if at any time prior to July
1, 2004 any plan of liquidation or plan of reorganization (each as defined in
chapter 11 of the Bankruptcy Code) not meeting the criteria set forth in Section
5.7(b) (an "ALTERNATIVE PLAN") is confirmed, then on July 1, 2004 or the
effective date of the Alternative Plan as the case may be, Sellers, jointly and
severally, shall either (i) pay $15,000,000 to Buyer, by wire transfer of
immediately available funds to an account designated by Buyer or (ii) deliver
the Consideration Shares to Buyer.
(e) At the Closing, Sellers shall grant to Buyer, as security for
Sellers' performance of their obligations under this Section 5.7, a first
priority security interest in the Consideration Shares. Sellers acknowledge that
Sellers' obligations under this Section 5.7 are an expense necessary to the
administration of their estates and are entitled to administrative priority
senior to all administrative claims as provided in the Bankruptcy Sale Order.
41
The security interest to be granted by Sellers under this Section 5.7(e) shall
terminate upon confirmation of a POL by the Bankruptcy Court prior to July 1,
2004 or satisfaction by Sellers of their obligation under Section 5.7(c).
(f) Sellers shall use best efforts to cause the Bankruptcy Sale Order
to authorize the grant of the security interest by Sellers described in Section
5.7(e). At Buyer's request and expense, Sellers shall take any other actions
reasonably necessary to perfect the security interest granted pursuant to
Section 5.7(e) (other than to deliver possession of the Consideration Shares to
Buyer). In addition, Sellers hereby authorize Buyer, at Buyer's expense, to file
any financing statements against Sellers under the UCC that Buyer reasonably
deems necessary to perfect, when granted, the security interest to be granted by
Sellers pursuant to Section 5.7(e).
ARTICLE 6. TAXES
Section 6.1. Taxes Related to Purchase of Acquired Assets. All Taxes,
including, without limitation, all state and local Taxes in connection with the
transfer of the Acquired Assets, and all recording and filing fees
(collectively, "TRANSACTION TAXES"), that may be imposed by reason of the sale,
transfer, assignment and delivery of the Acquired Assets and that are not exempt
under section 1146(c) of the Bankruptcy Code, shall be borne 50% by Buyer and
50% by Sellers. Buyer and Sellers shall cooperate to (a) determine the amount of
Transaction Taxes payable in connection with the transactions contemplated under
this Agreement, (b) provide all requisite exemption certificates and (c) prepare
and file any and all required Tax Returns for or with respect to such
Transaction Taxes with any and all appropriate Government taxing authorities.
Section 6.2. Cooperation on Tax Matters. Buyer and Sellers shall
furnish or cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to the Acquired Assets and the Assumed
Liabilities as is reasonably necessary for the preparation and filing of any Tax
Return, claim for refund or other required or optional filings relating to Tax
matters, for the preparation for and proof of facts during any Tax audit, for
the preparation for any Tax protest, for the prosecution or defense of any suit
or other proceeding relating to Tax matters and for the answer to any Government
relating to Tax matters.
(b) Buyer shall retain possession of all accounting, business,
financial and Tax records and information (i) relating to the Acquired Assets or
the Assumed Liabilities that are in existence on the Closing Date and
transferred to Buyer hereunder and (ii) coming into existence after the Closing
Date that relate to the Acquired Assets or the Assumed Liabilities before the
Closing Date, for a period of at least three years from the Closing Date. Buyer
shall give Sellers notice and an opportunity to retain any such records in the
event that Buyer determines to destroy or dispose of them after such period. In
addition, from and after the Closing Date, Buyer shall provide access to Parent,
on behalf of Sellers, and its Related Persons (after reasonable notice and
during normal business hours and without charge), to the books, records,
documents and other information relating to the Acquired Assets or the Assumed
Liabilities as Parent may reasonably deem necessary to (i) properly prepare for,
file, prove, answer, prosecute and/or defend any such Tax Return, claim, filing,
tax audit, tax protest, suit, proceeding or answer or (ii) administer or
complete any cases under chapter 11 of the Bankruptcy Code of Parent or the
42
other Sellers. Such access shall include, without limitation, access to any
computerized information retrieval systems relating to the Acquired Assets or
the Assumed Liabilities.
Section 6.3. Purchase Price Allocation. (a) The Purchase Price shall
be allocated among all of Sellers in proportion to the relative fair market
values of each of their Acquired Assets, net of their Assumed Liabilities. A pro
rata portion of cash and Consideration Shares, if any, paid pursuant to this
Agreement shall be deemed received by each Seller for each of its Acquired
Assets, net of its Assumed Liabilities.
(b) If a sale contemplated under this Agreement by a Seller to Buyer
does not qualify as a transaction described in Section 368(a)(1)(G) of the Code,
then the portion of the Total Consideration allocated to that Seller shall be
further allocated among the Seller's Acquired Assets, in each case consistent
with Section 1060 of the Code in the manner agreed to by Parent and Buyer (the
"ALLOCATION"). Not less than 25 Business Days prior to the Closing Date, Buyer
shall deliver to Parent a proposed Allocation. Within 20 Business Days after
receipt of the proposed Allocation, Parent shall notify Buyer of any objections
it has to the proposed Allocation. If Parent fails to provide notice of its
objection to the Allocation within the 20-day period, then the proposed
Allocation will be deemed to be accepted by Sellers for purposes of this Section
6.3. After Buyer receives notice of any of Parent's objections to the
Allocation, Parent and Buyer shall use their commercially reasonable efforts to
agree on the Allocation on or prior to the Closing Date. If Buyer and Parent
cannot agree on the Allocation on or prior to the Closing Date, their disputes
relating to the Allocation shall be submitted to arbitration before the
Accounting Referee after the Closing. Where a dispute is submitted to the
Accounting Referee under this Section 6.3, the Accounting Referee shall make its
determination in writing as promptly as practicable (but in any case no later
than 30 days from the date of engagement of the Accounting Referee regarding
this dispute), which shall be binding upon the parties hereto. The cost of the
Accounting Referee's review and determination shall be borne equally by Buyer
and Parent. Sellers and Buyer shall cooperate in filing with the IRS their
respective Forms 8594 as provided for in Section 1060 of the Code on a basis
consistent with the Allocation and, except to the extent otherwise precluded by
law, the Allocation shall be reflected on any Tax Return required to be filed as
a result of the transactions contemplated hereby.
ARTICLE 7. CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES
Section 7.1. Conditions Precedent to Performance by Sellers. The
obligation of Sellers to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, at or before the Closing, of the
following conditions, any one or more of which (other than the conditions
contained in Section 7.1(c)) may be waived by Parent, on behalf of Sellers, in
its sole discretion:
(a) Representations and Warranties of Buyer and ISG. The
representations and warranties of ISG and Buyer made in Section 4.2 and Section
4.3 of this Agreement, in each case, shall be true and correct as of the
Execution Date and as of the Closing Date as though made by ISG and Buyer again
as of the Closing Date, except to the extent (i) such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct on and as of such
earlier date and (ii) any inaccuracies in such representations and warranties
would not, individually or in the aggregate, reasonably be expected to result in
an ISG Material Adverse Effect.
43
(b) Performance of the Obligations of ISG and Buyer. Each of ISG and
Buyer shall have performed in all material respects all obligations required
under this Agreement or any Ancillary Agreement to which it is party which are
to be performed by it on or before the Closing Date (except with respect to the
obligation to pay the Total Consideration in accordance with the terms of this
Agreement and any obligations qualified by materiality, which obligations shall
be performed in all respects as required under this Agreement).
(c) Governmental Consents and Approvals. The Bankruptcy Court shall
have entered the Bankruptcy Sale Order, the Bankruptcy Sale Order shall be in
full force and effect, and no order staying, reversing, modifying, vacating or
amending the Bankruptcy Sale Order shall be in effect on the Closing Date.
(d) No Violation of Orders. No preliminary or permanent injunction or
other order of any court or Government that declares this Agreement invalid or
unenforceable in any material respect or which prevents the consummation of the
transactions contemplated hereby shall be in effect.
(e) No Litigation. There shall not be pending or threatened in
writing by any Government any suit, action or proceeding, (i) challenging or
seeking to restrain, prohibit, alter or materially delay the consummation of any
of the transactions contemplated by this Agreement or (ii) seeking to obtain
from Sellers or any of their Affiliates any damages in connection with the
transactions contemplated hereby.
(f) PBGC Release. The PBGC Release shall have been obtained.
(g) Health Insurance. Sellers' obligation to provide health (other
than pursuant to COBRA) and life insurance benefits for retirees formerly
represented by the USWA shall have been terminated or shall terminate effective
no later than the Closing Date.
(h) No Material Adverse Effect. There shall not have occurred any
event, fact or circumstance, that has had, in the aggregate, an ISG Material
Adverse Effect.
(i) Closing Deliveries. Buyer shall have made the deliveries
contemplated under Section 3.3.
Section 7.2. Conditions Precedent to the Performance by ISG and
Buyer. The obligations of ISG and Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing, of the following conditions, any one or more of which (other than the
conditions contained in Section 7.2(c)) may be waived by Buyer, in its sole
discretion:
(a) Representations and Warranties of Sellers. The representations
and warranties of Sellers made in Section 4.1 of this Agreement shall be true
and correct as of the Execution Date and as of the Closing Date as though made
by Sellers again as of the Closing Date, except to the extent (i) such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be true and correct on and as of
such earlier date and (ii) any inaccuracies in such representations and
44
warranties would not, individually or in the aggregate, reasonably be expected
to result in a Seller Material Adverse Effect.
(b) Performance of the Obligations of Sellers. Sellers shall have
performed in all material respects all obligations required under this Agreement
or any Ancillary Agreement to which any Seller is party to be performed by
Sellers on or before the Closing Date (except with respect to any obligations
qualified by materiality, which obligations shall be performed in all respects
as required under this Agreement).
(c) Governmental Consents and Approvals. The Orders shall have been
entered and become Final Orders; provided, however, that the conditions
contained in this Section 7.2(c) shall be satisfied notwithstanding the pendency
of an appeal if (i) the effectiveness of the Bankruptcy Sale Order has not been
stayed and (ii) the sole reason that the Bankruptcy Sale Order has not become a
Final Order is because of an appeal challenging the transaction free and clear
of the liabilities described in Section 1.4(h).
(d) No Violation of Orders. No preliminary or permanent injunction or
other order of any court or Government that declares this Agreement invalid in
any material respect or prevents the consummation of the transactions
contemplated hereby shall be in effect.
(e) No Litigation. There shall not be pending or threatened in
writing by any Government any suit, action or proceeding, (i) challenging or
seeking to restrain, prohibit, alter or materially delay the consummation of any
of the transactions contemplated by this Agreement, (ii) seeking to obtain from
Buyer or any of its Affiliates any damages in connection with the transactions
contemplated hereby or (iii) seeking to prohibit Buyer or any of its Affiliates
from effectively controlling or operating any portion of the Acquired Assets.
(f) No Material Adverse Change. Since December 31, 2002, there shall
not have been any adverse change, or any development involving a prospective
adverse change, in or affecting the general affairs, management, financial
position or stockholders' equity of ISG, Parent or their respective subsidiaries
that is determined by any of the Agents (as defined in the Commitment Letter) in
their reasonable discretion to have had a Lender Material Adverse Effect.
(g) No Adverse Change in Capital Markets. Since the Execution Date,
there shall not have occurred any adverse change or disruption in the financial,
banking or capital markets (including, without limitation, the markets for loans
to or debt securities issued by companies similar to ISG, Buyer or Sellers)
which has had or would reasonably be expected to have a Lender Material Adverse
Effect, as such occurrence has been determined by UBS or GSCP (each as defined
in the Commitment Letter), in their reasonable discretion.
(h) Third Party Consents and Approvals. Those Consents listed on
Schedule 4.1(g)) as being closing conditions shall have been obtained.
(i) Title Insurance. The Title Company shall have issued (or advised
Buyer in writing that it will issue), upon Buyer's payment of the cost therefor
and all fees and expenses of the Title Company and upon Sellers' delivery of all
customary documents, certificates and instruments reasonably required by the
Title Company, an ALTA (or local equivalent) owner's policy of title insurance
or a signed marked up binder in respect thereof, dated the Closing Date for each
45
of the Owned Real Properties listed on Schedule 1.1(b) as requiring title
insurance, insuring in Buyer or its designee the interest being acquired by
Buyer in each property, subject only to Permitted Liens (specifically deleting
the standard exceptions other (i) than the standard survey exception except for
properties where Buyer has obtained a survey and (ii) the parties-in-possession
exception; provided, however, that Sellers shall nonetheless agree to make a
reasonable knowledge-based representation for the Title Company as to
parties-in-possession as part of the customary title affidavit requested by the
Title Company) and including such endorsements as are available in the
particular states in which the properties are located and as Buyer or its
lenders may reasonably require, and in each case in an amount not less than the
portion of the Total Consideration allocated to the property being insured
thereunder.
(j) PBGC Release. The PBGC Release shall have been obtained.
(k) Coal Act. Either Sellers shall have obtained a release, in form
and substance reasonably satisfactory to Buyer in its sole discretion, of all
liabilities and obligations arising under the Coal Act (including, without
limitation, liability as a successor or as a successor-in-interest) for (A) any
Person any equity of which is purchased and sold pursuant to this Agreement and
(B) any Person that acquires any Acquired Assets pursuant to this Agreement and
its present and future Affiliates and successors-in-interest (solely with
respect to liabilities and obligations under the Coal Act arising out of or in
connection with the Acquired Assets or any business conducted therewith), or
every Seller that has any liability or obligation (including, without liability,
control group liability) under the Coal Act shall have commenced, at the expense
of Buyer, a case under chapter 11 of the Bankruptcy Code and at the Closing all
of the Acquired Assets of each such Seller shall be conveyed pursuant to
sections 105, 363 and 365 of the Bankruptcy Code, as applicable, on the terms
set forth in the Bankruptcy Sale Order.
(l) Closing Deliveries. Sellers shall have made the deliveries
contemplated under Section 3.2.
ARTICLE 8. TERMINATION
Section 8.1. Conditions of Termination. This Agreement may be
terminated only in accordance with this Section 8.1. This Agreement may be
terminated at any time before the Closing as follows:
(a) By mutual written consent of Parent, ISG and Buyer;
(b) By Parent by notice to Buyer, or by Buyer by notice to Parent, on
or after the date that is six months after the Execution Date (the "TERMINATION
DATE"), if the Closing shall not have occurred on or prior to the Termination
Date; provided, however, that a party shall not have the right to terminate this
Agreement under this Section 8.1(b) if any Seller (in case of termination by
Parent) or Buyer or ISG (in case of termination by Buyer) is then in material
breach of this Agreement;
(c) By Parent by notice to Buyer, or by Buyer by notice to Parent, if
any injunction or other order contemplated by Section 7.1(d) and Section 7.2(d)
shall have become effective; provided, however, that the party seeking to
46
terminate this Agreement pursuant to this Section 8.1 has used its commercially
reasonable efforts to remove such injunction or other order;
(d) By Parent, by notice to Buyer, if Parent has previously provided
Buyer with notice of any inaccuracy of any representation or warranty contained
in Section 4.2 or Section 4.3, which inaccuracy could reasonably be expected to
result in, individually or in the aggregate with the results of other
inaccuracies, an ISG Material Adverse Effect, or a material failure to perform
any covenant of ISG or Buyer contained in this Agreement or any Ancillary
Agreement to which ISG or Buyer is party, and ISG or Buyer, as applicable, has
failed, within 10 days after such notice, to remedy such inaccuracy or perform
such covenant or provide reasonably adequate assurance to Parent of ISG's or
Buyer's ability, as applicable, to remedy such inaccuracy or perform such
covenant; provided, however, that Parent shall not have the right to terminate
this Agreement under this Section 8.1(d) if any Seller is then in material
breach of this Agreement;
(e) By Buyer, by notice to Parent, if Buyer has previously provided
Parent with notice of any inaccuracy of any representation or warranty of
Sellers contained in Section 4.1, which inaccuracy could reasonably be expected
to result in, individually or in the aggregate with the results of other
inaccuracies, a Seller Material Adverse Effect, or a material failure to perform
any covenant of Sellers contained in this Agreement or any Ancillary Agreement
to which any Seller is party, and Sellers have failed, within 10 days after such
notice, to remedy such inaccuracy or perform such covenant or provide reasonably
adequate assurance to Buyer of Sellers' ability to remedy such inaccuracy or
perform such covenant; provided, however, that Buyer shall not have the right to
terminate this Agreement under this Section 8.1(e) if ISG or Buyer is then in
material breach of this Agreement;
(f) By Buyer, by notice to Parent, if any event, fact or circumstance
identified in Section 7.2(f) or Section 7.2(g) shall have occurred; provided,
however, that Buyer shall not have the right to terminate this Agreement under
this Section 8.1(f) if ISG or Buyer is then in material breach of this
Agreement.
(g) By Buyer, by notice to Parent, if (i) the Bidding Procedures and
Sale Motion is not filed with the Bankruptcy Court on the Execution Date or
within two Business Days after the Execution Date, (ii) the Bidding Procedures
Order (in the form attached as Exhibit C or in other form satisfactory to Buyer)
is not entered by the Bankruptcy Court within 25 days of the Execution Date or
(iii) the Bankruptcy Sale Order (in the form attached as Exhibit A or in other
form satisfactory to Buyer) is not entered by the Bankruptcy Court within 60
days of the Execution Date.
(h) Automatically, if Sellers consummate an Alternative Transaction.
Section 8.2. Effect of Termination; Remedies.
(a) In the event of termination pursuant to Section 8.1, this
Agreement shall become null and void and have no effect (other than Article 8,
Article 11 and Article 12, which shall survive termination), with no liability
on the part of Sellers, ISG or Buyer, or their respective Affiliates or
respective Related Persons, with respect to this Agreement or any Ancillary
Agreement, except for any liability provided for in this Article 8.
47
(b) If this Agreement is terminated pursuant to Section 8.1(a),
Section 8.1(b), Section 8.1(c), Section 8.1(f) or Section 8.1(g) then, within
two Business Days after such termination, (i) the Performance Deposit, together
with any interest accrued thereon, shall be returned to Buyer and (ii) in the
case of termination pursuant to Section 8.1(a) in circumstances where, at the
time of such termination, the PBGC Release shall not have been obtained, the
Parent shall pay to Buyer 50% of the Expense Reimbursement in cash, up to a
maximum of $2,500,000.
(c) If this Agreement is terminated pursuant to Section 8.1(d), then,
within two Business Days after such termination, the Performance Deposit,
together with any interest accrued thereon, shall be paid to Sellers in
accordance with the terms of the Performance Escrow Agreement.
(d) If this Agreement is terminated pursuant to Section 8.1(e), then,
within two Business Days after such termination, (i) the Performance Deposit,
together with any interest accrued thereon, shall be returned to Buyer in
accordance with the terms of the Performance Escrow Agreement and (ii) Parent
shall pay to Buyer the Expense Reimbursement in cash.
(e) If this Agreement is terminated pursuant to Section 8.1(h) then,
within two Business Days after such termination, (i) the Performance Deposit,
together with any interest accrued thereon shall be returned to Buyer in
accordance with the terms of the Performance Escrow Agreement and (ii) Parent
shall pay to Buyer a break-up fee in cash equal to $27,000,000 (the "BREAK-UP
FEE") and the Expense Reimbursement in cash.
(f) Any payments of the Breakup Fee or Expense Reimbursement under
this Section 8.2 shall be made by Parent, on behalf of Sellers, by wire transfer
of immediately available funds to an account designated in writing by Buyer. The
Breakup Fee and the Expense Reimbursement shall be payable directly from and
secured by the cash component consideration of the Alternative Transaction.
Section 8.3. Exclusive Remedy. Prior to the Closing Date, the
parties' sole and exclusive remedies for any claim arising out of or in
connection with this Agreement shall be termination in accordance with this
Article 8.
ARTICLE 9. SURVIVAL AND INDEMNIFICATION
Section 9.1. Survival; Indemnification. None of the representations
and warranties of Sellers, ISG and Buyer made in this Agreement shall survive
the Closing Date and all of such representations and warranties shall be
extinguished by the Closing. All covenants and agreements of the parties
contained in this Agreement shall survive the Closing, except that Sellers shall
have no monetary obligation to ISG or Buyer for breach of any covenant or
agreement other than insofar as may arise under Section 3.4 or any other
affirmative obligation of Seller to make any payment under this Agreement. If
the Closing occurs, Buyer shall indemnify and hold harmless Sellers and their
respective Affiliates and Related Persons against any and all losses, liability,
expense or damage that result from or arise out of (a) the Assumed Liabilities,
(b) all Taxes arising (i) as a result of the transactions contemplated by this
Agreement, (ii) during the period beginning on the Closing Date and ending on
the last day of the Debtors' Bankruptcy Cases, in each case, only where such
48
Taxes would not have otherwise been due had the sales by the Debtors to Buyer
not qualified as transactions described in Section 368(a)(1)(G) of the Code, and
(iii) as a result of any indemnity payment made under this clause (b), (c)
Buyer's failure to obtain the transfer to Buyer of the Permits that are required
to operate the Acquired Assets under the applicable Environmental Laws or any
post-Closing violation of any such Permit and (d) relating to or arising out of
the continued operation of the Railroad Subsidiaries between the Closing Date
and the date on which Buyer either closes on the purchase of the assets of the
Railroad Subsidiaries or elects to eliminate such assets from the Acquired
Assets.
Section 9.2. Specific Performance. Each party acknowledges that in
case of any breach of their covenants or other obligations (other than Buyer's
covenants and obligations contained in Section 2.2(c), as to which Section 9.3
specifies the exclusive remedy) contained herein, the others would suffer
immediate and irreparable harm, which money damages would be inadequate to
remedy, and accordingly, in case of any such breach each non-breaching party
shall be entitled to obtain specific performance and other equitable remedies,
in addition to other remedies provided in this Article 9.
Section 9.3. Remedy for Deferred Purchase Price Payment. Sellers'
sole and exclusive remedy for Buyer's breach of its covenants or other
obligations contained in Section 2.2(c) shall be those remedies provided at law.
Section 9.4. Exclusive Remedy. Following the Closing Date, the
parties' sole and exclusive remedies for any claim arising out of or in
connection with this Agreement shall be those set forth in this Article 9.
ARTICLE 10. BIDDING PROCEDURES
Section 10.1. Bidding Procedures.
(a) Bankruptcy Court Approval. On the Execution Date or within two
Business Days after the Execution Date, Sellers shall file with the Bankruptcy
Court a motion in the form attached hereto as Exhibit B (the "BIDDING PROCEDURES
AND SALE MOTION"), in form and substance satisfactory to Buyer, seeking entry of
a bidding procedures order in the form attached hereto as Exhibit C (or in such
other form that is satisfactory to Buyer, the "BIDDING PROCEDURES ORDER").
Sellers shall use commercially reasonable efforts to obtain entry by the
Bankruptcy Court of the Bidding Procedures Order as soon as practicable. The
Bidding Procedures Order shall contain provisions substantially similar to those
contained in Section 10.1(b) and Section 10.1(c) and, in addition, shall contain
additional provisions regarding qualification of bidders, bidding requirements
and other matters.
(b) Other Bids.
(i) Buyer acknowledges that Sellers may receive bids ("BIDS")
from prospective purchasers (such prospective purchasers, the "BIDDERS") for the
sale of all or part of the Acquired Assets (as such or in combination with other
assets of Sellers) or other assets owned by Sellers as provided in the Bidding
Procedures Order. All Bids shall be subject to bid incentives and protections
49
set forth in this Section 10.1(b) and overbid protections set forth in Section
10.1(c) of this Agreement. All Bids (other than Bids submitted by Buyer) will be
submitted with two copies of this Agreement marked to show changes requested by
the Bidder.
(ii) If Sellers receive any Bids, Sellers shall have the right
to select, and seek final approval of the Bankruptcy Court for, the highest or
otherwise better Bid or Bids from the Bidders (the "SUPERIOR BID"), which will
be determined by considering, among other things, the (A) identity of the
Bidder; (B) number, type and nature of any changes to this Agreement requested
by the Bidder; (C) extent to which the identity of the Bidder or such
modifications are likely to delay closing of the sale of the Acquired Assets and
Assumed Liabilities to the Bidder and the cost to Sellers of such modifications
or delay; (D) extent to which such Bid covers less than or more than all of the
Acquired Assets and Assumed Liabilities; (E) form and amount of the total
consideration to be received by Sellers; and (F) financial strength of the
Bidder. All other considerations being equal, Sellers shall strongly favor Bids
for all of Sellers' assets or for such assets which Sellers determine, in their
sole discretion, cannot otherwise be easily sold. Sellers reserve the right to
accept a Bid or Bids which contain a purchase price that is less than the Total
Consideration set forth in this Agreement but which, in Sellers' sole
discretion, otherwise constitutes a Superior Bid. Sellers shall provide copies
of all Bids to Buyer.
1 (c) Overbid Protection.
(i) Sellers shall seek Bankruptcy Court approval of the
following overbid protections: (A) Bids will not be considered by Sellers unless
they are $15,000,000 more than the sum of the (x) Total Consideration, (y)
Breakup Fee and (z) Expense Reimbursement; (B) any Bids thereafter must be at
least $10,000,000 higher than the then existing highest or better Bid; and (C) a
provision that Buyer will be credited with, and have added to the aggregate
amount of its bid when comparing it to other bids, the amount of the Breakup Fee
and the Expense Reimbursement that will be earned by Buyer under Section 8.2(e)
if it is not the successful bidder for the Acquired Assets.
(ii) The value of a Bid for purposes of this Section 10.1(c)
shall be determined by combining (A) the value of the consideration to be
received by Sellers pursuant to such Bid for all assets and liabilities covered
by such Bid (including a reasonable estimation of any assumed liabilities) and
(B) the value of the Acquired Assets and Assumed Liabilities that are not
covered by such Bid ("NON-COVERED ASSETS"), such value to be determined in good
faith by Sellers on the basis of, for the Acquired Assets and Assumed
Liabilities that are covered by other Bids or by proposals reasonably likely to
result in a sale of such Acquired Assets and Assumed Liabilities, the value of
the proposed consideration payable pursuant to such other Bid or proposal, and,
for other Non-Covered Assets, the projected value thereof in the context of the
most commercially reasonable use or disposition of such properties and assets.
Section 10.2. Sale Hearing and Entry of Bankruptcy Sale Order.
The Bidding Procedures and Sale Motion shall also seek entry by the Bankruptcy
Court of the Bankruptcy Sale Order. Sellers shall use commercially reasonable
efforts to obtain entry by the Bankruptcy Court of the Bankruptcy Sale Order
within 60 days of the Execution Date.
50
ARTICLE 11. MISCELLANEOUS
Section 11.1. Allowed Administrative Expenses. Any and all amounts
owed to Buyer by Sellers hereunder or under any Ancillary Agreement after the
Execution Date shall constitute allowed administrative expenses of the Debtor
Sellers under sections 503(b)(1) and 507(A)(1), as applicable, of the Bankruptcy
Code.
Section 11.2. Alternative Transaction. Notwithstanding anything
herein or in any Ancillary Agreement to the contrary, Sellers may furnish
information concerning Sellers, the Acquired Assets and the Assumed Liabilities
to any Person in connection with a potential Alternative Transaction and
negotiate, enter into and consummate an Alternative Transaction.
Section 11.3. Further Assurances. At the request and the sole expense
of the requesting party, Buyer or Sellers, as applicable, shall execute and
deliver, or cause to be executed and delivered, such documents as Buyer or
Seller, as applicable, or their respective counsel may reasonably request to
effectuate the purposes of this Agreement and the Ancillary Agreements.
Section 11.4. Successors and Assigns.
(a) Buyer shall have the right to assign to any Person or Persons
(each, an "ASSIGNEE") any of its rights or obligations (including the right to
acquire any of the Acquired Assets) and may require any such Assignee to pay a
portion of the Purchase Price and/or to assume those Assumed Liabilities that
are both described in Section 1.3(a), Section 1.3(b), Section 1.3(c), Section
1.3(d), Section 1.3(h), Section 1.3(i), Section 1.3(j) or Section 1.3(k) and
relate to the Acquired Assets acquired by the Assignee ("ASSIGNABLE
LIABILITIES"). In the event of any assignment pursuant to this Section 11.4(a),
Buyer shall not be relieved of any liability or obligation hereunder; provided,
however, that Buyer shall, with Parent's approval, which shall not be
unreasonably withheld, be fully released from such Assignable Liabilities upon
their assumption by an Assignee.
(b) ISG and Buyer shall have the right to assign this Agreement or
any of their rights or obligations hereunder collaterally to any lender of ISG
or Buyer; provided, however, that no such assignment shall relieve ISG or Buyer
of its obligations to Sellers hereunder.
(c) Sellers shall not assign this Agreement or any of their rights or
obligations hereunder. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
Section 11.5. Governing Law; Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York (without giving effect to the principles of conflicts
of laws thereof), except to the extent that the laws of such State are
superseded by the Bankruptcy Code. For so long as any Seller is subject to the
jurisdiction of the Bankruptcy Court, the parties irrevocably elect, as the sole
judicial forum for the adjudication of any matters arising under or in
connection with the Agreement, and consent to the exclusive jurisdiction of, the
Bankruptcy Court. After Sellers are no longer subject to the jurisdiction of the
Bankruptcy Court, the parties irrevocably elect, as the sole judicial forum for
the adjudication of any matters arising under or in connection with this
51
Agreement, and consent to the jurisdiction of, any state or federal court having
competent jurisdiction over the Borough of Manhattan, New York City, New York.
Section 11.6. Expenses. Except as otherwise provided in this
Agreement, each of the parties shall pay its own expenses in connection with
this Agreement and the transactions contemplated hereby, including, without
limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated. Buyer shall pay the cost of all surveys,
title insurance policies and title reports ordered by Buyer.
Section 11.7. Broker's and Finder's Fees. Each of the parties
represents and warrants that it has not engaged any broker or finder in
connection with any of the transactions contemplated by this Agreement other
than Credit Suisse First Boston and ▇▇▇▇▇▇▇▇▇ Capital Partners whose fees and
expenses shall, as between the parties, be the sole responsibility of Sellers,
and, insofar as such party knows, no other broker or other Person is entitled to
any commission or finder's fee in connection with any of these transactions.
Section 11.8. Severability. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall provide for the consummation of the
transactions contemplated hereby in substantially the same manner as originally
set forth at the later of (a) the Execution Date and (b) the date this Agreement
was last amended.
Section 11.9. Notices. (a) All notices, requests, demands, consents
and other communications under this Agreement shall be in writing and shall be
deemed to have been duly given: (i) on the date of service, if served personally
on the party to whom notice is to be given; (ii) on the day of transmission, if
sent via facsimile transmission to the facsimile number given below; (iii) on
the day after delivery to Federal Express or similar overnight courier or the
Express Mail service maintained by the United States Postal Service addressed to
the party to whom notice is to be given; or (iv) on the fifth day after mailing,
if mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid and properly addressed, to the party as
follows:
If to Sellers:
Bethlehem Steel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel and Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
52
If to ISG or Buyer:
International Steel Group Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ Day
North Point
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇ ▇▇▇▇ & Co. LLC
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇)
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Wax
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any party may change its address or facsimile number for the
purpose of this Section 11.9 by giving the other parties written notice of its
new address in the manner set forth above.
Section 11.10. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by ISG,
Buyer and Parent, or in the case of a waiver, by the party waiving compliance.
Any waiver by any party of any condition, or of the breach of any provision,
term, covenant, representation or warranty contained in this Agreement, in any
one or more instances, shall not be deemed to be or construed as a furthering or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
Section 11.11. Public Announcements. Promptly after the Execution
Date, the parties shall make a joint press release in form and substance
reasonably satisfactory to both of them regarding the transaction contemplated
herein. Thereafter, no party shall make any press release or public announcement
concerning the transactions contemplated by this Agreement without first
coordinating their communications strategy with the other party, unless a press
release or public announcement is required by law, the rules of any stock
53
exchange or order of the Bankruptcy Court. If any such announcement or other
disclosure is required by law or order of the Bankruptcy Court, the disclosing
party agrees to give the nondisclosing party or parties prior notice of, and an
opportunity to comment on, the proposed disclosure. The parties acknowledge that
Sellers shall file this Agreement with the Bankruptcy Court in connection with
obtaining the Bankruptcy Sale Order and with the SEC.
Section 11.12. Entire Agreement. This Agreement and the Ancillary
Agreements contain the entire understanding between the parties with respect to
the transactions contemplated hereby and supersede and replace all prior and
contemporaneous agreements and understandings, oral or written, with regard to
such transactions. All Schedules hereto and any documents and instruments
delivered pursuant to any provision hereof are expressly made a part of this
Agreement as fully as though completely set forth herein.
Section 11.13. No Third Party Beneficiaries. Nothing in this
Agreement is intended to or shall confer any rights or remedies under or by
reason of this Agreement on any Persons other than Sellers, ISG and Buyer and
their respective successors and permitted assigns. Nothing in this Agreement is
intended to or shall relieve or discharge the obligations or liability of any
third Persons to Sellers, ISG or to Buyer. This Agreement is not intended and
shall not give any third Persons any right of subrogation or action over or
against Sellers or against ISG or Buyer.
Section 11.14. Headings. The article and section headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 11.15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same agreement.
Section 11.16. Joint and Several. The obligations of Sellers
hereunder shall be joint and several.
Section 11.17. Joint Drafting. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
Section 11.18. Construction. Any reference to any law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including without
limitation. Any reference to the singular in this Agreement shall also include
the plural and vice versa.
Section 11.19. Performance Deposit. If Buyer is obligated to pay the
Performance Deposit to Sellers pursuant to the terms of this Agreement and the
amount delivered by the Escrow Agent to Parent, on behalf of Sellers, is less
than $10,000,000, then ISG and Buyer shall promptly pay the difference to
Parent, on behalf of Sellers, by wire transfer of immediately available funds to
Parent's Account.
54
ARTICLE 12. DEFINITIONS
Section 12.1. Certain Terms Defined. As used in this Agreement, the
following terms have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Person.
"ALTERNATIVE TRANSACTION" means any transaction (regardless of the
form thereof) involving a sale of all or any substantial portion of the Acquired
Assets by Sellers to a purchaser or purchasers other than Buyer.
"ANCILLARY AGREEMENTS" means the Performance Escrow Agreement and the
Confidentiality Agreements.
"ASBESTOS CLAIMS" means any Claim asserted by any Person at any time
relating to the operation of the Business prior to the Closing alleging any
actual or potential death, injury, loss, damage, product liability or other
legally or equitably compensable thing, actually or allegedly arising, in whole
or in part, out of or in any way connected with any use of, contact with, or
exposure to, asbestos or any asbestos-containing production material.
"AVOIDANCE ASSETS" means all Claims of a Debtor assertable or arising
under chapter 5 of the Bankruptcy Code, including, without limitation, all
preference, fraudulent transfer, and other Claims to avoid a transfer.
"BUSINESS DAY" means any day other than Saturday, Sunday and any day
that is a legal holiday or a day on which banking institutions in New York City,
New York are authorized by law or other governmental action to close.
"CAPITAL LEASES" means, collectively, the (i) Equipment Lease, dated
as of April 28, 1999, between ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Son, Inc. and Bethlehem Steel
Corporation, as amended; (ii) Master Lease Agreement No. 3120, dated as of June
30, 2000, between Cisco Systems Capital Corporation and Bethlehem Steel
Corporation, as amended from time to time, together with Schedule 002-000, dated
as of August 30, 2001; (iii) Master Lease Agreement, dated as of July 23, 1996,
between GTE Leasing Corporation and Bethlehem Steel Corporation, as amended from
time to time according to its terms, together with Schedule No. 003, dated as of
March 15, 1999; (iv) Letter of Intent, dated as of April 23, 1997, between
Bethlehem Steel Corporation and the Luria Brothers Division of ▇▇▇▇▇▇▇ Limited
Partnership, as amended from time to time; (v) Industrial Gas Supply Agreement,
dated as of October 1, 1999, between Air Products and Chemicals, Inc. and
Bethlehem Steel Corporation, as amended from time to time; (vi) Bareboat Charter
Party, dated as of December 28, 2000, between Buyer 2000 Trust, as Owner, and
Bethlehem Steel Corporation, as Charterer, as supplemented by Charter Supplement
No. 1, dated as of December 29, 2000; (vii) IMS Slab Carrier Agreement, dated as
of December 31, 2000, between Bethlehem Steel Corporation and International Mill
Service, Inc., as amended from time to time; (viii) Equipment Lease Agreement,
dated as of August 1, 2001, between ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Bethlehem Steel
Corporation, as amended from time to time; and (ix) Master Lease Agreement,
dated as of July 1, 2001, between SAFECO Credit Company, Inc. and Columbus
55
Coatings Company, together with Schedule 001, dated as of July 1, 2000, as
amended from time to time.
"CASH" means all cash and cash equivalents.
"CLAIM" means all rights, claims, causes of action, defenses, debts,
demands, damages, obligations, and liabilities of any kind or nature under
contract, at law or in equity, known or unknown, contingent or matured,
liquidated or unliquidated, and all rights and remedies with respect thereto,
including, without limitation, causes of action arising under chapter 5 of the
Bankruptcy Code or similar state statutes.
"COAL ACT" means the Coal Industry Retiree Health Benefit Act of
1992, 26 ▇.▇.▇.▇▇.▇▇. 9701-9722.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT LETTER" means the commitment letter, dated as of even
date herewith, by and among ISG and UBS AG, Stamford Branch, UBS Warburg LLC,
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and The CIT Group/Business Credit, Inc.
"CONFIDENTIALITY AGREEMENTS" means the Confidentiality Agreement,
dated as of October 28, 2002, by and between Parent and ISG and the
Confidentiality Agreement, dated as of July 19, 2002, among Parent, ISG and ▇▇
▇▇▇▇ & Co. LLC.
"CONTRACT" means any written contract, agreement, lease or sublease,
license or sublicense, instrument, indenture, commitment or undertaking,
including, without limitation, any Sales Order or Purchase Order.
"DIP FACILITY" means the Revolving Credit and Guaranty Agreement,
dated as of October 15, 2001, by and among Parent and the subsidiaries of Parent
named therein, the lenders named therein and General Electric Capital
Corporation, as amended.
"EMPLOYEE BENEFIT PLANS" means all employee benefit plans as defined
in Section 3(3) of ERISA, all compensation, pay, severance pay, salary
continuation, bonus, incentive, stock option, retirement, pension, profit
sharing or deferred compensation plans, Contracts, programs, funds or
arrangements of any kind and all other employee benefit plans, programs, funds
or arrangements (whether written or oral, qualified or nonqualified, funded or
unfunded, foreign or domestic, currently effective or terminated) and any trust,
escrow or similar agreement related thereto, whether or not funded.
"ENVIRONMENTAL LAWS" means all applicable federal, state and local
statutes, ordinances, rules, orders, judgments, junctions, decrees, regulations
and other provisions having the force of law, all judicial and administrative
orders and determinations, and all common law concerning pollution or protection
of human health and the environment, including, without limitation, all those
relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control or cleanup of any Hazardous
Materials.
56
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means, with respect to any Person, any trade or
business (whether or not incorporated) (i) under common control within the
meaning of Section 4001(b)(1) of ERISA with such Person or (ii) which together
with such Person is treated as a single employer under Sections 414(b), (c),
(m), (n) and (o) of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXPENSE REIMBURSEMENT" means reimbursement to Buyer of its actual
documented out-of-pocket expenses incurred in connection with the transactions
contemplated by this Agreement, including professional fees, not to exceed
$5,000,000.
"FINAL ORDER" means (i) an order or judgment of the Bankruptcy Court
or any other court or adjudicative body as to which the time to appeal, petition
for certiorari, or move for reargument or rehearing has expired and as to which
no appeal, petition for certiorari, or other proceedings for reargument or
rehearing shall then be pending, or (ii) in the event that an appeal, writ of
certiorari, reargument, or rehearing thereof has been sought, such order of the
Bankruptcy Court or any other court or adjudicative body shall have been
affirmed by the highest court to which such order was appealed, or certiorari
has been denied, or from which reargument or rehearing was sought, and the time
to take any further appeal, petition for certiorari or move for reargument or
rehearing shall have expired; provided, however, that no order shall fail to be
a Final Order solely because of the possibility that a motion pursuant to Rule
60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 may be filed
with respect to such order.
"FINANCING" shall mean the financing contemplated in the Commitment
Letter on substantially the terms set forth in the Commitment Letter or such
other terms as Buyer or ISG may approve.
"GAAP" means United States generally acceptable accounting principles
as in effect as of the Execution Date.
"GOVERNMENT" means any agency, division, subdivision or governmental
or regulatory authority or any adjudicatory body thereof, of the United States,
or any state thereof.
"HAZARDOUS MATERIALS" means any hazardous or toxic substance or waste
or any contaminant or pollutant regulated or otherwise creating liability under
Environmental Laws, including, without limitation, "hazardous substances" as
defined by the Comprehensive Environmental Response Compensation and Liability
Act, as amended, "toxic substance" as defined by the Toxic Substance Control
Act, as amended, "hazardous wastes" as defined by the Resource Conservation and
Recovery Act, as amended, "hazardous materials" as defined by the Hazardous
Materials Transportation Act, as amended, thermal discharges, radioactive
substances, PCBs, natural gas, petroleum products or byproducts and crude oil.
"ICC TERMINATION ACT" means the ICC Termination Act of 1995, as
amended.
57
"IMPROVEMENTS" mean the buildings, improvements and structures of
Sellers now existing on the Real Property or demised under any lease of, or
other Contract for the use of, Real Property.
"INTELLECTUAL PROPERTY" means any and all patents, patent
applications, trademarks, service marks, trade names, trade dress rights,
internet domain names, trade secrets and copyrights; foreign equivalent or
counterpart rights having similar effect in any jurisdiction throughout the
world; and registrations and applications for registration of any of the
foregoing.
"INVENTORY" means all the finished goods, raw materials, work in
process and inventoriable supplies owned by Sellers on the Closing Date.
"INVENTORY CREDIT FACILITY" means the Credit Agreement, dated as of
September 12, 1995, by and among Parent, the lenders named therein and ▇▇▇▇▇▇
Guaranty Trust Company of New York, as amended.
"IRS" means the Internal Revenue Service.
"ISG CLASS B COMMON STOCK" means common stock of ISG having terms
substantially similar to those set forth on Exhibit D.
"ISG COMMON STOCK" means the common stock, par value $.01 per share,
of ISG.
"ISG MATERIAL ADVERSE EFFECT" means a state of facts, events, change
or effect with respect to ISG and the ISG Subsidiaries that results in a
material adverse effect on the financial condition, business, operations, assets
or liabilities of ISG and the ISG Subsidiaries, taken as a whole, but excludes
any state of facts, event, change or effect caused by events, changes or
developments relating to (A) changes or conditions affecting the steel industry
generally or (B) changes in economic, regulatory or political conditions
generally.
"JOINT VENTURES" means Double G Coatings Company, L.P., Double G
Coatings, Inc., BethNova Tube, LLC, Bethlehem Roll Technologies, LLC, Steel
Construction Systems, Indiana Pickling and Processing Company, TWB Company, LLC,
▇▇▇▇▇▇▇▇▇ Coatings, Steel Health Resources, LLC, Chesapeake Heavy Machine
Services, L.L.C., Hibbing Taconite Company, ▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, Hibbing
Development Company and Ontario Iron Company.
"JOINT VENTURE SELLERS" means Parent, Mississippi Coatings Line
Corporation, Mississippi Coatings Limited Corporation, IPV, Inc., Bethlehem
Blank Welding, Inc., EGL Steel Company, LLC and Bethlehem Hibbing Corporation.
"KNOWLEDGE OF ISG" or any other similar term or knowledge
qualification means the actual knowledge of the Vice President-Finance and
Administration, the Manager-Environmental and the Vice President-Business
Development after inquiry and reasonable investigation as of the Execution Date.
"KNOWLEDGE OF SELLERS" or any other similar term or knowledge
qualification means the actual knowledge, as of the Execution Date, of the
following persons (a) with respect to each of the following Joint Ventures,
after inquiry to the management of each Joint Venture, respectively: (1) Ontario
58
Iron Company; Hibbing Taconite Company; Hibbing Development Company and Hibbing
Land Corporation - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; (2) Double G Coatings Company, L.P.; Double
G. Coatings, Inc. - ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; (3) BethNova Tube, LLC; Steel Construction
Systems; ▇▇▇▇▇▇▇▇.▇▇▇ Incorporated - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇; (4) Bethlehem Roll
Technologies, LLC; Chesapeake Heavy Machine Services, L.L.C. - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
(5) TWB Company, LLC; Indiana Pickling and Processing; ▇▇▇▇▇▇▇▇▇ Coatings - ▇▇▇▇
▇▇▇▇▇▇; Steel Health Resources, LLC - ▇▇▇▇▇ ▇▇▇▇▇▇ and (b) with respect to
Parent and the other Sellers, with respect to environmental matters, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, with respect to intellectual property matters, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with
respect to Employee Benefit Plans and Acquired Benefit Plans, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and with respect to litigation matters, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ after inquiry and
reasonable investigation.
"LENDER MATERIAL ADVERSE EFFECT" means a material adverse effect on
the actual or projected condition (financial or otherwise) or prospects of ISG,
Parent and their respective subsidiaries, taken as a whole.
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien (statutory or other), conditional sale agreement, claim or liability.
"NET PROCEEDS" means the remainder obtained by subtracting (i) the
actual out-of-pocket costs (including commissions and professional fees)
incurred by any Seller in the sale of any asset, from (ii) the total fair market
value of all consideration received by any Seller on the sale of any asset.
"OPERATING LEASES" means, collectively, (i) the Equipment Lease,
dated as of September 29, 2000, between First Security Bank, National
Association, as Owner Trustee, and Bethlehem Steel Corporation; (ii) the Master
Lease Agreement, dated as of October 8, 1991, between General Electric Capital
Corporation and Bethlehem Steel Corporation, as amended from time to time,
together with Schedule 013, dated as of December 30, 1996, as amended February
28, 2003; (iii) the Master Lease Agreement, dated as of October 8, 1991, between
General Electric Capital Corporation and Bethlehem Steel Corporation, as amended
from time to time, together with Schedule 018, dated as of October 7, 1999; (iv)
the Master Lease Agreement, dated as of October 8, 1991, between General
Electric Capital Corporation and Bethlehem Steel Corporation, as amended from
time to time, together with Schedule 012, dated as of December 14, 1995; (v) the
Master Lease Agreement, dated as of July 23, 1996, between GTE Leasing
Corporation and Bethlehem Steel Corporation, as amended from time to time
according to its terms, together with Schedule No. 001, dated as of July 17,
1996; and (vi) the Bareboat Charter Party, dated as of September 15, 1980,
between Wilmington Trust Company, as Owner Trustee, and Bethlehem Steel
Corporation, as Charterer, as amended from time to time, together with any
schedules as amended.
"ORDERS" means the Bankruptcy Sale Order and the Bidding Procedures
Order.
"OTHER OFFERING" shall mean any offering of securities of ISG, any
Affiliate of ISG or any other Person (other than pursuant to the Financing or
the Public Offering), whether offered or sold in a registered public offering or
in a private placement, the proceeds of which are used, directly or indirectly,
to finance all or a portion of the transactions contemplated by this Agreement.
59
"PARENT'S ACCOUNT" means an account designated by Parent by notice to
Buyer not less than two Business Days prior to Closing.
"PAYROLL LIABILITIES" means all liabilities and obligations of
Sellers as of the Closing Date for accrued and unpaid payroll, payroll Taxes and
all other withheld amounts for all employees of Sellers.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED LIENS" mean: (a) Liens for Taxes, assessments and
Government or other similar charges that are not yet due and payable, (b)
easements, licenses, unrecorded real estate agreements, restrictions and other
matters of record which either (i) the title company has agreed to affirmatively
insure against loss caused thereby in the applicable title policy, by way of
ALTA coverage or other affirmative cover, reasonably acceptable to Buyer, or
(ii) do not materially and adversely effect the operation of the Real Property
in question as currently operated, (c) any state of facts a survey or other
visual inspection would show that do not materially and adversely effect the
operation of the Real Property in question as currently operated and (d) Liens
arising from the Assumed Liabilities.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Government.
"PUBLIC OFFERING" shall mean an initial public offering of ISG Common
Stock by ISG.
"PURCHASE ORDERS" means all outstanding purchase orders or other
similar Contracts entered into by any Seller with any supplier of goods or
services for materials, supplies or other items.
"RAILROAD SUBSIDIARIES" means Brandywine Valley Railroad Company LLC,
Upper Merion & Plymouth Railroad Company LLC, Lake Michigan & Indiana Railroad
Company, LLC, Conemaugh & Black Lick Railroad Company LLC, Keystone Railroad
LLC, Cambria & Indiana Railroad Company, Patapsco & Back Rivers Railroad Company
LLC and Steelton & Highspire Railroad Company LLC.
"REFERENCE BALANCE SHEET" means the consolidated balance sheet of
Parent and its subsidiaries as of December 31, 2002, a true and accurate copy of
which is attached as Exhibit E.
"REGISTRATION STATEMENT" means the registration statement to be used
in connection with the Public Offering.
"RELATED PERSON" means, with respect to any Person, all past, present
and future directors, officers, members, managers, stockholders, employees,
controlling persons, agents, professionals, attorneys, accountants, investment
bankers or representatives of any such Person.
"SALES ORDERS" means all sales orders and other similar Contracts
entered into by any Seller with purchasers of goods or services.
"SEC" means the U.S. Securities and Exchange Commission.
60
"SECURED FINANCINGS" means all of the (i) DIP Facility; (ii)
Inventory Credit Facility; (iii) Loan and Security Agreement, dated as of
November 18, 1999, between Columbus Coatings Company and Columbus Steel
Facility, LLC, as amended from time to time in accordance with its terms; (iv)
Amended and Restated Credit Agreement, dated as of September 29, 2000, among
Buyer, RZB Finance LLC and each other financial institution that may from time
to time become a party thereto as a lender, and RZB Finance LLC, as
Administrative Agents and Collateral Agents, as amended from time to time in
accordance with its terms; (v) Loan Agreement, dated as of January 6, 1995
between Bethlehem Steel Corporation and the Commonwealth of Pennsylvania, acting
by and through the Department of Commerce, Note, dated as of January 6, 1995,
made by Bethlehem Steel Corporation in favor of the Commonwealth of
Pennsylvania, and Security Agreement, dated as of January 6, 1995 between the
same; (vi) Loan Agreement, dated as of December 20, 1994, between Bethlehem
Steel Corporation and the County of Dauphin, Pa., Economic Development
Partnership Note, dated as of December 20, 1994, made by Bethlehem Steel
Corporation in favor of the County of Dauphin, and Security Agreement, dated as
of December 29, 1994, made by Bethlehem Steel Corporation in favor of County of
Dauphin; and (vii) Credit Agreement, dated as of March 14, 1996, among Chicago
Cold Rolling, LLC, the lenders named therein and Bank of America, N.A. (f/k/a
Nationsbank, N.A.), as Agent.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SELLER MATERIAL ADVERSE EFFECT" means a state of facts, event,
change or effect with respect to the Acquired Assets, the Assumed Liabilities or
the enforceability of any Contract(s), that results in a material adverse effect
on the value of the Acquired Assets, taken as a whole, or a material increase in
the amount of the Assumed Liabilities, taken as a whole, but excludes any state
of facts, event, change or effect caused by events, changes or developments
relating to (A) changes or conditions affecting the steel industry generally;
(B) changes in economic, regulatory or political conditions generally; (C)
changes resulting from or from any motion, application, pleading or order filed
related to, the Bankruptcy Cases; or (D) any action of any or all of the Sellers
pursuant to any order of the Bankruptcy Court entered prior to the date hereof,
including, without limitation, the transactions contemplated by this Agreement
or any of the Ancillary Agreements or the announcement thereof.
"SELLERS" means Parent, the Joint Venture Sellers, Columbus
Processing Company, LLC, Columbus Coatings Company, Chicago Cold Rolling,
L.L.C., the Railroad Subsidiaries, Bethlehem Development Corporation, Bethlehem
Rail Corporation, Encoat-North Arlington, Inc., Kenacre Land Corporation,
Primeacre Land Corporation, Bethlehem Steel Export Company of Canada, Limited,
Bethlehem Steel Export Corporation, Bethlehem Steel de Mexico, S.A. de C.V.,
Bethlehem Steel International Corporation, Bethlehem Industries Corporation,
BethEnergy Mines Inc., Eagle Nest Inc., HPM Corporation, Energy Coatings
Company, Greenwood Mining Corporation, Marmoraton Mining Company, Ltd.,
Bethlehem Energy Services, Inc., Pennsylvania Steel Technologies, Inc., BethPlan
Corporation, Bethlehem Steel Foundation, Bethtran LLC, Carrier Express, Inc.,
BethIntermodal LLC, RailQuest, LLC, LI Service Company, Alliance Coatings
Company, LLC, Buckeye Coatings Company, LLC, Ohio Steel Service Company, LLC,
Buckeye Steel Service Company, LLC, Bethlehem Cold Rolled Corporation and
Hibbing Land Corporation.
61
"SHIP BUSINESS" means the manufacture, construction, repair,
overhaul, servicing, ownership, leasing, transportation or other use of any ship
or other maritime vessel other than M/V ▇▇▇▇▇ Harbor and M/V ▇▇▇▇▇▇▇ ▇▇▇▇.
"SUPPLIES" means all supplies, items and materials (including spare
parts) owned by Sellers on the Closing Date.
"TAX RETURN" means any report, return, information return, filing or
other information, including any schedules, exhibits or attachments thereto, and
any amendments to any of the foregoing required to be filed or maintained in
connection with the calculation, determination, assessment or collection of any
Taxes (including estimated Taxes).
"TAXES" means all taxes, however denominated, including any interest,
penalties or additions to tax that may become payable in respect thereof,
imposed by any Government, whether payable by reason of contract, assumption,
transferee liability, operation of law or Treasury Regulation Section
1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar
provision under state, local or foreign law), which taxes shall include all
income taxes, payroll and employee withholding, unemployment insurance, social
security (or similar), sales and use, excise, franchise, gross receipts,
occupation, real and personal property, stamp, transfer, workmen's compensation,
customs duties, registration, documentary, value added, alternative or add-on
minimum, estimated, environmental (including taxes under section 59A of the
Code) and other assessments or obligations of the same or a similar nature,
whether arising before, on or after the Closing Date.
"TECHNOLOGY" means any and all inventions, discoveries, ideas,
processes, formulae, designs, models, industrial designs, know-how, confidential
information and proprietary information, whether or not patented or patentable,
writings and other copyrightable works and works in progress, databases and
software.
"TITLE COMPANY" means any one or more of Chicago Title Insurance
Company or such other title insurance company reasonably acceptable to the
Buyer.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement to be entered into by Sellers and Buyer, in a form to be agreed to by
Sellers and Buyer on or prior to the Closing Date.
"USWA" means the United Steelworkers of America, AFL-CIO-CLC.
Section 12.2. All Terms Cross-Referenced. Each of the following terms
is defined in the Section set forth opposite such term:
ACCOUNTING REFEREE.............................................Section 3.4(c)
ACCOUNTS PAYABLE...............................................Section 1.3(d)
ACCOUNTS RECEIVABLE............................................Section 1.1(e)
ACQUIRED ASSETS...................................................Section 1.1
ACQUIRED BENEFIT PLANS.........................................Section 1.1(r)
ACQUIRED CONTRACTS.............................................Section 1.1(d)
ACQUIRED INTELLECTUAL PROPERTY.................................Section 1.1(h)
62
AFFILIATE........................................................Section 12.1
AGREEMENT............................................................Preamble
ALLOCATION.....................................................Section 6.3(b)
ALTERNATIVE PLAN...............................................Section 5.7(d)
ALTERNATIVE TRANSACTION..........................................Section 12.1
AMORTIZATION AMOUNT............................................Section 2.2(a)
ANCILLARY AGREEMENTS.............................................Section 12.1
ASBESTOS CLAIMS..................................................Section 12.1
ASSIGNABLE LIABILITIES........................................Section 11.4(a)
ASSIGNEE......................................................Section 11.4(a)
ASSUMED LIABILITIES...............................................Section 1.3
AVOIDANCE ASSETS.................................................Section 12.1
BANKRUPTCY CASES.......................................Background Information
BANKRUPTCY CODE........................................Background Information
BANKRUPTCY COURT.......................................Background Information
BANKRUPTCY SALE ORDER..................................Background Information
BIDDERS....................................................Section 10.1(b)(i)
BIDDING PROCEDURES AND SALE MOTION............................Section 10.1(a)
BIDDING PROCEDURES ORDER......................................Section 10.1(a)
BIDS.......................................................Section 10.1(b)(i)
BREAK-UP FEE...................................................Section 8.2(e)
BUSINESS DAY.....................................................Section 12.1
BUSINESS ENTITY................................................Section 4.1(a)
BUYER................................................................Preamble
CAPITAL LEASES...................................................Section 12.1
CASH.............................................................Section 12.1
CCC LOAN.......................................................Section 2.2(a)
CCR LOAN.......................................................Section 2.2(a)
CLAIM............................................................Section 12.1
CLOSING...........................................................Section 3.1
CLOSING DATE......................................................Section 3.1
CLOSING STATEMENT..............................................Section 3.4(a)
CLOSING WORKING CAPITAL.......................................Section 3.4(a)
COAL ACT.........................................................Section 12.1
COBRA..........................................................Section 1.4(d)
CODE.............................................................Section 12.1
COMMITMENT LETTER................................................Section 12.1
CONFIDENTIALITY AGREEMENTS.......................................Section 12.1
CONSENTS.......................................................Section 4.1(g)
CONSIDERATION SHARES...........................................Section 2.2(d)
CONTRACT.........................................................Section 12.1
CURE COSTS.....................................................Section 1.3(a)
DEBTORS................................................Background Information
DIP FACILITY.....................................................Section 12.1
DIP PAYOFF AMOUNT..............................................Section 2.2(a)
EDS........................................................... Section 5.1(f)
EMPLOYEE BENEFIT PLANS...........................................Section 12.1
63
EMPLOYMENT RECORDS.............................................Section 1.2(h)
ENVIRONMENTAL LAWS...............................................Section 12.1
ERISA............................................................Section 12.1
ERISA AFFILIATE..................................................Section 12.1
ESCROW AGENT...........................................Background Information
EXCHANGE ACT....................................................Section 12.1
EXCLUDED ASSETS...................................................Section 1.2
EXCLUDED CONTRACT.................................................Section 1.6
EXCLUDED LIABILITIES..............................................Section 1.4
EXECUTION DATE.......................................................Preamble
EXPENSE REIMBURSEMENT............................................Section 12.1
FINAL ORDER......................................................Section 12.1
FINAL WORKING CAPITAL..........................................Section 3.4(e)
FINANCING.......................................................Section 12.1
GAAP.............................................................Section 12.1
GOVERNMENT.......................................................Section 12.1
HAZARDOUS MATERIALS..............................................Section 12.1
HIBBING SALE...................................................Section 5.3(i)
ICC TERMINATION ACT..............................................Section 12.1
IMPROVEMENTS.....................................................Section 12.1
INFORMATION TECHNOLOGY.........................................Section 4.1(m)
INTELLECTUAL PROPERTY............................................Section 12.1
INVENTORY........................................................Section 12.1
INVENTORY CREDIT FACILITY........................................Section 12.1
IRS Section 12.1
ISG Preamble
ISG CLASS B COMMON STOCK.........................................Section 12.1
ISG COMMON STOCK.................................................Section 12.1
ISG FINANCIAL STATEMENTS.......................................Section 4.3(d)
ISG MATERIAL ADVERSE EFFECT......................................Section 12.1
ISG SUBSIDIARY.................................................Section 4.3(f)
JOINT VENTURE BENEFIT PLANS................................Section 4.1(j)(ii)
JOINT VENTURE CONTROLLED GROUP............................Section 4.1(j)(iii)
JOINT VENTURE INTERESTS........................................Section 1.1(m)
JOINT VENTURE SELLERS............................................Section 12.1
JOINT VENTURES...................................................Section 12.1
KNOWLEDGE OF ISG.................................................Section 12.1
KNOWLEDGE OF SELLERS.............................................Section 12.1
LEASED REAL PROPERTY...........................................Section 1.1(b)
LENDER MATERIAL ADVERSE EFFECT...................................Section 12.1
LIABILITIES CERTIFICATE....................................Section 3.2(b)(ii)
LIEN.............................................................Section 12.1
NET PROCEEDS.....................................................Section 12.1
NET WORKING CAPITAL............................................Section 3.4(a)
NEWLY FILED ENTITY.............................................Section 5.3(j)
NON-COVERED ASSETS........................................Section 10.1(c)(ii)
OFFERING MEMORANDUM...............................................Section 5.5
64
OPERATING LEASES.................................................Section 12.1
ORDERS...........................................................Section 12.1
OTHER OFFERING...................................................Section 12.1
OWNED MACHINERY AND EQUIPMENT..................................Section 1.1(c)
OWNED MOTOR VEHICLES...........................................Section 1.1(i)
OWNED REAL PROPERTY............................................Section 1.1(b)
PARENT...............................................................Preamble
PARENT REPORTS..............................................Section 4.1(d)(i)
PARENT'S ACCOUNT.................................................Section 12.1
PAYROLL LIABILITIES..............................................Section 12.1
PBGC.............................................................Section 12.1
PBGC RELEASE...................................................Section 5.3(c)
PERFORMANCE DEPOSIT....................................Background Information
PERFORMANCE ESCROW AGREEMENT...........................Background Information
PERMITS........................................................Section 1.1(k)
PERMITTED LIENS..................................................Section 12.1
PERSON...........................................................Section 12.1
PETITION DATE..........................................Background Information
POL Section 5.7(b)
PREPETITION CLAIMHOLDERS.......................................Section 5.7(b)
PUBLIC OFFERING.................................................Section 12.1
PURCHASE ORDERS..................................................Section 12.1
PURCHASE PRICE....................................................Section 2.1
PURPA.......................................................Section 4.1(x)(i)
RAILROAD SUBSIDIARIES............................................Section 12.1
REAL PROPERTY..................................................Section 1.1(b)
RECORDED CURE COST.............................................Section 4.1(o)
REFERENCE BALANCE SHEET..........................................Section 12.1
REGISTRATION STATEMENT...........................................Section 12.1
RELATED PERSON...................................................Section 12.1
SALES ORDERS.....................................................Section 12.1
SEC Section 12.1
SECURED FINANCINGS...............................................Section 12.1
SECURITIES ACT..................................................Section 12.1
SELLER BENEFIT PLANS...........................................Section 1.2(k)
SELLER CONTROLLED GROUP........................................Section 1.2(k)
SELLER MATERIAL ADVERSE EFFECT...................................Section 12.1
SELLERS..........................................................Section 12.1
SHIP BUSINESS....................................................Section 12.1
SPECIFIED LIABILITIES..........................................Section 1.3(g)
STOCK OPTION PLANS.............................................Section 4.3(m)
SUPERIOR BID..............................................Section 10.1(b)(ii)
SUPPLIES.........................................................Section 12.1
TAX RETURN.......................................................Section 12.1
TAXES............................................................Section 12.1
TECHNOLOGY.......................................................Section 12.1
TERMINATION DATE...............................................Section 8.1(b)
65
TITLE COMPANY....................................................Section 12.1
TOTAL CONSIDERATION...............................................Section 2.1
TRANSACTION TAXES.................................................Section 6.1
TRANSITION SERVICES AGREEMENT....................................Section 12.1
UCC Section 1.5
USWA.............................................................Section 12.1
WARN ACT.......................................................Section 1.4(d)
66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
BUYER: ISG:
ISG ACQUISITION INC. INTERNATIONAL STEEL GROUP INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President Title: President and CEO
SELLERS:
BETHLEHEM STEEL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
PATAPSCO & BACK RIVERS RAILROAD COMPANY LLC
BRANDYWINE VALLEY RAILROAD COMPANY LLC
UPPER MERION & PLYMOUTH RAILROAD COMPANY LLC
LAKE MICHIGAN & INDIANA RAILROAD COMPANY, LLC
STEELTON & HIGHSPIRE RAILROAD COMPANY LLC
CONEMAUGH & BLACK LICK RAILROAD COMPANY LLC
KEYSTONE RAILROAD LLC
BETHTRAN LLC
CARRIER EXPRESS, INC.
BETHINTERMODAL LLC
RAILQUEST, LLC
MISSISSIPPI COATINGS LINE CORP.
MISSISSIPPI COATINGS LTD. CORP.
IPV, INC.
BETHLEHEM BLANK WELDING, INC.
COLUMBUS PROCESSING COMPANY, LLC
COLUMBUS COATINGS COMPANY
ALLIANCE COATINGS COMPANY, LLC
BUCKEYE COATINGS COMPANY, LLC
OHIO STEEL SERVICE COMPANY, LLC
BUCKEYE STEEL SERVICE COMPANY, LLC
CHICAGO COLD ROLLING, L.L.C.
EGL STEEL COMPANY, LLC
BETHLEHEM DEVELOPMENT CORPORATION
BETHLEHEM RAIL CORPORATION
ENCOAT-NORTH ARLINGTON, INC.
KENACRE LAND CORPORATION
PRIMEACRE LAND CORPORATION
BETHLEHEM STEEL EXPORT COMPANY OF CANADA, LIMITED
BETHLEHEM STEEL EXPORT CORPORATION
BETHLEHEM STEEL DE MEXICO, S.A. DE C.V.
BETHLEHEM STEEL INTERNATIONAL CORPORATION
BETHLEHEM INDUSTRIES CORPORATION
BETHENERGY MINES INC.
EAGLE NEST INC.
HPM CORPORATION
ENERGY COATINGS COMPANY
GREENWOOD MINING CORPORATION
MARMORATON MINING COMPANY, LTD.
BETHLEHEM ENERGY SERVICES, INC.
PENNSYLVANIA STEEL TECHNOLOGIES, INC.
BETHPLAN CORPORATION
BETHLEHEM STEEL FOUNDATION
LI SERVICE COMPANY
CAMBRIA & INDIANA RAILROAD COMPANY
BETHLEHEM HIBBING CORPORATION
HIBBING LAND CORPORATION
BETHLEHEM COLD ROLLED CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Duly Authorized
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