EXHIBIT 4.20
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CEMEX, INC.
AND
VOTORANTIM PARTICIPACOES S.A.
* * *
Dated as of February 4, 2005
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND TERMS
1.1 CERTAIN DEFINITIONS.............................................................................1
1.2 OTHER DEFINITIONAL PROVISIONS..................................................................11
ARTICLE II TRANSFER OF ASSETS AND LIABILITIES
2.1 ASSETS. 11
2.2 LIABILITIES....................................................................................16
2.3 PURCHASE PRICE.................................................................................19
2.4 PURCHASE PRICE ADJUSTMENT......................................................................19
2.5 ALLOCATION OF THE PURCHASE PRICE...............................................................22
2.6 PRORATION OF CERTAIN AMOUNTS AND UTILITIES.....................................................23
ARTICLE III THE CLOSING
3.1 GENERALLY......................................................................................25
3.2 GENERAL CONDITIONS.............................................................................25
3.3 CONDITIONS TO SELLER'S OBLIGATIONS.............................................................26
3.4 CONDITIONS TO PURCHASER'S OBLIGATIONS..........................................................26
3.5 DELIVERIES BY SELLER...........................................................................27
3.6 DELIVERIES BY PURCHASER........................................................................29
3.7 POST-CLOSING ACTIONS...........................................................................29
ARTICLE IV SELLER'S REPRESENTATIONS AND WARRANTIES
4.1 ORGANIZATION, ETC..............................................................................30
4.2 AUTHORIZATION..................................................................................30
4.3 BINDING EFFECT.................................................................................31
4.4 NO VIOLATIONS..................................................................................31
4.5 FINANCIAL INFORMATION..........................................................................31
4.6 CONDUCT IN THE ORDINARY COURSE; ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS..............32
4.7 LITIGATION.....................................................................................32
4.8 MATERIAL CONTRACTS.............................................................................32
4.9 OWNED REAL PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASES; VESSEL................................34
4.10 PERMITS. 34
4.11 NOTICES OF VIOLATIONS..........................................................................35
4.12 EMPLOYEE, EMPLOYEE BENEFIT AND LABOR MATTERS...................................................35
4.13 ENVIRONMENTAL MATTERS..........................................................................36
4.14 TAXES. ......................................................................................36
4.15 BROKERS AND FINDERS............................................................................37
4.16 DISCLAIMERS....................................................................................37
ARTICLE V PURCHASER'S REPRESENTATIONS AND WARRANTIES
5.1 ORGANIZATION...................................................................................38
5.2 AUTHORIZATION..................................................................................38
5.3 BINDING EFFECT.................................................................................38
5.4 NO VIOLATIONS..................................................................................38
5.5 FINANCING......................................................................................39
5.6 BROKERS AND FINDERS............................................................................39
5.7 VESSELS. 39
ARTICLE VI COVENANTS
6.1 OPERATION OF THE BUSINESS BETWEEN SIGNING AND CLOSING..........................................39
6.2 ACCESS TO INFORMATION..........................................................................42
6.3 COMMERCIALLY REASONABLE EFFORTS................................................................43
6.4 GOVERNMENT NOTIFICATION........................................................................44
6.5 BULK TRANSFER LAWS.............................................................................44
6.6 PUBLIC ANNOUNCEMENTS...........................................................................45
6.7 ACCOUNTS RECEIVABLE; RECEIPTS AND DISBURSEMENTS................................................45
6.8 TRANSITION SERVICES............................................................................45
6.9 LIKE-KIND EXCHANGE.............................................................................48
6.10 INSURANCE; RISK OF LOSS........................................................................49
6.11 INTRACOMPANY ARRANGEMENTS......................................................................51
6.12 RETAINED NAMES.................................................................................51
6.13 ▇▇▇▇ SOUND TERMINAL............................................................................51
6.14 MAINTENANCE OF INDEMNIFICATION RIGHTS..........................................................52
6.15 VESSELS. 52
6.16 CONFIDENTIALITY................................................................................53
6.17 NOTICE OF DEVELOPMENTS.........................................................................53
6.18 NON-COMPETITION................................................................................54
6.19 WHITE OAK LITIGATION...........................................................................57
6.20 CHARLEVOIX LANDFILL OPERATING LICENSE..........................................................57
ARTICLE VII EMPLOYEE MATTERS
7.1 OFFERS OF EMPLOYMENT...........................................................................58
7.2 EMPLOYEE-RELATED OBLIGATIONS AND COSTS.........................................................58
7.3 SEVERANCE......................................................................................59
7.4 SERVICE CREDIT.................................................................................60
7.5 WELFARE PLANS..................................................................................60
7.6 BONUSES. 60
ARTICLE VIII SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................61
8.2 INDEMNIFICATION BY SELLER......................................................................61
8.3 INDEMNIFICATION BY PURCHASER...................................................................63
8.4 CERTAIN LIMITATIONS............................................................................63
8.5 INDEMNIFICATION PROCESS........................................................................65
8.6 CHARACTERIZATION OF INDEMNIFICATION PAYMENTS...................................................67
8.7 SATISFACTION OF INDEMNIFICATION OBLIGATIONS....................................................67
8.8 ADDITIONAL ENVIRONMENTAL INDEMNIFICATION.......................................................67
8.9 REMEDIATION PROCEDURES AND STANDARDS...........................................................69
8.10 CORRECTIVE ACTION PROCEDURES AND STANDARDS.....................................................71
8.11 ▇▇▇▇▇ PURCHASE AGREEMENT.......................................................................72
8.12 EXCLUSIVE REMEDIES.............................................................................74
ARTICLE IX TERMINATION AND ABANDONMENT
9.1 TERMINATION....................................................................................74
9.2 EFFECT OF TERMINATION..........................................................................75
9.3 DETROIT TERMINAL LIQUIDATED DAMAGES............................................................75
ARTICLE X MISCELLANEOUS PROVISIONS
10.1 EXPENSES AND TAXES.............................................................................76
10.2 FURTHER ASSURANCES.............................................................................76
10.3 NOTICES. 77
10.4 HEADINGS AND SCHEDULES.........................................................................78
10.5 APPLICABLE LAW.................................................................................78
10.6 NO THIRD PARTY RIGHTS..........................................................................78
10.7 COUNTERPARTS...................................................................................78
10.8 AMENDMENT......................................................................................78
10.9 WAIVER. 78
10.10 SEVERABILITY...................................................................................79
10.11 ENTIRE AGREEMENT...............................................................................79
10.12 CONSENT TO JURISDICTION........................................................................79
10.13 BINDING EFFECT; NO ASSIGNMENT..................................................................80
* * * * *
Schedule A - Knowledge Persons
Schedule B - Title Insurance Policies/Commitments
Exhibit 2.4-1 - Preliminary Closing Statement
Exhibit 2.4-2 - Accounting Principles and Practices
Exhibit 3.3(f) - Detroit Lease
Exhibit 3.5(a) - General ▇▇▇▇ of Sale
Exhibit 3.5(b) - General Assignment and Assumption Instrument
Exhibit 3.5(c) - Special Warranty Deed
Exhibit 3.5(d) - Legal Opinion
DEFINED TERMS
Accounts Receivable..........................................................12
Action........................................................................1
Affiliate.....................................................................1
Agreement.....................................................................1
Allocation...................................................................23
Allocation Disagreement......................................................23
Antitrust Division...........................................................44
Assumed Collective Bargaining Agreements......................................2
Assumed Contracts............................................................17
Assumed Environmental Liabilities............................................18
Assumed Leases...............................................................17
Assumed Liabilities..........................................................16
Base Working Capital..........................................................2
Business.....................................................................12
Business Day..................................................................2
Business Employees............................................................2
Casualty Loss................................................................49
Casualty Loss Election.......................................................50
Casualty Termination Election................................................50
CCPC..........................................................................2
Challenger....................................................................2
Challenger Agreements.........................................................2
Change of Control Transaction.................................................2
Charlevoix Facility...........................................................1
Charlevoix Landfill..........................................................57
Charlevoix Landfill Operating License.....................................2, 57
Charlevoix PSD Matter........................................................63
Citizen.......................................................................2
Claim Notice.................................................................65
Closing......................................................................25
Closing Date.................................................................25
Closing Working Capital.......................................................3
CMC...........................................................................3
Code..........................................................................3
Co-Generation Lease...........................................................3
Confidentiality Agreement.....................................................3
Conquest......................................................................3
▇▇▇▇▇▇▇▇ ▇▇▇▇ of Sale........................................................29
Contract......................................................................3
Conveyance Taxes..............................................................3
CTL..........................................................................22
Current NOx Patent Application................................................3
Damages......................................................................62
Deeds........................................................................28
Detroit Lease Agreement......................................................27
Detroit Terminal.............................................................75
Direct Claim.................................................................65
▇▇▇▇▇ Amendment No. 1.........................................................3
▇▇▇▇▇ Business................................................................3
▇▇▇▇▇ Environmental Litigation................................................3
▇▇▇▇▇ Facility................................................................1
▇▇▇▇▇ Material Adverse Effect.................................................4
▇▇▇▇▇ Petition................................................................4
▇▇▇▇▇ Purchase Agreement......................................................4
▇▇▇▇▇ Real Property...........................................................4
▇▇▇▇▇ Retained Real Property..................................................4
Environmental Condition.......................................................4
Environmental Cost Sharing Matters............................................4
Environmental Law.............................................................4
Environmental Permit..........................................................4
ERISA.........................................................................5
ERISA Affiliate...............................................................5
Exchange Act.................................................................55
Excluded Assets..............................................................16
Excluded Environmental Liabilities............................................5
Excluded Liabilities.........................................................18
Excluded Taxes................................................................5
Facilities....................................................................1
Facility Employees...........................................................35
Final Allocation.............................................................23
Final Closing Statement......................................................21
Final Valuation..............................................................22
Financial Statements.........................................................32
Former Prairie Allocated Liability............................................5
FTC..........................................................................44
GAAP..........................................................................5
General Assignment and Assumption Instrument..................................5
General ▇▇▇▇ of Sale..........................................................5
Governmental Authority........................................................5
Governmental Order............................................................6
▇▇▇▇▇ ▇▇▇▇▇▇▇▇...............................................................21
Hazardous Substances..........................................................6
HSR Act.......................................................................6
Income Taxes..................................................................6
Indemnified Party............................................................65
Indemnifying Party...........................................................65
Independent Accounting Firm..................................................21
Interest Rate................................................................22
Intracompany Liabilities.....................................................19
Intracompany Receivables.....................................................15
Inventory.....................................................................6
Judgments.....................................................................6
Knowledge.....................................................................6
Known Environmental Matters...................................................6
Landfill Account.............................................................57
Law...........................................................................6
Lease.........................................................................7
Leased Real Property..........................................................7
Liability.....................................................................7
Lien..........................................................................7
Material Adverse Effect.......................................................7
▇▇▇▇▇▇.......................................................................51
▇▇▇▇▇▇ Supply Agreement......................................................51
Non-Transferred Employee.....................................................58
Notice of Disagreement.......................................................21
Off-Site Location.............................................................7
▇▇▇▇ Sound Terminal...........................................................7
Owned Real Property..........................................................34
Payroll Amount...............................................................47
Payroll Services.............................................................46
Permit........................................................................7
Permitted Liens...............................................................7
Person........................................................................8
Plans........................................................................36
Post-Acquisition Contacts....................................................33
Post-Closing Tax Period......................................................24
Prairie.......................................................................8
Prairie Allocated Liability...................................................8
Pre-Acquisition Contacts.....................................................33
Pre-Closing Tax Period.......................................................24
Preliminary Closing Statement................................................20
PSD Damages..................................................................63
Purchase Price...............................................................20
Purchased Assets.............................................................12
Purchaser.....................................................................1
Purchaser Detroit Liabilities................................................62
Real Property.................................................................9
Real Property Leases..........................................................9
Real Property Sublease........................................................9
Reference Balance Sheet.......................................................9
Reference Balance Sheet Date..................................................9
Release.......................................................................9
Remediation...................................................................9
Resolution Period............................................................21
Restricted Building Region....................................................9
Restricted Cement Business...................................................54
Restricted Cement Region.....................................................10
Restricted Period............................................................54
Retained Names...............................................................15
Retained Policies............................................................14
Seller........................................................................1
Seller Disclosure Schedule...................................................30
Seller Representatives.......................................................53
Seller Retained Environmental Fines and Penalties............................10
Seller Retained Off-site Liabilities.........................................10
Seller's Severance Cap.......................................................60
Shipping Act.................................................................10
Significant Business Combination Transaction.................................10
Significant Restricted Business..............................................10
Specified Affiliates.........................................................11
Straddle Period..............................................................11
Surveys......................................................................29
Tangible Personal Property...................................................13
Tax Returns..................................................................11
Taxes........................................................................11
Terminals.....................................................................1
Third Party Claim............................................................65
Threshold Damage Amount......................................................50
Title Company................................................................28
Title Policy.................................................................28
Title Representation Damages.................................................64
Transaction Documents........................................................11
Transferred Employee.........................................................58
Unassigned Contracts.........................................................43
Valenciana...................................................................11
Vessels......................................................................11
WARN Act.....................................................................11
Worker's Compensation Claim..................................................59
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of February 4, 2005, by and
between CEMEX, Inc., a Louisiana corporation ("Seller"), and Votorantim
Participacoes S.A., a corporation (sociedade anonima) organized under the laws
of the Federative Republic of Brazil ("Purchaser").
This Agreement sets forth the terms and conditions upon which Seller
will, and will cause its Affiliates to, sell to Purchaser or its Affiliates or,
with respect to the Conquest, its nominee, and Purchaser will purchase, or will
cause its Affiliates and, with respect to the Conquest, its nominee, to
purchase, from Seller or Seller's Specified Affiliates, certain assets of
Seller and its Specified Affiliates relating to Seller's cement plants located
in Dixon, Illinois (the "▇▇▇▇▇ Facility") and in Charlevoix, Michigan (the
"Charlevoix Facility") and its related cement distribution business with
terminals located in ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (subject to Section 6.13);
Ferrysburg, Michigan; Cleveland and Toledo, Ohio; Chicago, Illinois; and
Milwaukee, Manitowoc and Green Bay, Wisconsin (collectively, the "Terminals,"
and together with the ▇▇▇▇▇ Facility and the Charlevoix Facility, the
"Facilities"), and Purchaser will assume certain liabilities of Seller and its
Specified Affiliates relating to such assets.
ARTICLE I
DEFINITIONS AND TERMS
1.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
such Person. For the purposes of this definition, "control" (including, with
correlative meaning, the terms "controlled," "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Asset Purchase Agreement, together with the
Exhibits and Schedules hereto, the Seller Disclosure Schedule and the Purchaser
Disclosure Schedule, as the same may by amended or supplemented from time to
time in accordance with the terms of this Agreement.
"Assumed Collective Bargaining Agreements" means, collectively, the
collective bargaining agreements applicable to the Facility Employees that are
being assumed by Purchaser as set forth on Section 2.1(a)(xiii) of the Seller
Disclosure Schedule.
"Base Working Capital" means $30,959,000.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in New York City are authorized or obligated by Law or executive
order to close.
"Business Employees" means the current employees, officers and
directors of the Business.
"CCPC" means CEMEX Central Plains Cement LLC, a Delaware limited
liability company.
"Challenger" means the vessel named "Southdown Challenger."
"Challenger Agreements" means, collectively, (i) the Participation
Agreement, dated as of May 28, 2002, among Seller, as Charterer, Valenciana, as
Guarantor, Citicorp Railmark, Inc. as Owner Participant, and Wilmington Trust
Company, not in its individual capacity, except as expressly provided for
therein, but solely as Owner Trustee, and (ii) the Time Charter Party, made and
concluded on May 31, 2002, by and between Wilmington Trust Company, not in its
individual capacity, but solely as Owner Trustee and Seller.
"Change of Control Transaction" means any business combination
transaction (including any merger, consolidation, stock or asset purchase or
sale or other similar transaction) involving CEMEX S.A. de C.V. or Seller or
any of their respective Affiliates or subsidiaries that results in (i) CEMEX
S.A. de C.V. owning, immediately following the closing of such transaction,
less than 50% of the voting equity of Seller, (ii) the shareholders of CEMEX
S.A. de C.V. immediately prior to the closing of such transaction owning,
immediately following the closing of such transaction, less than 50% of the
voting equity of CEMEX S.A. de C.V. or (iii) CEMEX S.A. de C.V. or Seller
having, immediately following the closing of such transaction, sold all or
substantially all of their respective assets or businesses.
"Charlevoix Landfill Operating License" means the Solid Waste Disposal
Area Operating License for the operation of a Type III Low Hazard Industrial
Landfill, License No. 9069, in connection with the Charlevoix Facility.
"Citizen" means any Person within the meaning of 46 U.S.C. ss.
12102(a)(4) who is qualified to own and document vessels in the United States.
"Closing Working Capital" means the current assets of the Business as
of the Closing Date, minus the current liabilities of the Business, as of the
Closing Date, in each case as reflected on the balance sheet of the Business
included in the Final Closing Statement as provided in Section 2.4.
"CMC" means Canadian Medusa Cement Limited (f/k/a ▇▇▇▇▇▇ Terminals
Limited and 843343 Ontario Limited), a company organized under the laws of
Ontario, Canada.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Co-Generation Lease" means the Co-Generation Plant Lease Agreement,
dated July 30, 2002, by and between ▇▇▇▇▇ Energy Partners, LLC and Prairie
Materials Sales, Inc., which was assigned to CCPC pursuant to the ▇▇▇▇▇
Purchase Agreement.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
February 27, 2004, by and between Seller and Votorantim Cimentos Ltda., as the
same may by amended or supplemented from time to time in accordance with the
terms of the Confidentiality Agreement.
"Conquest" means the vessel named "CEMEX Conquest."
"Contract" means any contract, agreement, license, purchase order,
sale order, bid, unaccepted bid, instrument of indebtedness, guarantee or other
binding arrangement, whether written or oral.
"Conveyance Taxes" means all excise, sales, use, value added,
transfer, stamp, real property transfer, value added or gains and similar Taxes
and any transfer, recording, documentary, filing, registration and similar
levies, fees and charges.
"Current NOx Patent Application" means the United States provisional
patent application No. 60/583,663 filed by Licensor on June 29, 2004 entitled
"Method of Reducing Cement Kiln NOx Emissions by Water Injection".
"▇▇▇▇▇ Amendment No. 1" means the First Amendment to Purchase
Agreement, dated as of February 3, 2005, by and between Seller and Prairie.
"▇▇▇▇▇ Business" means the "Business" as such term is defined in the
▇▇▇▇▇ Purchase Agreement.
"▇▇▇▇▇ Environmental Litigation" means the "Environmental Litigation"
as such term is defined in the ▇▇▇▇▇ Purchase Agreement.
"▇▇▇▇▇ Material Adverse Effect" means a "Material Adverse Effect" as
such term is defined in the ▇▇▇▇▇ Purchase Agreement.
"▇▇▇▇▇ Petition" means the "Petition" as such term is defined in the
▇▇▇▇▇ Purchase Agreement.
"▇▇▇▇▇ Purchase Agreement" means the Purchase Agreement, dated June
20, 2003, between Prairie and Seller, as amended by (i) the letter agreement,
dated September 25, 2003, between Prairie and Seller and (ii) ▇▇▇▇▇ Amendment
No. 1.
"▇▇▇▇▇ Real Property" means the "Real Property" as such term is
defined in the ▇▇▇▇▇ Purchase Agreement.
"▇▇▇▇▇ Retained Real Property" means the "Retained Real Property" as
such term is defined in the ▇▇▇▇▇ Purchase Agreement.
"Environmental Condition" means the presence of Hazardous Substances
in the environment or building materials, the Release of Hazardous Substances
to the environment, or the disposal of Hazardous Substances to land-based
storage, treatment or disposal facilities (such as landfills), whether at the
Facilities, the Purchased Assets or any Off-Site Location, including any
migration of Hazardous Substances through air, soil, surface water,
groundwater, sediments, land or surface or subsurface strata at, to or from the
Facilities, the Purchased Assets or any Off-Site Location.
"Environmental Cost-Sharing Matters" means those Actions, Liabilities
and Damages described in clauses (i) through (iii) of Section 8.8(b), except in
each case to the extent that such Actions, Liabilities and Damages arise from
or relate to Known Environmental Matters.
"Environmental Law" means all Laws, including rules of common law,
relating to pollution or protection of the environment or human health and
safety, including Laws relating to Releases or threatened Releases of Hazardous
Substances into the indoor or outdoor environment (including air, soil, surface
water, groundwater, sediment, land and surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Substances; all
Laws that relate to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Substances; all Laws relating to wildlife,
including endangered or threatened species of fish and plants and the
management or use of natural resources; and all Laws regulating or setting
standards with respect to noise and, as such relates to mining and quarrying
activities conducted at the Facilities, seismic vibrations.
"Environmental Permit" means Permits issued pursuant to Environmental
Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any entity that is a member of a controlled
group for purposes of Section 4001(a)(14) of ERISA.
"Excluded Environmental Liabilities" means the Seller Retained
Environmental Fines and Penalties and the Seller Retained Off-Site Liabilities.
"Excluded Taxes" means (i) all Income Taxes owed by Seller or any of
its Affiliates for any period, (ii) all Taxes relating to the Excluded Assets
or Excluded Liabilities for any period, (iii) all Taxes relating to the
Purchased Assets, the Business or the Assumed Liabilities for any Pre-Closing
Tax Period or the allocable portion of a Straddle Period (as determined under
Section 2.6(a)), (iv) Seller's allocable portion of any Conveyance Taxes as
determined under Section 10.1(a) and (v) subject to Section 8.6, all Taxes
imposed on Purchaser or any of its Affiliates as a result of Seller breaching
(A) its representations and warranties set forth in Article IV or (B) its
covenants under Sections 2.6 and 10.1, except in the case of clauses (i), (ii)
and (iii), to the extent of any Tax Liabilities reflected in the Final Closing
Statement and that are taken into account in determining any Purchase Price
adjustment under Section 2.4.
"Former Prairie Allocated Liability" means any Damage with respect to
any matter or event for which Purchaser or any of its Affiliates would have
been entitled to indemnification from Prairie solely as a result of the
inaccuracy of any representation or warranty of Prairie (other than the
representations and warranties in Sections 6.1(a), 6.1(b), 6.1(c), 6.1(l), and
6.1(r)) under the terms of the ▇▇▇▇▇ Purchase Agreement had the ▇▇▇▇▇ Amendment
No. 1 not become effective. To the extent that Purchaser or any of its
Affiliates would be entitled to indemnification from Prairie under other terms
of the ▇▇▇▇▇ Purchase Agreement (including, for example, indemnification for
matters that are retained liabilities under the ▇▇▇▇▇ Purchase Agreement), such
Damages shall not be considered a Former Prairie Allocated Liability.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"General Assignment and Assumption Instrument" means an instrument of
general assignment and assumption with respect to the Assumed Liabilities in
substantially the form of Exhibit 3.5(b).
"General ▇▇▇▇ of Sale" means a ▇▇▇▇ of sale in substantially the form
of Exhibit 3.5(a).
"Governmental Authority" means any U.S. or non-U.S. federal, state,
foreign or local legislative, executive, administrative, judicial, provincial,
quasi-judicial or other public authority, agency, department, bureau, division,
unit, court or other public body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Substances" means (i) any petrochemical or petroleum
products, radioactive materials, radon gas, asbestos or asbestos-containing
materials, mold, lead-based paint, urea formaldehyde foam insulation and
polychlorinated biphenyls, (ii) any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning
and regulatory effect under any applicable Environmental Law and (iii) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any applicable Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Income Taxes" means any and all Taxes based on or measured by
reference to gross or net income (and franchise or other Taxes imposed in lieu
thereof).
"Inventory" means all inventory held for sale and all raw materials,
work in process, finished products, supply and packaging materials, in each
case primarily relating to the Business and located at the Facilities and the
Detroit Terminal.
"Judgments" means any judgments, decisions, injunctions, orders,
decrees, writs, rulings or awards of any court or other judicial authority or
any Governmental Authority of competent jurisdiction.
"Knowledge" means, with respect to Seller, the actual knowledge of
those Persons set forth in Schedule A after such Person reviewed this Agreement
and the disclosures schedules and made a reasonable investigation with respect
to matters set forth in this Agreement relating to such Person's particular
area of responsibility; provided, however, that if any such Person fails to
make such an investigation, "Knowledge" of such Person shall include the
matters such Person would have known had such reasonable investigation been
conducted.
"Known Environmental Matters" means those matters identified on
Section 2.2(a)(viii) of the Seller Disclosure Schedule.
"Law" means each applicable provision of any constitution, statute,
law, ordinance, code, rule, regulation, Judgment, release, license or other
official legally binding pronouncement of any Governmental Authority.
"Lease" means any (i) Real Property Lease, (ii) Real Property Sublease
and (iii) written or oral lease, sublease, rental contract or similar contract
related to the Business or the Purchased Assets and pursuant to which Seller or
any of its Affiliates leases any Tangible Personal Property from a third party
(together with all amendments, modifications, supplements, waivers and consents
thereto or thereunder).
"Leased Real Property" means any real property leased by Seller or its
Affiliates from third parties pursuant a Real Property Lease.
"Liability" means any liability, expense, fee, penalty, fine, damage
or obligation of any nature, whether known or unknown, accrued, absolute,
contingent or otherwise, and whether due or to become due.
"Lien" means any lien (statutory or otherwise), encumbrance or adverse
claim, deed to secure debt, mortgage, preferred ship mortgage, maritime lien,
lease, license the interest of a lessor under any capital lease, security
interest, option, charge, pledge, hypothecation, title defect or objection,
reversion, reverter, preferential arrangement, easement, encroachment,
restrictive covenant or restriction of any kind.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition or results of operations of the Business, taken
as a whole, except to the extent any such effect is attributable to or results
from (i) any change in applicable Law or in the interpretation of any
applicable Law by any Governmental Authority, (ii) any change in GAAP, (iii)
the execution or announcement of this Agreement or compliance with the terms
hereof, (iv) any circumstances or conditions generally affecting the portland
cement or aggregates industry in the United States and Canada that do not
affect the Business in a materially disproportionate manner relative to other
Persons engaged in such business, or (v) general economic, political or market
conditions in the United States and Canada that do not affect the Business in a
materially disproportionate manner relative to other Persons engaged in the
portland cement or aggregates business in the United States and Canada;
provided that the exception set forth in clause (iii) above shall not apply in
respect of representations and warranties of Seller contained in Sections 4.4
and 4.12(d).
"Off-Site Location" means any real property other than the Real
Property.
"▇▇▇▇ Sound Terminal" means Seller's cement terminal located in ▇▇▇▇
Sound, Ontario Canada.
"Permit" means any license, approval, registration, variances, permit,
authorization, certificate or similar rights granted or issued by a
Governmental Authority.
"Permitted Liens" means the following: (i) Liens set forth in Section
1.1(a) of the Seller Disclosure Schedule, (ii) mechanics', carriers',
workmen's, repairmen's, landlord's or other like Liens arising or incurred in
the ordinary course of business (as to which no enforcement, execution, levy or
foreclosure shall have commenced or for which no ▇▇▇▇ shall have been sent),
(iii) Liens for Taxes, assessments and other governmental charges which are not
delinquent or are being contested in good faith in appropriate proceedings and
for which adequate reserves have been maintained in accordance with GAAP, (iv)
all matters shown on those certain surveys of the ▇▇▇▇▇ Facility by S and E
Enterprises, Inc. d/b/a Survey-Tech (File Numbers 316-03 and 317-03), copies of
which have been provided to Purchaser, (v) all matters shown on each of the
Surveys to the extent such matters do not, individually or in the aggregate,
materially impair the present occupancy or use of the applicable Real Property,
(vi) any matters shown on those certain title insurance policies/commitments
set forth on Schedule B attached hereto (other than those matters identified as
unpermitted on such schedule), (vii) any other covenants, conditions,
restrictions, reservations, rights, claims, rights-of-ways, easements and other
encumbrances or matters of record affecting title to the Purchased Assets but
which, in any event, do not materially interfere with the present occupancy or
use of the applicable Purchased Asset in the Business which (A) were not
incurred in connection with any indebtedness for borrowed money and (B) do not
render title to the applicable Real Property encumbered thereby unmarketable,
(viii) zoning, building, land use, conservation and other similar restrictions
imposed by Law, (ix) the terms of the Assumed Leases and Assumed Contracts and
liens of the other parties to such Assumed Leases and Assumed Contracts arising
thereunder for sums not yet due and payable, (x) Liens related to Assumed
Liabilities, (xi) Liens affecting a lessor's or licensor's interest in Tangible
Personal Property leased or licensed to Seller, (xii) Liens registered under
the Uniform Commercial Code as adopted in any applicable state or similar
legislation in other jurisdictions by any lessor or licensor of Tangible
Personal Property to Seller, (xiii) Liens arising in the ordinary course of
business after the date hereof that do not, individually or in the aggregate,
materially impair the present use or value of the Purchased Assets, provided
that such Liens do not arise as a result of Seller incurring or assuming any
indebtedness for borrowed money, and (xiv) Liens arising or resulting, during
or after the Closing, from any action taken by Purchaser or any of its
Affiliates.
"Person" means any individual, sole proprietorship, partnership, joint
venture, corporation, estate, trust, unincorporated organization, association,
limited liability company, institution, Governmental Authority, or other
entity.
"Prairie" means Prairie Material Sales, Inc., an Illinois corporation.
"Prairie Allocated Liability" means any Damage with respect to any
matter or event for which Seller or any of its Affiliates would have been
entitled to indemnification from Prairie under the terms of the ▇▇▇▇▇ Purchase
Agreement had the transactions contemplated by this Agreement not occurred,
without regard to (i) any defense that Prairie may otherwise have to such
indemnification obligation under any applicable bankruptcy, insolvency or
similar Law affecting creditors' rights generally, (ii) any defense that
Prairie may otherwise have to such indemnification obligation by virtue of any
act or omission of Purchaser or any of its Affiliates, (iii) any failure or
inability of Purchaser or any of its Affiliates to collect on any judgment
against Prairie with respect to any such claim or (iv) any modifications to the
▇▇▇▇▇ Purchase Agreement that occur after the Closing.
"Real Property" means, collectively, the Leased Real Property and the
Owned Real Property.
"Real Property Leases" means any lease, sublease or similar agreement
pursuant to which Seller or any of its Affiliates leases, subleases or
otherwise occupies any real property primarily used in (or intended to be used
in) or primarily related to the Business.
"Real Property Sublease" means any lease, sublease or similar
agreement granting to any other Person any right to the use or occupancy of the
Owned Real Property.
"Reference Balance Sheet" means the unaudited combined balance sheet
of the Business, dated October 31, 2004 and expressed in U.S. dollars, a copy
of which is set forth in Section 4.5(a) of the Seller Disclosure Schedule.
"Reference Balance Sheet Date" means October 31, 2004.
"Release" means any release, spill, emission, discharge, leaking,
pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or
migration of Hazardous Substances into soil, surface water, ground water,
sediments, land or surface or subsurface strata.
"Remediation" means actions undertaken to address an Environmental
Condition, including the following activities: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any Permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining a written notice from a Governmental Authority with
jurisdiction over the Facilities, the Purchased Assets, or an Off-Site Location
under Environmental Laws that no material additional work is required by such
Governmental Authority; (v) the use, implementation, application, installation,
operation or maintenance of removal actions on the Facilities, the Purchased
Assets or Off-Site Locations, remedial technologies applied to the surface or
subsurface soils, excavation and treatment or disposal of soils at an Off-Site
Location, systems for long-term treatment of surface water or groundwater,
engineering controls or institutional controls; and (vi) any other activities
reasonably determined to be necessary or appropriate or required under
Environmental Laws to address an Environmental Condition.
"Restricted Building Region" means the areas that fall within a 150
mile radius around each of (i) the ▇▇▇▇▇ Facility and (ii) the Charlevoix
Facility.
"Restricted Cement Region" means, unless this definition is modified
pursuant to Section 6.13, (i) the State of Michigan and (ii) the areas that
fall within a 150 mile radius around each of (A) the ▇▇▇▇▇ Facility, (B) the
Terminals located in the cities of Milwaukee, Manitowoc and Green Bay,
Wisconsin and (C) the Terminal located in the city of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇.
"Seller Retained Environmental Fines and Penalties" means any fines
and penalties arising out of or related to any violations of or non-compliance
with Environmental Laws or Environmental Permits by Seller or any of its
Affiliates with respect to the Facilities or the Purchased Assets during the
period of Seller's ownership of the Facility or Purchased Asset; provided,
however, that "Seller Retained Environmental Fines and Penalties" shall not
include (i) any costs associated with correcting any such violations or
non-compliance, (ii) any such fines or penalties that arise out of any Known
Environmental Matter or (iii) any fines or penalties attributable to violations
of, or non-compliance with, Environmental Laws or Environmental Permits that
occur after the Closing Date, including any portion of any fine or penalty to
the extent that portion is attributed to the continuation after the Closing
Date of any violations of, or non-compliance with, applicable Environmental
Laws or Environmental Permits that commenced prior to the Closing Date.
"Seller Retained Off-Site Liabilities" means Liabilities relating to
or resulting or arising from the off-site transportation, storage, disposal,
treatment, or recycling of Hazardous Substances generated by and transported by
or on behalf of Seller or any of its Affiliates in connection with the Business
prior to the Closing Date, including claims related to loss of life, injury to
persons or property or Remediation of Environmental Conditions.
"Shipping Act" means the Shipping Act, 1916 (46 U.S.C. ss. 801 et
seq.), as amended, and the rules and regulations promulgated thereunder.
"Significant Business Combination Transaction" means any business
combination transaction (including any merger, consolidation, stock purchase or
sale or other similar transaction) involving Seller or any of its subsidiaries
or Affiliates where immediately following the consummation of such transaction
the shareholders of the other party to such transaction or any of such Person's
Affiliates or subsidiaries owns at least 20% of the outstanding equity of
CEMEX, S.A. de C.V. (or any Person who shall be a successor, by merger or
otherwise, to Seller or any of its subsidiaries or Affiliates of any of the
foregoing in connection with or at any time after such transaction).
"Significant Restricted Business" means, with respect to a particular
Person, the Restricted Cement Businesses of such Person if more than 25% of
such Person's consolidated total revenues during the most recently completed
fiscal year were derived from such Person's Restricted Cement Businesses.
"Specified Affiliates" means, collectively, CCPC and CMC.
"Straddle Period" means any taxable period beginning on or prior to
and ending after the Closing Date.
"Tax Returns" means any report, return, declaration or other filing
required to be supplied to any taxing authority or jurisdiction with respect to
any Tax, including any amendments or attachments thereto and including any
information return, claim for refund, amended return or declaration of
estimated Tax.
"Taxes" means any and all taxes, assessments, charges, duties,
tariffs, imposts, fees, levies or other governmental charges, including all
federal, state, local, foreign or other income, windfall or other profits,
unitary, gross receipts, payroll, business, franchise, capital stock, real
property, personal property, intangible taxes, withholding, FICA, unemployment
compensation, transfer, sales, use, ad valorem, stamp, value added, excise and
other taxes, assessments, charges, duties, fees, or levies of any kind
whatsoever (whether or not requiring the filing of returns), any transferee or
secondary liability in respect of taxes and all deficiency assessments,
additions to tax, penalties and interest.
"Transaction Documents" means this Agreement, the General Assignment
and Assumption Agreement, the General ▇▇▇▇ of Sale, the Deeds, the ▇▇▇▇▇▇▇▇
▇▇▇▇ of Sale, the Detroit Lease Agreement and any other deeds, endorsements,
assignments or other documents delivered in connection with this Agreement.
"Valenciana" means CEMEX Espana, S.A., a company organized and
existing under the laws of Spain that was formerly known as Compania Valenciana
De Cementos Portland, S.A.
"Vessels" means, collectively, the Challenger and the Conquest.
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended from time to time, and the rules and regulations
promulgated thereunder.
1.2 Other Definitional Provisions.
(a) Any reference to an Article, Section, Exhibit or
Annex is a reference to an Article or Section of, or an Exhibit or Annex to,
this Agreement, unless otherwise specified.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) The words "include," "includes" and "including"
are not limiting.
(d) The terms "dollars" and "$" mean United States
dollars.
(e) The phrases "the date of this Agreement," "the
date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to February 4, 2005.
ARTICLE II
TRANSFER OF ASSETS AND LIABILITIES
2.1 Assets.
(a) Purchased Assets. Upon the terms and subject to
the conditions of this Agreement, at the Closing, Seller shall, and shall cause
its Specified Affiliates to, sell, transfer, convey, assign, lease and deliver
to Purchaser and/or one or more Affiliates or, with respect to the Conquest,
the nominee of Purchaser (as designated by Purchaser), and Purchaser shall, and
shall cause any such designated Affiliate or, with respect to the Conquest,
such nominee to, purchase, acquire and accept from Seller all of Seller's and
the Specified Affiliates' right, title and interest in all of the (y) fixed
assets located at the Facilities and (z) other properties, assets, rights,
claims and contracts (collectively, the "Purchased Assets") primarily used in
(or intended to be primarily used in) or primarily related to Seller's business
of producing, marketing, distributing and selling portland cement and coarse
construction aggregates (as customarily performed by Seller prior to the
Closing) at or from the Facilities (the "Business"), free and clear of any and
all Liens (other than Permitted Liens) and excluding the Excluded Assets.
Without limiting the generality of the foregoing, the Purchased Assets shall
include (other than Excluded Assets) all right, title and interest in the
following assets, rights, properties and contracts of Seller and its Specified
Affiliates as of the Closing Date:
(i) the Inventory for which title of ownership
has not passed from Seller to its customers prior to the Closing;
(ii) all prepaid expenses, prepaid Taxes,
advance payments, deposits and prepaid items, including prepaid
interest and deposits with lessors, suppliers or utilities, to the
extent related to the Business;
(iii) Seller's and Seller's Affiliates' accounts
receivable primarily arising out of and primarily related to the
conduct of the Business and outstanding as of the Closing, other than
the Intracompany Receivables ("Accounts Receivable");
(iv) the Owned Real Property, including, to the
extent of Seller's or its Specified Affiliates' rights, titles and
interests therein, all mineral rights appurtenant to the Owned Real
Property, all buildings, structures, fixtures and other improvements
located thereon and all easements, rights-of-way and other rights and
interests appurtenant thereto;
(v) all equipment, motor vehicles and other
tangible personal property owned or leased by Seller and/or a
Specified Affiliate, as the case may be, and located on the Real
Property or used primarily in the conduct of the Business as presently
conducted, including all vehicles (both plant and delivery), office
furniture, and operating and other supplies (including fuel), tools,
repair parts and spare parts located at the Facilities, including
those assets listed in Section 2.1(a)(v) of the Seller Disclosure
Schedule (collectively, "Tangible Personal Property");
(vi) subject to receipt of any required
contractual consents, all Assumed Leases;
(vii) subject to receipt of any required
contractual or governmental consents and, with respect to the
Challenger Agreements, Purchaser satisfying its obligations under
Section 6.15, all Assumed Contracts;
(viii) other than the Charlevoix Landfill
Operating License, all Permits issued to Seller or its Specified
Affiliates in connection with its operation of the Business or its
ownership, possession, occupancy or use of any of the Purchased
Assets, including those Permits listed in Section 2.1(a)(viii) of the
Seller Disclosure Schedule;
(ix) all claims and rights of action, including
warranty, indemnification and other rights (including performance
guarantees and, except as set forth in Section 6.10, rights to
insurance proceeds) (to the extent transferable), in each case to the
extent primarily relating to the ownership or operation of, or
primarily used for the conduct of, the Business or the Purchased
Assets, but excluding (A) any of the foregoing that exclusively relate
to any Excluded Liabilities, (B), except as set forth in Section 6.10,
any claim for reimbursement under insurance policies for losses or
damages suffered or incurred with respect to the Business or any
Purchased Assets prior to the Closing Date and (C) those referred to
in Sections 2.1(b)(xv) and 2.1(b)(xvii);
(x) all originals (or if originals are
unavailable, copies) of (A) the Assumed Contracts and other documents
that constitute an Assumed Liability, and (B) all other books of
account, records, files, customer and supplier lists, price lists,
vessel records and logs and correspondence (including that on
microfiche and computer tapes and disks) primarily associated with, or
used by Seller in the operation, ownership or use of, the Facilities
or the ownership, use, possession or occupancy of any of the Purchased
Assets, but specifically excluding records that are a part of Seller's
accounting system; provided that Seller may, subject to Section 6.16,
retain one copy of any such items listed in clauses (A) and (B) of
this Section 2.1(a)(x);
(xi) the goodwill of the Business;
(xii) subject to Purchaser satisfying its
obligations under Section 6.15, the Conquest;
(xiii) subject to receipt of contractual
consents from the applicable union, to the Assumed Collective
Bargaining Agreements;
(xiv) all Real Property Tax Returns and sales
Tax Returns specified in Section 2.1(a)(xiv) of the Seller Disclosure
Schedule and related workpapers to the extent exclusively related to
the Purchased Assets or the Business; and
(xv) the assets described in Section 2.1(a)(xv)
of the Seller Disclosure Schedule.
(b) Excluded Assets. Except to the extent expressly
described above, Purchased Assets shall not include any other assets,
properties, rights and interest of Seller or any of its Affiliates, and,
without limiting the generality of the foregoing and notwithstanding Section
2.1(a), Purchased Assets shall not include the following:
(i) the assets described in Section 2.1(b)(i) of
the Seller Disclosure Schedule;
(ii) cash, cash equivalents and other short term
investments;
(iii) any Inventory sold or otherwise disposed
of in accordance with Section 6.1(d) to non-Affiliates of Seller
during the period from the date of this Agreement until the Closing;
(iv) except as set forth in Section 6.10, any
insurance policies or insurance coverage (or assumed coverage) of
Seller or any of its Affiliates, including any policy or coverage
relating to the Purchased Assets or the Business (the "Retained
Policies");
(v) any rights pursuant to any agreement or
contract between Seller and any of its Affiliates, unless otherwise
listed on Section 2.1(b)(v) of the Seller Disclosure Schedule;
(vi) subject to Section 6.7, all outstanding
amounts, including Accounts Receivable, owing to the Business from
other businesses of Seller or Seller's Affiliates (the "Intracompany
Receivables");
(vii) all rights, including the right to use, in
or to (a) any intellectual property of Seller and its Affiliates,
whether or not exclusively used in or necessary for the conduct of the
Business, including Seller's and its Affiliates' patents, copyrights,
tradenames, trademarks, service marks, logos, slogans, internet domain
names, licenses and software (whether or not registered in any country
in the world), (b) Seller's and its Affiliates' rights to the
trademarks "CEMEX", "Southdown" or "Medusa" and (c) those items listed
on Section 2.1(b)(vii) of the Seller Disclosure Schedule (such names,
collectively, the "Retained Names");
(viii) the services of the Non-Transferred
Employees;
(ix) all refunds, rebates or similar payments of
Taxes to the extent related to the Excluded Taxes (other than any such
amount for which Seller has received a Purchase Price adjustment
pursuant to Section 2.4);
(x) the assets of any employee benefits plan,
program, agreement or arrangement maintained by Seller or any of its
Affiliates;
(xi) all Tax Returns of Seller other than those
specified in Section 2.1(a)(xiv) of the Seller Disclosure Schedule;
(xii) any books and records related to the
Business that Seller or any of its Affiliates is required by Law to
retain, so long as Seller delivers at least one copy thereof to
Purchaser;
(xiii) rights of Seller or any of its Affiliates
under this Agreement and the other Transaction Documents entered into
by Seller or any of its Affiliates pursuant to or in connection with
this Agreement;
(xiv) all other assets and rights (excluding
Purchased Assets) of every kind and nature, real or personal, tangible
or intangible, used primarily or held by Seller or any of its
Affiliates for use primarily in connection with its ownership,
possession, occupancy, use or management of the Excluded Assets;
(xv) all rights with respect to claims or legal
proceedings relating to the Business set forth on Section 2.1(b)(xv)
of the Seller Disclosure Schedule;
(xvi) the shares of ownership or other ownership
interests in any Affiliate or subsidiary of Seller and any Tax
attributes of any Affiliate or subsidiary of Seller;
(xvii) all rights, privileges, claims, demands,
choses in action, prepayments, deposits, refunds, claims in
bankruptcy, indemnification agreements with, and indemnification
rights against, third parties, warranty claims, offsets and other
rights and claims primarily relating to any Excluded Asset or any
Excluded Liability and the rights and claims excluded from the
Purchased Assets pursuant to Section 2.1(b)(xv);
(xviii) all correspondence and documents
prepared by Seller for its internal evaluation purposes or related to
any third party bid to purchase the assets of the Business in
connection with the sale of the Business;
(xix) any collective bargaining agreement
between Seller or any of its Affiliates and any union other than the
Assumed Collective Bargaining Agreements; and
(xx) the Charlevoix Landfill Operating License.
The assets retained by Seller and/or any of its Affiliates pursuant to this
Section 2.1(b) are "Excluded Assets".
2.2 Liabilities.
(a) Assumed Liabilities. Subject to the terms and
conditions set forth herein, at Closing, Purchaser agrees to assume and pay,
discharge and perform when due (or to cause its Affiliates or, with respect to
the Conquest, its nominee to pay, discharge and perform when due) and shall
assume (or cause its Affiliates or, with respect to the Conquest, its nominee
to assume) pursuant to the General Assignment and Assumption Instrument (or
such other assignment and assumption agreement acceptable to Purchaser and
Seller), the following Liabilities, except for the Excluded Liabilities (the
"Assumed Liabilities"):
(i) Liabilities relating to periods on or after
the Closing Date (and all Liabilities arising prior to the Closing
Date in the ordinary course of business to the extent performance is
required after the Closing Date and to the extent Purchaser receives
the benefit corresponding to such Liabilities) under the Leases
(excluding Leases that are Unassigned Contracts) that are either (A)
listed on Section 4.9(c) of the Seller Disclosure Schedule (unless
designated in such Schedule as not being assumed by Purchaser), or (B)
entered into between the date hereof and the Closing by the Seller or
any of its Specified Affiliates in accordance with Section 6.1,
excluding in each case Liabilities attributable to any breach or
default of such Lease by Seller or any Specified Affiliate prior to
the Closing (collectively, the "Assumed Leases");
(ii) Liabilities relating to periods on or after
the Closing Date (and all Liabilities arising prior to the Closing
Date in the ordinary course of business to the extent performance is
required after the Closing Date and to the extent Purchaser receives
the benefit corresponding to such Liabilities) under the Contracts
(excluding Contracts that are Unassigned Contracts) related to the
Business that are either (A) listed on Section 2.2(a)(ii) of the
Seller Disclosure Schedule (unless designated in such Schedule as not
being assumed by Purchaser), or (B) entered into between the date
hereof and the Closing by Seller or any of its Specified Affiliates in
accordance with Section 6.1, excluding in each case Liabilities
attributable to any breach or default of such Contract by Seller or
any Specified Affiliate prior to the Closing (collectively, the
"Assumed Contracts");
(iii) reclamation obligations with respect to
the Charlevoix Facility and the ▇▇▇▇▇ Facility;
(iv) all Liabilities for Taxes (other than
Excluded Taxes) with respect to the Purchased Assets or the Business,
including those taxes for which Purchaser is liable pursuant to
Section 2.6(a) for taxable periods (or portions thereof) ending after
the Closing Date and Section 10.1(a);
(v) all Liabilities relating to, or occurring or
existing in connection with, or arising out of, the ownership and
operation of the Purchased Assets or the conduct of the Business on or
after the Closing Date;
(vi) all Liabilities of Seller or any of its
Specified Affiliates under any Permit constituting a Purchased Asset
that arise on or after the Closing Date (and all Liabilities arising
prior to the Closing Date in the ordinary course of business to the
extent performance is required after the Closing Date and to the
extent Purchaser receives the benefit corresponding to such
Liabilities);
(vii) all Liabilities arising out of or in
connection with product liability claims for personal injuries,
property damage or losses that involve the use of any product sold or
otherwise disposed of by Purchaser or any of its Affiliates on or
after the Closing Date;
(viii) all Liabilities relating to or resulting
or arising from the following: (A) any violation or alleged violation
of or non-compliance with Environmental Laws or Environmental Permits
whether prior to, on or after the Closing Date, with respect to the
ownership, lease, maintenance or operation of the Facilities, the
Purchased Assets or the Business, including any fines or penalties and
the costs associated with correcting any such violations or
non-compliance, but excluding any Seller Retained Environmental Fines
or Penalties; (B) Environmental Conditions or exposure to Hazardous
Substances at, on, in, under, adjacent to or migrating or discharged
to or from the Facilities or Purchased Assets prior to, on or after
the Closing Date, including loss of life, injury to persons or
property (including from exposure to asbestos-containing materials),
damage to natural resources, and Remediation of Environmental
Conditions; (C) the off-site transportation, storage, disposal,
treatment, or recycling of Hazardous Substances generated by and
transported by or on behalf of Purchaser or any of its Affiliates in
connection with the Business on or after the Closing Date, including
claims related to loss of life, injury to persons or property or
Remediation of Environmental Conditions; and (D) Known Environmental
Matters. The Liabilities described in this subsection are collectively
the "Assumed Environmental Liabilities."
(ix) all Liabilities reflected on the Final
Closing Statement;
(x) the Assumed Collective Bargaining
Agreements;
(xi) all Liabilities arising out of, relating
to, or occurring or existing in connection with, for the period after
the Closing Date, the employment, compensation, benefits, severance or
termination of employment of the Transferred Employees by Purchaser or
its Affiliates pursuant to plans, arrangements and policies of
Purchaser or its Affiliates (including the Assumed Collective
Bargaining Agreements), except as otherwise provided in Article VII of
this Agreement; and
(xii) all Liabilities specifically assumed by
Purchaser pursuant to Sections 6.10(d).
(b) Excluded Liabilities. Except as otherwise
provided in this Section 2.2(b) with respect to the Prairie Allocated
Liabilities, Seller and its Specified Affiliates shall retain, and shall be
responsible for paying, performing and discharging when due, and Purchaser
shall not assume or have any responsibility for, the Liabilities of Seller and
the Specified Affiliates other than the Assumed Liabilities (the "Excluded
Liabilities"), including:
(i) all Liabilities with respect to Excluded
Taxes;
(ii) all Liabilities relating to, or occurring
or existing in connection with, or arising out of, the ownership and
operation of the Excluded Assets, whether before, on or after, the
Closing Date;
(iii) relating to, or occurring or existing in
connection with, or arising out of, the ownership and operation of the
Business prior to the Closing Date, except obligations or liabilities
assumed pursuant to Sections 2.2(a)(i), (ii), (iii), (iv), (vi),
(viii), (ix) and (xii);
(iv) all Liabilities arising out of or in
connection with product liability claims for personal injuries,
property damage or losses that involve the use of any product sold or
otherwise disposed of by Seller or any of its Affiliates prior to the
Closing Date;
(v) all Liabilities relating to litigation of
Seller and its Affiliates pending as of the Closing, including the
Actions identified in Section 2.2(b)(v) of the Seller Disclosure
Schedule;
(vi) all Excluded Environmental Liabilities;
(vii) all Liabilities arising out of, relating
to, or occurring or existing in connection with, (A) for the period
ending on and including the Closing Date, the employment,
compensation, benefits, severance or termination of employment of the
Business Employees by Seller or its Affiliates, (B) for the period
prior to, on and after the Closing Date, the employment, compensation,
benefits, severance or termination of employment of the
Non-Transferred Employees and (C) for the period prior to, on and
after the Closing Date, the employment, compensation, benefits,
severance or termination of employment of any former employees,
officers or directors of the Facilities, in each case except as
otherwise provided in Article VII;
(viii) all Liabilities relating to indebtedness
for borrowed money, obligations evidenced by notes, bonds, debentures
or similar instrument or obligations as lessee under capital leases
(other than, to the extent assumed by Purchaser, Liabilities under the
Challenger Agreements) relating to the Business; and
(ix) all amounts, including accounts payable,
due from the Business to other businesses of Seller or any of its
Affiliates (the "Intracompany Liabilities");
provided, however, that, notwithstanding the foregoing, with respect to any
such Liabilities that constitute Prairie Allocated Liabilities, such
liabilities shall not constitute Excluded Liabilities to the extent that either
(x) Seller has an indemnification right with respect thereto pursuant to
Section 8.11(a) or (y) Purchaser is not entitled to seek indemnification from
Seller with respect thereto under Section 8.11(b).
2.3 Purchase Price. The purchase price for the sale,
conveyance, assignment, transfer and delivery of the Purchased Assets, shall be
the sum of (a) $389,200,000, plus (b) the value of the Landfill Account as of
the Closing Date (the "Purchase Price"), subject to adjustment as set forth in
Section 2.4, plus the assumption of the Assumed Liabilities in accordance with
Section 2.2(a). Notwithstanding any other provision of this Agreement, if
Seller does not deliver the certificate described in Section 3.5(e) at or prior
to the Closing, Purchaser shall be permitted to withhold from the Purchase
Price the amount required to be withheld pursuant to Section 1445 of the Code
as calculated by Purchaser in good faith.
2.4 Purchase Price Adjustment.
(a) As promptly as practicable, but in any event not
later than 60 calendar days after the Closing Date, Seller shall cause to be
prepared and delivered to Purchaser a statement (the "Preliminary Closing
Statement") substantially in the form of Exhibit 2.4-1, setting forth (i) the
balance sheet of the Business at the close of business on the day immediately
preceding the Closing Date, which shall be prepared in accordance with GAAP on
a basis consistent with the preparation of the Reference Balance Sheet and
consistent with the accounting principles, practices and methodologies set
forth in Exhibit 2.4-2 (and excluding the items identified therein) and (ii)
Seller's calculation (based on the amounts set forth on the balance sheet
contained in the Preliminary Closing Statement) of the Closing Working Capital.
Seller shall allow Purchaser's employees, accountants and other authorized
representatives the opportunity to review Seller's preparation of the
Preliminary Closing Statement, including the opportunity (A) to observe any
counting of inventory and similar activity conducted in the preparation of the
Preliminary Closing Statement and other accounting procedures, and (B) to
obtain copies of Seller's work papers and, to the extent Seller can obtain
access using commercially reasonable efforts, access to Seller's accountant's
work papers).
(b) Subject to the provisions of Section 2.4(c),
Purchaser shall have 30 calendar days from the date of delivery of the
Preliminary Closing Statement to review and approve or disapprove the
Preliminary Closing Statement. Seller shall provide Purchaser and its
representatives with copies of Seller's work papers and, to the extent Seller
can obtain access using commercially reasonable efforts, access to Seller's
accountants' work papers generated in connection with the preparation of the
Preliminary Closing Statement, as well as access to employees and
representatives of Seller and its accounting firm to assist Purchaser in its
review of such work papers and the Preliminary Closing Statement. If Purchaser
has no objections to the Preliminary Closing Statement or to Seller's
calculation of the Closing Working Capital contained in the Preliminary Closing
Statement, Purchaser shall promptly so advise Seller in writing. If Purchaser
so advises Seller, or if Purchaser fails to deliver the Notice of Disagreement
referred to below within the requisite 30 calendar day period, the calculation
of the Closing Working Capital set forth in the Preliminary Closing Statement
shall be deemed final.
(c) If Purchaser has any objections to the
Preliminary Closing Statement or to the calculation of the Closing Working
Capital set forth in the Preliminary Closing Statement, including objections to
the valuation of the Inventory, Purchaser shall notify Seller in writing (the
"Notice of Disagreement") of such disagreement within 30 calendar days after
delivery of the Preliminary Closing Statement (such 30 calendar day period, the
"Resolution Period"). The Notice of Disagreement shall set forth in reasonable
detail the basis for the disagreement. Thereafter, Seller and Purchaser shall
attempt in good faith to resolve any such objection. Except with respect to
disagreements regarding the valuation of the Inventory (which will be resolved
pursuant to Section 2.4(d)), if Seller and Purchaser are unable to resolve the
disagreement within 30 calendar days after the delivery of the Notice of
Disagreement, such disagreement shall be referred to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇
▇▇▇▇▇▇▇▇") or, if for any reason such public accounting firm is not independent
of Seller or Purchaser or is not able or declines to be engaged to resolve such
disagreement, an independent public accounting firm mutually selected by Seller
and Purchaser for resolution of such disagreement, in accordance with the
requirements of Section 2.4(a) (either ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or the selected or
appointed public accounting firm, as the case may be, the "Independent
Accounting Firm"). If Seller and Purchaser do not promptly agree on the
selection of an independent public accounting firm, each of them shall appoint
an independent public accounting firm and such two independent public
accounting firms shall jointly select the Independent Accounting Firm. The
determinations made by the Independent Accounting Firm with respect to any such
disagreement shall be final and binding upon Seller and Purchaser for all
purposes under this Agreement. Each of Seller and Purchaser shall use its
commercially reasonable efforts to cause the Independent Accounting Firm to
render its determination as soon as practicable after referral of such
disagreement to such firm, and each shall cooperate with such firm and shall
provide such firm with reasonable access to its books, records, personnel and
representatives and such other information as such firm may require in order to
render its determination. The scope of the Independent Accounting Firm's
engagement (which shall not be an audit) shall be limited to the resolution of
the items contained in the Notice of Disagreement (other than the resolution of
any disagreement regarding the valuation of the Inventory), and the
recalculation, if any, of the Closing Working Capital in light of such
resolution. In its review of the Preliminary Closing Statement and
recalculation of the Closing Working Capital, the Independent Accounting Firm
will be limited to using the procedures and methodologies set forth in Exhibit
2.4-2, and if there is a disagreement as to the valuation of the Inventory, the
Independent Accounting Firm shall use the Final Valuation determined pursuant
to Section 2.4(d). The fees, costs and expenses of the Independent Accounting
Firm, if any, will be borne equally by Seller and Purchaser. The Preliminary
Closing Statement, as adjusted in accordance with the resolution of any
disagreement with respect thereto or, if no Notice of Disagreement is timely
given, as delivered to Purchaser pursuant to Section 2.4(a), is referred to in
this Agreement as the "Final Closing Statement."
(d) Subject to Section 2.4(c), if Purchaser has any
objections to the valuation of the Inventory included in the Preliminary
Closing Statement, Purchaser shall notify Seller of such disagreement in the
Notice of Disagreement. If Seller and Purchaser are unable to resolve the
disagreement within the Resolution Period, such disagreement shall be referred
to Construction Technology Laboratories, Inc. ("CTL") or, if for any reason
such organization or firm is not independent of Seller or Purchaser or is not
able or declines to be engaged to resolve such disagreement, an organization or
firm mutually selected by Seller and Purchaser for resolution of such
disagreement (either CTL or the selected or appointed organization or firm, as
the case may be, the "Independent Appraiser"). If Seller and Purchaser do not
promptly agree on the selection of an independent appraiser, each of them shall
appoint an independent appraiser and such two independent appraisers shall
jointly select the Independent Appraiser. The determinations made by the
Independent Appraiser with respect to any such Inventory valuation disagreement
shall be final and binding upon Seller and Purchaser for all purposes under
this Agreement. Each of Seller and Purchaser shall use its commercially
reasonable efforts to cause the Independent Appraiser to render its
determination as soon as practicable after referral of such disagreement to
such organization, and each shall cooperate with such organization and shall
provide such organization with reasonable access to its books, records,
personnel and representatives and such other information as such firm may
require in order to render its determination. The scope of the Independent
Appraiser's engagement shall be limited to the resolution of the valuation of
the Inventory contained in the Notice of Disagreement. The fees, costs and
expenses of the Independent Appraiser, if any, will be borne equally by Seller
and Purchaser. The valuation of the Inventory, as adjusted in accordance with
the resolution of any disagreement with respect thereto is referred to in this
Agreement as the "Final Valuation."
(e) No later than five Business Days after the time
the Preliminary Closing Statement becomes final pursuant to the provisions of
this Section 2.4, the following payments shall be made in immediately available
funds by wire transfer to an account specified by the recipient prior to such
date:
(i) if the Closing Working Capital as shown on
the Final Closing Statement is less than the Base Working Capital,
Seller shall pay to Purchaser an amount equal to such shortfall,
together with interest on such amount at an annual rate equal to the
prime rate of interest (as quoted daily by The Wall Street Journal),
calculated on the basis of a 365-day year (the "Interest Rate") from
and including the Closing Date to but excluding the date of the
payment of such amount to Purchaser; and
(ii) if the Closing Working Capital as shown on
the Final Closing Statement is greater than the Base Working Capital,
Purchaser shall pay to Seller an amount equal to such excess, together
with interest on such amount at the Interest Rate from and including
the Closing Date to but excluding the date of the payment of such
amount to Seller.
2.5 Allocation of the Purchase Price.
(a) Seller and Purchaser agree that (i) the sum of
the Purchase Price and the Assumed Liabilities shall be allocated among the
Purchased Assets in accordance with Section 1060 of the Code and the Treasury
regulations promulgated thereunder and (ii) the portion of the Purchase Price
allocable to the ▇▇▇▇ Sound Terminal is $20 million (the "Allocation"). No
later than 90 days after the Closing Date, Purchaser shall provide Seller with
a proposed Allocation for Seller's review. Purchaser shall allow Seller's
employees, accountants and other authorized representatives the opportunity (y)
to review Purchaser's proposed Allocation and (z) to obtain and review copies
of Purchaser's work papers and appraisal reports and, to the extent Purchaser
can obtain access using commercially reasonable efforts, access to Purchaser's
accountant's work papers and Purchaser's appraiser's work papers.
(b) If Seller has any objections to the proposed
Allocation, Seller shall notify Purchaser in writing (the "Allocation
Disagreement") of such disagreement no later than 30 calendar days after
delivery of the proposed Allocation. The Allocation Disagreement, if any, shall
set forth in reasonable detail the basis for the disagreement. Thereafter,
Seller and Purchaser shall attempt in good faith to resolve any such objection.
If Seller and Purchaser are unable to resolve the disagreement no later than 30
calendar days after the delivery of the Allocation Disagreement, such
disagreement shall be referred to the Independent Accounting Firm. If for any
reason the Independent Accounting Firm is no longer independent of Seller or
Purchaser or is not able or declines to be engaged to resolve such
disagreement, another independent public accounting firm shall be mutually
selected by Seller and Purchaser for resolution of such disagreement. If Seller
and Purchaser do not promptly agree on the selection of an independent public
accounting firm, each of them shall appoint an independent public accounting
firm and such two independent public accounting firms shall jointly select a
new independent accounting firm (such new accounting firm shall also be deemed
the "Independent Accounting Firm" for purposes of this Section 2.5(b)). Absent
manifest error, the determinations made by the Independent Accounting Firm with
respect to any such disagreement shall be final and binding upon Seller and
Purchaser for all purposes under this Agreement. Each of Seller and Purchaser
shall use its commercially reasonable efforts to cause the Independent
Accounting Firm to render its determination as soon as practicable after
referral of such disagreement to such firm, and each shall cooperate with such
firm and shall provide such firm with reasonable access to its books, records,
personnel and representatives and such other information as such firm may
require in order to render its determination. The scope of the Independent
Accounting Firm's engagement (which shall not be an audit) shall be limited to
the resolution of the items contained in the Allocation Disagreement, and the
determination of an Allocation that accurately conforms to Section 1060 of the
Code and the Treasury regulations promulgated thereunder. The fees, costs and
expenses of the Independent Accounting Firm, if any, will be borne equally by
Seller and Purchaser. The Allocation, as adjusted in accordance with the
resolution of any disagreement with respect thereto or, if no Allocation
Disagreement is timely given, as delivered to Seller pursuant to Section
2.5(a), is referred to in this Agreement as the "Final Allocation."
(c) After determination of the Final Allocation by
agreement of Seller and Purchaser or by binding determination of the
Independent Accounting Firm, Seller and Purchaser shall follow the Final
Allocation for all Tax purposes (including the filing of any Tax Return). Any
subsequent adjustments to the sum of the Purchase Price and Assumed Liabilities
shall be reflected in the Final Allocation in a manner consistent with Section
1060 of the Code and the Treasury regulations promulgated thereunder. The
transactions contemplated in this Agreement shall be reported in a manner
consistent with the terms of this Agreement (including the Final Allocation),
and neither Seller nor Purchaser shall, except as required by applicable Law,
take any position inconsistent therewith in any Tax Return, in any refund
claim, in any litigation, or otherwise. Each of Seller and Purchaser agrees to
cooperate with the other in preparing IRS Form 8594, and to furnish the other
with a copy of such form within a reasonable period before its filing due date.
2.6 Proration of Certain Amounts and Utilities.
(a) All real property, personal property Taxes and
similar ad valorem obligations levied with respect to the Purchased Assets for
a taxable period that includes (but does not end on) the Closing Date shall be
apportioned between Purchaser and Seller as of the Closing Date based on the
number of days of such taxable period included in the period prior to and
ending with and including the Closing Date (with respect to any such taxable
period, the "Pre-Closing Tax Period"), and the number of days of such taxable
period beginning with, but excluding, and continuing after the Closing Date
(with respect to any such taxable period, the "Post-Closing Tax Period").
Seller shall be liable for the proportionate amount of such Taxes that is
attributable to the Pre-Closing Tax Period (except to the extent any such
amount is reflected in the Final Closing Statement and is taken into account in
determining any Purchase Price adjustment under Section 2.4), and Purchaser
shall be liable for the proportionate amount of such Taxes that is attributable
to the Post-Closing Tax Period. Notwithstanding the foregoing, if the amount of
accrued real property taxes for the period included in the period prior to and
ending with and including the Closing Date is not known at the time of the
Closing, the foregoing apportionment shall be based upon the most current
actual tax ▇▇▇▇, and promptly after such time in which the ▇▇▇▇ evidencing the
actual amount of the accrued real property taxes is issued (but in no event
later than 30 days after the issuance of such bills), there shall be a cash
adjustment between the parties to this Agreement with the appropriate
reimbursements. The provisions of this Section 2.6(a) shall survive the
Closing.
(b) Seller and Purchaser further agree to prorate at
Closing all other items which are normally prorated in connection with
transactions similar to the transaction contemplated by this Agreement, with
all such prorations being final. Notwithstanding the foregoing, if the amount
of prorations with respect to any such transaction provided for in this Section
2.6(b) for the period included in the period prior to and ending with and
including the Closing Date is not known at the time of the Closing, such
apportionment shall be based upon the most current actual ▇▇▇▇, and promptly
after such time in which the ▇▇▇▇ evidencing the actual amount of the accrued
Liability is issued (but in no event later than 30 days after the issuance of
such bills), there shall be a cash adjustment between the parties to this
Agreement with the appropriate reimbursements. The provisions of this Section
2.6(b) shall survive the Closing.
(c) Seller shall be responsible for all utilities
used in the conduct of the Business prior to the Closing Date (except to the
extent any such amount is reflected in the Final Closing Statement and is taken
into account in determining any Purchase Price adjustment under Section 2.4).
Purchaser shall be responsible for all utilities used in the conduct of the
Business on or after the Closing Date. Promptly upon receipt of any utility
▇▇▇▇ that includes charges for periods prior to the Closing Date, Purchaser
shall forward a copy of such utility ▇▇▇▇ to Seller, and Seller shall promptly
pay to Purchaser its pro rata share of such ▇▇▇▇ (based on the number of days
prior to the Closing Date included in such ▇▇▇▇ as compared to the total number
of days included in such ▇▇▇▇.) Promptly after the Closing (but in any event,
no later than 30 days after the Closing), Purchaser shall notify all relevant
utilities that Purchaser's name or the name of an Affiliate designated by
Purchaser should replace Seller's name on all bills and that Purchaser or such
designee shall be responsible for payment of all utility bills going forward.
ARTICLE III
THE CLOSING
3.1 Generally. The payments and deliveries contemplated
by Sections 3.5 and 3.6 (the "Closing") will be made at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
commencing at 10:00 a.m., local time on (a) the third Business Day following
the satisfaction or waiver of the conditions to Closing set forth in Sections
3.2, 3.3 and 3.4 (other than those conditions that by their nature can only be
satisfied at the time of Closing) or (b) at such other place, time or date as
Seller and Purchaser may agree in writing (the "Closing Date").
3.2 General Conditions. The obligations of each party to
this Agreement to consummate the transactions contemplated by this Agreement
and the other Transaction Documents shall be subject to the satisfaction at or
prior to the Closing of the following conditions:
(a) No Challenge to Transaction. No action, suit,
arbitration or proceeding shall have been instituted, proposed or threatened by
any Governmental Authority that has not been withdrawn, dismissed with
prejudice, rescinded, or otherwise eliminated either to enjoin, restrain or
prohibit the performance of this Agreement.
(b) Governmental Consents Obtained or Requirements
Satisfied. All authorizations, consents and approvals, if any, of any
Governmental Authority necessary for the execution, delivery and performance of
this Agreement and the other Transaction Documents shall have been obtained and
being in full force and effect. Without limiting the foregoing, (i) all
applicable governmental pre-acquisition filing, information furnishing and
waiting period requirements (including those under the HSR Act) shall have been
met or such compliance shall have been waived by the Governmental Authorities
having authority to grant such waivers and (ii), with respect to the transfer
and assignment of the Conquest and the Challenger Agreements, all approvals
from the United States Maritime Administration, if required, shall have been
obtained.
(c) Third Party Consents. All third party consents,
each in form and substance reasonably satisfactory to Seller and Purchaser,
relating to the Assumed Contracts set forth in Section 3.2(c) to the Seller
Disclosure Schedule shall have been obtained.
(d) No Restraints. No Governmental Order or Law
shall have been enacted, entered, promulgated or enforced by any Governmental
Authority or instrumentality that prohibits the consummation of the
transactions contemplated by this Agreement.
(e) FERC Filing. The Federal Energy Regulatory
Commission shall have (i) approved the parties' application under Section 203
of the Federal Power Act in connection with the transfer of the Co-Generation
Lease from Seller to Purchaser or (ii) disclaimed jurisdiction over that
transaction under Section 203 of the Federal Power Act.
3.3 Conditions to Seller's Obligations. Seller's
obligation to consummate the transactions contemplated by this Agreement and
the other Transaction Documents shall be subject to the satisfaction or waiver
at or prior to the Closing of each of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of Purchaser contained in this Agreement (i)
that are qualified by "materiality" shall have been true and correct in all
respects when made and shall be true and correct in all respects as of the
Closing as though made on and as of the Closing Date (except to the extent any
such representation and warranty is expressly made as of an earlier date, in
which case as of such date) and (ii) that are not so qualified shall be true
and correct in all material respects as of the Closing as though made on and as
of the Closing Date (except to the extent any such representation and warranty
is expressly made as of an earlier date, in which case as of such date).
(b) Agreements Complied With. Purchaser shall have
performed or complied in all material respects with all covenants and
agreements required to be performed or complied with by Purchaser under this
Agreement at or prior to the Closing.
(c) Payment of Purchase Price. Seller shall have
received from Purchaser the Purchase Price.
(d) Officer's Certificate. Seller shall have
received from Purchaser a certificate signed by an appropriate officer of
Purchaser that the conditions set forth in paragraphs (a) and (b) of this
Section 3.3 have been satisfied.
(e) Deliveries. Seller shall have received the
documents referred to in Section 3.6 in form and substance reasonably
satisfactory to Seller.
(f) Detroit Lease Agreement. Seller shall have
received a Lease Agreement, substantially in the form attached hereto as
Exhibit 3.3(f) (the "Detroit Lease Agreement"), duly executed by Purchaser.
3.4 Conditions to Purchaser's Obligations. Purchaser's
obligation to consummate the transactions contemplated by this Agreement and
the other Transaction Documents shall be subject to the satisfaction or waiver
at or prior to the Closing of each of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of Seller contained in this Agreement (i) that
are qualified by "Material Adverse Effect" shall have been true and correct in
all respects when made and shall be true and correct in all respects (subject
to such qualifier) as of the Closing as though made on and as of the Closing
Date (except to the extent any such representation and warranty is expressly
made as of an earlier date, in which case as of such date), (ii) that are
qualified by "materiality" or that are not qualified by either "materiality" or
"Material Adverse Effect" (other than the representations and warranties set
forth in Sections 4.2 and 4.3) shall be true and correct (without giving effect
to any limitation as to "materiality" set forth therein) in all respects as of
the Closing as though made on and as of the Closing Date (except to the extent
any such representation and warranty is expressly made as of an earlier date,
in which case as of such date), except where the failure or failures of such
representations or warranties to be so true and correct would not have, in the
aggregate, a Material Adverse Effect and (iii) that are set forth in Sections
4.2 and 4.3 shall be true and correct in all respects as of the Closing as
though made on and as of the Closing Date (except to the extent any such
representation and warranty is expressly made as of an earlier date, in which
case as of such date).
(b) Agreements Complied With. Seller shall have
performed or complied in all material respects with all covenants and
agreements required to be performed or complied with by Seller under this
Agreement at or prior to the Closing.
(c) Officer's Certificate. Purchaser shall have
received from Seller a certificate signed by an appropriate officer of Seller
that the conditions set forth in paragraphs (a) and (b) of this Section 3.4
have been satisfied.
(d) Permits. All Permits shall have been transferred
to Purchaser or, if such Permits are not transferable, shall have been reissued
to Purchaser, except where the failure to have transferred or reissued such
Permits would not reasonably prohibit Purchaser from operating the Facilities
and the Purchased Assets after the Closing in substantially the same manner as
operated by Seller prior to the Closing.
(e) No Material Adverse Change. Since the Reference
Balance Sheet Date, no event, circumstance or development shall have occurred
that, individually or in the aggregate, has had, or would reasonably be
expected to have, a Material Adverse Effect.
(f) Deliveries. Purchaser shall have received the
documents referred to in Section 3.5 in form and substance reasonably
satisfactory to Purchaser.
3.5 Deliveries by Seller. Seller will deliver or cause
to be delivered to Purchaser at the Closing the following:
(a) General ▇▇▇▇ of Sale. The General ▇▇▇▇ of Sale,
duly executed by Seller and/or its Specified Affiliates, as appropriate.
(b) General Assignment and Assumption Instrument.
The General Assignment and Assumption Instrument, duly executed by Seller
and/or its Specified Affiliates, as appropriate.
(c) Deeds. A special warranty deed (or its local
equivalent) in substantially the form of Exhibit 3.5(c) with respect to each
tract of Owned Real Property in proper statutory form for recording, duly
executed and acknowledged by Seller and with all required documentary and
transfer tax stamps affixed, conveying fee simple title to the Owned Real
Property to Purchaser free and clear of all Liens (other than Permitted Liens)
(collectively, the "Deeds").
(d) Assignment of Permits. An assignment of, or
documentation requesting the assignment of, the Permits of the Facilities to be
transferred hereunder in the form reasonably acceptable to Purchaser and, to
the extent applicable, the Governmental Authorities issuing such Permits, duly
executed by Seller.
(e) Code ss. 1445 Affidavit. A certificate from each
of Seller and CCPC, in the form described in Treasury Regulation Section
1.1445-2(b)(2)(iv)(B), certifying its compliance with Treasury Regulation
Section 1.1445-2(b) that, as of the Closing Date, such Person is not a "foreign
person" within the meaning of Section 1445.
(f) Title Insurance for Owned Real Property.
Purchaser shall have received from First American Title Insurance Company (the
"Title Company") an ALTA owner's policy of title insurance, or irrevocable and
unconditional binder to issue the same (the "Title Policy"), in the amount of
the fair market value of the applicable Owned Real Property (as reasonably
determined by Seller and Purchaser), dated, or updated to, the Closing Date,
insuring, or committing to insure, Purchaser's good and marketable title in fee
simple to each parcel of Owned Real Property with extended coverage over the
standard exceptions waived, and containing at Purchaser's option such
affirmative endorsements as desired by Purchaser, acting reasonably. Each of
Seller and Purchaser shall pay one-half of the costs of the premium for each of
the Title Policies (including the costs of any endorsements).
(g) Title Affidavits. Such customary affidavits,
documents, disclosures and forms as reasonably requested by the Title Company
in connection with the issuance of each of the Title Policies and consummation
of the transactions contemplated by this Agreement.
(h) Surveys. Surveys of each parcel of the Owned
Real Property (other than the ▇▇▇▇▇ Facility) (collectively, the "Surveys")
certified to Seller, Purchaser and the Title Company in accordance with a form
of certification which is reasonably acceptable to Seller, Purchaser and the
Title Company, such certification to include a statement that the Surveys have
been prepared in accordance with 1999 (or most recent) minimum standard details
for a land survey jointly adopted by ALTA/ACSM and to include Table A Items
1-4, 6-11 and 13-16. Each of Seller and Purchaser shall pay one-half of the
costs of the Surveys.
(i) ▇▇▇▇▇▇▇▇ ▇▇▇▇ of Sale. A ▇▇▇▇ of Sale for the
Conquest (the "▇▇▇▇▇▇▇▇ ▇▇▇▇ of Sale") in form suitable for recordation of
title thereto in the name of Purchaser or its nominee, duly executed by the
appropriate Specified Affiliate.
(j) Releases of Liens. Releases of liens evidencing
the discharge and removal of all Liens on the Purchased Assets, other than
Permitted Liens.
(k) Receipt. A receipt for the Purchase Price.
(l) Other Instruments. All such other deeds,
endorsements, assignments or other instruments, in form and substance
reasonably satisfactory to Purchaser, as shall be necessary to vest in
Purchaser title to the Purchased Assets.
(m) Detroit Lease Agreement. The Detroit Lease
Agreement, duly executed by Seller.
3.6 Deliveries by Purchaser. Purchaser shall pay or
deliver or shall cause to be paid or delivered to Seller at the Closing the
following:
(a) Payment of Purchase Price. Payment to Seller of
the Purchase Price in same day funds (in U.S. dollars) by wire transfer based
on wiring instructions given by Seller to Purchaser at least three Business
Days prior to the Closing Date.
(b) General Assignment and Assumption Instrument.
The General Assignment and Assumption Instrument, duly executed by Purchaser
and/or its designated Affiliate, as appropriate.
(c) General ▇▇▇▇ of Sale. The General ▇▇▇▇ of Sale,
duly executed by Purchaser and/or its designated Affiliate, as appropriate.
(d) Legal Opinion. The opinion of Ray, Robinson,
▇▇▇▇▇ & Davies, P.L.L. in the form attached hereto as Exhibit 3.6(d).
(e) Detroit Lease Agreement. The Detroit Lease
Agreement, duly executed by Purchaser.
(f) Affidavit of Citizenship. An affidavit from
Purchaser or Purchaser's nominee that it meets all requirements of 46 U.S.C.
ss. 12102(a)(4).
3.7 Post-Closing Actions.
(a) Mail. From and after the Closing Date, (i)
Purchaser may open all mail and other communications received by Purchaser at
the Facilities addressed to Seller, and may act with respect to such
communications in such manner as Purchaser may elect if such communications
relate to the Purchased Assets, the Assumed Liabilities or the Facilities and
the Business (other than payments to which Seller is entitled) or if such
communications do not so relate, Purchaser will forward the same promptly to
Seller, and (ii) Seller may open all mail and other communications received by
it with respect to the Facilities and the Business, and if such communications
relate to the Purchased Assets, the Assumed Liabilities or the Facilities and
the Business (including payments to which Purchaser is entitled), Seller will
promptly forward the same to Purchaser.
(b) Access to Books and Records. From and after the
Closing Date, and until the seventh anniversary of the Closing Date, each of
Seller and Purchaser shall permit the other and its authorized representatives
to have reasonable access to the books and records relating to the Business in
its possession and to make copies of them upon the following conditions: (i)(A)
with respect to Seller, the requested information relates to the Excluded
Assets or the Excluded Liabilities and (B) with respect to Purchaser, the
requested information relates to the Purchased Assets or the Assumed
Liabilities, (ii) the requesting party providing notice to the other that sets
forth a valid business reason for the request for access and (iii) the access
being at such times and on such other reasonable conditions appropriate to
avoid any material interference with the other party's business operations.
ARTICLE IV
SELLER'S REPRESENTATIONS AND WARRANTIES
Except as set forth in the disclosure schedules (the "Seller
Disclosure Schedule") delivered by Seller to Purchaser concurrently with the
execution of this Agreement, Seller and its Specified Affiliates, jointly and
severally, hereby represent and warrant to Purchaser on the date of this
Agreement as follows:
4.1 Organization, Etc. Each of Seller and its Specified
Affiliates is a corporation, limited liability company or other entity, duly
organized, validly existing and in good standing under the Laws of the State of
Louisiana, with respect to Seller, the Laws of the State of Delaware, with
respect to CCPC, and the Laws of Ontario, Canada, with respect to Canadian
Medusa Cement Limited. Each of Seller and its Specified Affiliates has all
requisite power and authority to carry on the Business as it is now being
conducted and to own or lease and operate the Purchased Assets as and in the
places where now conducted, owned, leased or operated. Each of Seller and its
Specified Affiliates is duly licensed or qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of the Purchased Assets or the conduct of the Business requires
such qualification, except where the failure to be so qualified or licensed or
in good standing, as the case may be, would not, individually or in the
aggregate, (a) adversely affect the ability of Seller or any of the Specified
Affiliates to carry out its respective obligations under, or consummate the
transactions contemplated by, this Agreement or (b) otherwise have a Material
Adverse Effect.
4.2 Authorization. Each of the Seller and each Specified
Affiliate has the requisite power and authority to execute and deliver each
Transaction Document to which it is a party and to perform its obligations
thereunder. The execution, delivery and performance of this Agreement by Seller
has been, and the execution, delivery and performance of each other Transaction
Document to which each of Seller or the Specified Affiliates is a party shall
be, on or prior to the Closing Date, duly and validly authorized by all
necessary corporate or other similar action on the part of Seller or such
Specified Affiliate, as the case may be, and no additional authorization on the
part of Seller is necessary in connection with the execution, delivery and
performance by Seller of this Agreement.
4.3 Binding Effect. This Agreement has been, and each
other Transaction Document will be, duly executed and delivered by each of
Seller and each Specified Affiliate that is a party thereto, and (assuming the
due authorization, execution and delivery by the other parties thereto) this
Agreement constitutes, and each other Transaction Document to which Seller or a
Specified Affiliate is to be a party, when so executed and delivered, will
constitute legal, valid and binding obligations of Seller or such Specified
Affiliate that is a party thereto, enforceable against Seller or such Specified
Affiliate, as the case may be, in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar Laws affecting creditors' rights
generally and to the general principles of equity.
4.4 No Violations. The execution, delivery and
performance by Seller or any Specified Affiliate of the Transaction Documents
to which it is or will be a party, and the consummation of the transactions
contemplated thereby, do not and will not (a) conflict with or violate any
provision of the articles of incorporation, bylaws or similar governing
documents of Seller or any of its Specified Affiliates, or (b) (i) violate any
Law, Permit or Judgment applicable to Seller or any of its Specified
Affiliates, or any of its respective properties or assets, or (ii) subject to
obtaining the consents set forth in Section 4.4(ii) of the Seller Disclosure
Schedule, violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon any of the
respective properties or assets of Seller or any of its Specified Affiliates,
including the Purchased Assets, under, any of the terms, conditions or
provisions note, bond, mortgage, indenture, of any deed of trust, license,
Lease, Contract or other instrument or obligation to which Seller or any of its
Specified Affiliates is a party, or by which Seller, any of its Specified
Affiliates or any of their respective properties or assets, including the
Purchased Assets, may be bound or affected, except (in the case of clause
(b)(ii) above) for such violations, conflicts, breaches or defaults which,
would not, individually or in the aggregate, (a) adversely affect the ability
of Seller and any of the Specified Affiliates to carry out its respective
obligations under, and to consummate the transactions contemplated by, this
Agreement and the other Transaction Documents or (b) otherwise have a Material
Adverse Effect.
4.5 Financial Information. True and complete copies of
the Reference Balance Sheet and the unaudited balance sheets of the Business
for (a) the Charlevoix Facility, the Terminals, and the Detroit Terminal for
each of the two fiscal years ended December 31, 2002 and December 31, 2003 and
for the period between January 1, 2004 and October 31, 2004 and (b) the ▇▇▇▇▇
Facility for the period between October 1, 2003 and October 31, 2004, and the
related statements of income of the Business (with such statements of income
including income related to the Detroit Terminal), together with all related
notes and schedules thereto (collectively referred to herein as the "Financial
Statements") have been delivered by Seller to Purchaser. To Seller's Knowledge,
the Reference Balance Sheet (i) has been prepared in accordance with the books
of account and other financial records of Seller and (ii) has been prepared in
accordance with GAAP applied on a basis consistent with the past practices of
Seller and Seller's normal monthly reporting process (except that it excludes
the Excluded Assets and Excluded Liabilities) and consistent with the
accounting principles, practices and methodologies set forth in Exhibit 2.4-2.
To Seller's Knowledge, the Financial Statements (x) were prepared in accordance
with the books of account and other financial records of Seller and (y) have
been prepared in accordance with GAAP applied on a basis consistent with the
past practices of Seller.
4.6 Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions. Except as (i) contemplated by this Agreement or
(ii) set forth in Section 4.6 of the Seller Disclosure Schedule, since the
Reference Balance Sheet Date and as of the date of this Agreement, Seller has
conducted the Business in the ordinary and usual course and consistent with
past practice. As amplification and not limitation of the foregoing, except as
set forth in Section 4.6 of the Seller Disclosure Schedule, since the Reference
Balance Sheet Date and as of the date of this Agreement, Seller has not, in
respect of the Business, (x) taken or allowed to occur any actions that would,
if taken after the date hereof, constitute a breach of clauses (c) through (l)
of Section 6.1 or (y) suffered any casualty loss or damage with respect to any
of the Purchased Assets (other than any such loss or damage that has been
repaired in all material respects by Seller) which in the aggregate have
replacement costs of more than $150,000, whether or not such loss or damage
shall have been covered by insurance.
4.7 Litigation. Except as set forth in Section 4.7 of
the Seller Disclosure Schedule (which, with respect to each Action set forth
therein, sets forth the parties, nature of the proceeding, date and method
commenced, amount of charges or other relief sought (if known) and, if
applicable, paid or granted), to Seller's Knowledge, there are no material
Actions by or against Seller or any Specified Affiliate and relating to the
Business or the Purchased Assets pending before any Governmental Authority (or
threatened in writing to be brought by or before any Governmental Authority).
Except as set forth in Section 4.7 of the Seller Disclosure Schedule, to
Seller's Knowledge, neither Seller nor any of the Specified Affiliates, nor any
of the Purchased Assets, is subject to any Governmental Order (nor has any
Governmental Authority threatened in writing any such Governmental Order) that
(a) would have a Material Adverse Effect or (b) as of the date of this
Agreement, would affect the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents.
4.8 Material Contracts.
(a) Section 4.8(a) of the Seller Disclosure Schedule
lists each of the material Contracts, written or, to Seller's Knowledge, oral,
of Seller or any Specified Affiliate relating to the Business that is currently
in effect and was entered into by Seller or any Specified Affiliate since
September 25, 2003, with respect to any such Contract relating to the ▇▇▇▇▇
Facility, and November 16, 2000, with respect to any such Contract relating to
the Charlevoix Facility and the Terminals (such Contracts being referred to
herein as the "Post-Acquisition Contacts"). Neither Seller nor any Specified
Affiliate has received any notice of breach or default under any
Post-Acquisition Contracts that would have, individually or in the aggregate, a
Material Adverse Effect. Seller has made available to Purchaser true and
complete copies (or with respect to oral contracts, summaries thereof) of all
Post-Acquisition Contracts.
(b) To Seller's Knowledge, (i) Section 4.8(b) of the
Seller Disclosure Schedule lists each of the material Contracts, written or
oral, of Seller or any Specified Affiliate relating to the Business that is
currently in effect and was acquired by Seller or a Specified Affiliate in
connection with Seller's acquisition of the ▇▇▇▇▇ Facility or of the Charlevoix
Facility and the Terminals (such Contracts being referred to herein as the
"Pre-Acquisition Contacts"), (ii) neither Seller nor any Specified Affiliate
has received any notice of breach or default under any Pre-Acquisition
Contracts that would have, individually or in the aggregate, a Material Adverse
Effect and (iii) Seller has made available to Purchaser true and complete
copies (or with respect to oral contracts, summaries thereof) of all
Post-Acquisition Contracts, provided that Seller makes no representation or
warranty that it received as a result of such acquisitions accurate and
complete originals or copies of the Pre-Acquisition Contracts.
(c) Except as specified in Section 4.8(c) of the
Seller Disclosure Schedule, and in each case other than any such failure,
breach, default, or waiver, as applicable, which would not be reasonably likely
to have a Material Adverse Effect, (i) to the Knowledge of Seller, the ▇▇▇▇▇
Purchase Agreement is valid, binding, in full force and effect, and enforceable
by Seller or its Specified Affiliate, as the case may be, in accordance with
its terms; (ii) neither Seller nor any Specified Affiliate, as the case may be,
is in breach or default under the ▇▇▇▇▇ Purchase Agreement that has had, or if
not cured would have, individually or in the aggregate, a material adverse
effect on Seller's rights and remedies under the ▇▇▇▇▇ Purchase Agreement;
(iii) neither Seller nor any Specified Affiliate, as the case may be, has
waived any of its rights under the ▇▇▇▇▇ Purchase Agreement or modified any of
the terms thereof and (iv) to the Knowledge of Seller, no other party to the
▇▇▇▇▇ Purchase Agreement is in breach or default thereunder. Seller has
provided to Purchaser prior to the date of this Agreement a complete and
correct copy of the ▇▇▇▇▇ Purchase Agreement.
(d) Section 4.8(d) of the Seller Disclosure Schedule
sets forth the supply schedule under the Cement Supply Agreement, dated as of
September 25, 2003, as amended (the "Prairie CSA"), between Seller and Prairie,
for calendar year 2005, as such supply schedule is in effect as of the date of
this Agreement.
4.9 Owned Real Property; Tangible Personal Property;
Leases; Vessel.
(a) Owned Real Property. (i) Section 4.9(a) of the
Seller Disclosure Schedule lists all of the real property owned by Seller
and/or a Specified Affiliate, as the case may be, which are primarily used in
(or intended to be used in) or primarily related to the Business and are
intended to be transferred to Purchaser pursuant to the terms of this Agreement
(collectively, the "Owned Real Property"). Seller has made available to
Purchaser correct and complete copies of each deed for each parcel of Owned
Real Property to the extent that the same are in Seller's possession or
control. Either Seller or a Specified Affiliate, as the case may be, is in
peaceful and undisturbed possession of each parcel of Real Property, subject to
Permitted Liens and Liens designated on Schedule B as unpermitted exceptions
that will be released on or prior to the Closing. As of the date of this
Agreement, there are no condemnation proceedings or eminent domain proceedings
of any kind pending or, to the Knowledge of Seller, threatened against the Real
Property.
(b) Tangible Personal Property. Section 2.1(a)(v) of
the Seller Disclosure Schedule lists all of the Tangible Personal Property.
(c) Leases. Section 4.9(c) of the Seller Disclosure
Schedule (i) lists (A) each Real Property Lease and Real Property Sublease and
(B) each other written Lease exclusively used in or exclusively related to the
Business that has annual aggregate rental payments of $250,000 or more and a
term of more than 12 months (copies of which have been made available to
Purchaser) and (ii) generally describes the terms of each oral Lease
exclusively used in or exclusively related to the Business.
(d) Vessel. Seller or one of its Specified
Affiliates is the owner of the Conquest and, upon recordation of the ▇▇▇▇ of
Sale contemplated by this Agreement, title to the Conquest will be vested in
Purchaser or its nominee free and clear of all Liens except Permitted Liens. At
the time of delivery the Conquest will be documented under the laws and flag of
the United States and in class.
(e) Title to Property. Seller has good title to all
of the Tangible Personal Property, free and clear of all Liens other than
Permitted Liens. Seller is in possession of the Leased Real Property or
Tangible Personal Property, as the case may be, leased pursuant to each Lease,
and each such Lease grants to Seller the exclusive right to possess, without
disruption, the property leased pursuant thereto. Seller has not assigned its
interest in any such Lease to any Person. Immediately following the Closing,
Purchaser (or its designated Affiliates or, with respect to the Conquest, its
nominee) will own, with good, valid and marketable title, or lease, under valid
and subsisting leases, the Purchased Assets, free and clear of any Liens, other
than Permitted Liens.
4.10 Permits. Section 2.1(a)(viii) of the Seller
Disclosure Schedule list all material Permits possessed by Seller or a
Specified Affiliate in connection with the Business, and true and complete
copies of all such Permits have heretofore been made available to Purchaser.
Except as set forth in Section 4.10 of the Seller Disclosure Schedule, neither
Seller nor any Specified Affiliate has received any written notice or, to
Seller's Knowledge, oral communication from any Governmental Authority
regarding non-compliance with or the possible non-renewal of any such Permits,
except for such non-compliance or non-renewal as would not have, individually
or in the aggregate, a Material Adverse Effect.
4.11 Notices of Violations. Except as set forth in
Section 4.11 of the Seller Disclosure Schedule, neither the Seller nor any
Specified Affiliate has, since September 25, 2003, with respect to the ▇▇▇▇▇
Facility, and November 16, 2000, with respect to the Charlevoix Facility and
the Terminals, been charged with or received any notice of, or, to Seller's
Knowledge, been under investigation with respect to, any failure or alleged
failure to comply with any provision of any applicable Law in the operation of
the Business (except where any such issue of non-compliance has been resolved
to the satisfaction of the party sending such notice or conducting such
investigation), except for such failures to comply that would not have,
individually or in the aggregate, a Material Adverse Effect.
4.12 Employee, Employee Benefit and Labor Matters.
(a) Seller has provided to Purchaser under separate
cover the following information relating to each individual employed by Seller
or its Affiliates in respect of the Facilities (including individuals on
maternity leave, short-term disability leave or another approved leave of
absence, and excluding any individuals on long-term disability leave, the
individuals employed in connection with the Detroit Terminal or individuals
identified in Section 4.12(a) of the Seller Disclosure Schedule) (the "Facility
Employees"): a true and complete list of the names, date of hire, position or
job title, department, employment location, status as full or part-time and
active or on leave, description of such leave (if applicable), base salary or
wages for the 2004 fiscal year, two-year incentive compensation and equity
award history, compensation guarantees payable in 2004 or any future years,
legal employer, or work authorization and status as unionized, non-unionized,
exempt or non-exempt employee.
(b) Section 4.12(b) of the Seller Disclosure
Schedule sets forth a complete list all benefit and compensation plans,
contracts, policies or arrangements, including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of ERISA, and any workers'
compensation, disability, vacation, leave of absence, change in control,
employment agreements, severance agreements, plans and policies, and deferred
compensation, stock option, stock purchase, stock appreciation rights, stock
based, incentive and bonus plans, to which Seller or its ERISA Affiliates is a
party, with respect to which Seller or its ERISA Affiliates has any obligation
or which is maintained, sponsored, contributed to or required to be contributed
to by Seller or its ERISA Affiliates on behalf of any current or former
employee or officer of the Business (all of which are hereinafter referred to
as the "Plans"). True and complete copies of all Plans have been made available
to Purchaser.
(c) None of Seller or its ERISA Affiliates has
incurred any liability under, arising out of or by operation of Title IV of
ERISA (other than for payment of premiums to the Pension Benefit Guaranty
Corporation in the ordinary course of business), and no fact or event exists
which would reasonably be expected to give rise to any such liability that
would reasonably be expected to result in a Lien on the Purchased Assets or a
Liability of Purchaser.
(d) Except as set forth in Section 4.12(d) of the
Seller Disclosure Schedule, neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (i) entitle any
Transferred Employees to severance pay or any increase in severance pay upon
any termination of employment after the date hereof or (ii) in respect of
Transferred Employees, accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, or increase the amount payable or trigger any other material
obligation pursuant to, any of the Plans.
(e) Except as set forth in Section 4.12(e) of the
Seller Disclosure Schedule, in respect of the Business, neither Seller nor its
Affiliates is a party to, or otherwise bound by, any collective bargaining
agreement, contract or other agreement with a labor union or labor organization
nor, to Seller's Knowledge, are there any activities or proceedings of any
labor union to organize any Facility Employee nor, as of the date of this
Agreement, is Seller or the Specified Affiliates the subject of any Action
asserting that Seller or the Specified Affiliates has committed an unfair labor
practice or seeking to compel it to bargain with any labor union or labor
organization nor is there pending or, to the Knowledge of Seller, threatened,
nor has there been (with respect to the Charlevoix Facility and the Terminals,
in the past three years and, with respect to the ▇▇▇▇▇ Facility, since
September 25, 2003) any labor strike, material dispute, walk-out, work
stoppage, slow-down or lockout involving Seller or its Affiliates. In respect
of the Business, Seller and its Affiliates are currently in compliance in all
material respects with all applicable Laws relating to the employment of labor,
including, but not limited to, the Fair Labor Standards Act of 1938, as
amended.
4.13 Environmental Matters. To the Seller's Knowledge,
Seller has made available to Purchaser prior to the date of this Agreement all
material documents (or copies thereof) in the possession or control of Seller
or any Specified Affiliate that relate to Environmental Conditions,
Environmental Laws, Environmental Liabilities, Environmental Permits or
Hazardous Substances, in each case as it relates to the Business or the Real
Property; provided that Seller makes no representation or warranty with respect
to the completeness or accuracy of such documents prepared prior to September
25, 2003, with respect to the ▇▇▇▇▇ Facility, and November 16, 2000, with
respect to the Charlevoix Facility and the Terminals.
4.14 Taxes. (a) All material Tax Returns required to be
filed by or with respect to the Business or the Purchased Assets have been
timely filed, (b) all Taxes required to be shown on such Tax Returns or all
material Taxes otherwise due by or with respect to the Business or the
Purchased Assets have been timely paid, (c) all such Tax Returns are true,
correct and complete in all material respects, (d) no adjustment relating to
such Tax Returns has been proposed formally or informally by any taxing
authority and (e) neither Seller nor any Specified Affiliate has received any
notice or inquiry from any jurisdiction where Seller or such Specified
Affiliate does not currently file Tax Returns to the effect that such filings
may be required with respect to the Purchased Assets or the Business or that
the Business may otherwise be subject to taxation by such jurisdiction.
4.15 Brokers and Finders. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Seller or any Affiliate of Seller who might be
entitled to any fee or commission from Seller or any Affiliate of Seller in
connection with the transactions contemplated by this Agreement.
4.16 DISCLAIMERS. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN THIS ARTICLE IV, THE DEEDS AND THE CERTIFICATE TO BE
DELIVERED BY SELLER AT THE CLOSING PURSUANT TO SECTION 3.4(C), (I) NEITHER
SELLER NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY, AND
HEREBY DISCLAIMS ANY OTHER REPRESENTATION AND WARRANTY, EXPRESS OR IMPLIED, AT
LAW OR IN EQUITY, RELATING TO THE BUSINESS, THE PURCHASED ASSETS, THE ASSUMED
LIABILITIES OR THE FACILITIES, INCLUDING ANY REPRESENTATION OR WARRANTY AS TO
VALUE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FOR ORDINARY
PURPOSES, OR ANY OTHER MATTER, WHETHER MADE BY SELLER OR ANY OF ITS AFFILIATES
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES OR ANY OTHER PERSON, AND NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO PURCHASER OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES OR ANY OTHER PERSON OF ANY DOCUMENTATION OR OTHER INFORMATION
BY SELLER OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES OR ANY OTHER PERSON, AND (II) THE
BUSINESS, THE PURCHASED ASSETS, THE ASSUMED LIABILITIES AND THE FACILITIES
BEING TRANSFERRED TO PURCHASER ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS AS OF
THE CLOSING, AND PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, NEITHER SELLER NOR ANY OF ITS
AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN
THE PURCHASED ASSETS OR ANY LIABILITIES OTHER THAN THE ASSUMED LIABILITIES OR
ANY OPERATIONS OTHER THAN THE FACILITIES, AND NONE SHALL BE IMPLIED AT LAW OR
IN EQUITY.
ARTICLE V
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser hereby represents and warrants to Seller as follows:
5.1 Organization. Purchaser is duly organized, validly
existing and in good standing under the Laws of the Federative Republic of
Brazil.
5.2 Authorization. Purchaser has the requisite power and
authority to execute and deliver each Transaction Document to which it is a
party and to perform its obligations thereunder. The execution, delivery and
performance of this Agreement by Purchaser have been, and the execution,
delivery and performance of each other Transaction Document to which Purchaser
is a party shall be, on or prior to the Closing Date, duly and validly
authorized by all necessary corporate action on the part of Purchaser and no
additional authorization on the part of Purchaser is necessary in connection
with the execution, delivery and performance by Purchaser of this Agreement.
5.3 Binding Effect. This Agreement has been, and each
other Transaction Document will be, duly executed and delivered by Purchaser
and (assuming the due authorization, execution and delivery by the other
parties thereto) this Agreement constitutes, and each other Transaction
Document to which Purchaser is to be a party, when so executed and delivered,
will constitute legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar Laws affecting creditors' rights generally
and to general principles of equity.
5.4 No Violations. The execution, delivery and
performance by Purchaser of the Transaction Documents to which it is or will be
a party, and the consummation of the transactions contemplated thereby, do not
and will not (a) conflict with or violate any provision of the certificate of
incorporation, bylaws or other organizational documents of Purchaser or any of
its Affiliates, or (b) (i) violate any Law, Permit or Judgment applicable to
Purchaser or any of its Affiliates or any of their respective properties or
assets, or (ii) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any Lien upon any of
the properties or assets of Purchaser or any of its Affiliates under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Purchaser or any of its Affiliates is a party, or by which Purchaser, any
of its Affiliates or any of their respective properties or assets may be bound
or affected, except (in the case of clause (b)(ii) above) for such violations,
conflicts, breaches or defaults which, either individually or in the aggregate,
would not materially impair Purchaser's ability to effect the Closing.
5.5 Financing. Purchaser has available to it sufficient
funds to enable it to consummate the transactions contemplated by this
Agreement.
5.6 Brokers and Finders. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Purchaser or any Affiliate of Purchaser who
might be entitled to any fee or commission from Purchaser or any Affiliate of
Purchaser in connection with the transactions contemplated by this Agreement.
5.7 Vessels. As of the Closing Date, Purchaser will be,
or will have nominated, a Citizen that will be qualified to purchase and
document the Conquest under the Laws of the United States so as to permit
Seller to transfer the Conquest and assign the Challenger Agreements to
Purchaser or its nominee pursuant to the terms of this Agreement without
contravention of the Shipping Act or any other requirements of United States
maritime law.
ARTICLE VI
COVENANTS
6.1 Operation of the Business Between Signing and
Closing. During the period from the date of this Agreement to the Closing
(except as otherwise expressly provided for in this Agreement or as Purchaser
shall otherwise consent to in writing, which consent shall not be unreasonably
withheld, delayed or conditioned), Seller covenants and agrees (x) to operate
the Business only in the ordinary course and consistent with past practice and
(y), except as described in Section 6.1 of the Seller Disclosure Schedule or as
required by Law, during the period from the date of this Agreement to the
Closing:
(a) Seller shall, and shall cause each of its
Specified Affiliates to, (i) carry on the Business substantially in the manner
heretofore conducted by Seller and its Specified Affiliates and (ii) use
commercially reasonable efforts to (A) keep available to the Business the
services of the Facility Employees and (B) maintain its relationships with
suppliers, customers and others having business relations with Seller or such
Specified Affiliate, as the case may be, that relate to the Business;
(b) Seller shall, and shall cause each of its
Specified Affiliates to, use, operate, maintain and repair the Facilities and
the Conquest in a manner consistent with past practices;
(c) Seller shall, and shall cause each of its
Specified Affiliates to, not loan or borrow any money or otherwise incur any
indebtedness that would constitute an Assumed Liability or that would impose
any Lien on any Purchased Asset; provided, however, that the foregoing does not
prohibit credit extended to customers in the ordinary course of business
consistent with past practice or trades payables or other current expenses
incurred in the ordinary course of business consistent with past practice;
(d) Seller shall, and shall cause each of its
Specified Affiliates to, not transfer, assign, lease or otherwise convey any
interest in any property that would otherwise be a Purchased Asset (except for
sales of Inventory in the ordinary course of business consistent with past
practice);
(e) Seller shall, and shall cause each of its
Specified Affiliates to, not enter into any Lease or other Contract that would
otherwise be a Purchased Asset and Assumed Liability (or modify or terminate
any existing one) except to the extent required by this Agreement and except
Contracts for the purchase of raw materials, products and supplies and the sale
of Inventory entered into in the ordinary course of business consistent with
past practice;
(f) Seller shall, and shall cause each of its
Specified Affiliates to, not (i) grant any increase, or announce any increase,
in the wages, salaries, compensation, bonuses, incentives, pension or other
benefits payable to any of its employees to whom offers of employment will be
made pursuant to Section 7.1, including any increase or change pursuant to any
Plan, or (ii) establish or increase or promise to increase any benefits under
any Plan in respect of the Facility Employees to whom offers will be made
pursuant to Section 7.1, in either case except as required by Law or any
collective bargaining agreement or involving ordinary increases consistent with
the past practices;
(g) Seller shall, and shall cause each of its
Specified Affiliates to, not permit or allow any of the Purchased Assets to be
subjected to any Lien, other than Permitted Liens or Liens that will be
released at or prior to the Closing;
(h) Seller shall, and shall cause each of its
Specified Affiliates to, (i) not write down or write up the value of any
Inventory or receivables or revalued any of the Purchased Assets other than in
the ordinary course of business consistent with past practice and in accordance
with GAAP or (ii) not fail to write down or write up the value of any Inventory
or receivables or any of the Purchased Assets in accordance with GAAP;
(i) Seller shall, and shall cause each of its
Specified Affiliates to, not amend, terminate, cancel or compromise any
material claims related to the Business or waive any other rights of
substantial value to the Business or amend, modify or consent to the
termination of any Assumed Contract or Seller's or any Specified Affiliate's
rights thereunder;
(j) except as necessary to safeguard life, property
or the environment, Seller shall, and shall cause each of its Specified
Affiliates to, not make any capital expenditure or commitment for any capital
expenditure, in each case relating to the Business, in excess of $100,000
individually or $500,000 in the aggregate;
(k) Seller shall, and shall cause each of its
Specified Affiliates to, not make any Tax election or change any method of
accounting, other than in the ordinary course of business consistent with past
practice, or settle any Tax contest not involving federal income Taxes, in each
case, with respect to the Purchased Assets or the Business; and
(l) Seller shall, and shall cause each of its
Specified Affiliates to, not enter into any agreement, contract, commitment or
arrangement to do any of the foregoing.
6.2 Access to Information.
(a) Beginning on the date of this Agreement and
ending on the Closing Date, Seller shall, and shall cause each of its Specified
Affiliates to, cause its officers, employees and agents to (i) afford Purchaser
and its authorized representatives reasonable access, during normal business
hours and upon reasonable advance notice, to the offices, properties, plants,
other facilities, books and records of Seller and the Specified Affiliates
relating to the Business and to those officers, directors, employees, agents,
accountants and counsel of the Seller and the Specified Affiliates who have any
knowledge relating to the Business, (ii) furnish to Purchaser and its
authorized representatives such additional financial and operating data and
other information (or legible copies thereof) regarding the Business that is
available with respect to the Business or the Purchased Assets as Purchaser may
from time to time reasonably request, provided that Purchaser shall have no
right to have access to, to be furnished with or to review any Tax Returns of
Seller or any of its subsidiaries or Affiliates (other than any Tax Returns
that are described in Section 2.1(a)(xiv)), and (iii) provide Purchaser and its
authorized representatives access to the Real Property in order to conduct
environmental assessments, provided that such environmental assessments shall
not include any sampling or testing, and provided, further, that Purchaser and
its authorized representatives shall not (A) have access to the Real Property
or (B) communicate with any environmental Governmental Authority or any
employees or representatives of Seller regarding any environmental matters
relating to the Business or the Purchased Assets unless ▇▇▇ ▇▇▇▇▇▇ or another
authorized representative of Seller accompanies Purchaser or its authorized
representatives on such visits to the Real property or participates with
Purchaser or its authorized representatives with respect to such
communications; provided, however, that if ▇▇▇ ▇▇▇▇▇▇ or another authorized
representative of Seller does not respond to a request by Purchaser to
communicate with an environmental Governmental Authority within a reasonable
period of time (which shall be no longer than four Business Days), Purchaser
and its authorized representatives shall be able to communicate with any
Governmental Authority without ▇▇▇ ▇▇▇▇▇▇ or another authorized representative
of Seller participating in such communication. Purchaser and its authorized
representatives will conduct all such information gathering in a manner that
will minimize any disruptions of the Business. Notwithstanding the foregoing,
neither Seller nor any of its Affiliates shall be required to disclose
information where such disclosure would violate or jeopardize any
attorney-client privilege or contravene any Law, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. Both Seller and
Purchaser will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(b) (i) Prior to the Closing, each of Purchaser or
any of Purchaser's Affiliates, agents, employees or representatives will hold
and will cause its representatives to hold in strict confidence all documents
and information concerning the Purchased Assets and the Business to the extent
and in accordance with the terms and conditions of the Confidentiality
Agreement and (ii) after the Closing, Purchaser shall promptly return to Seller
all documents and information concerning the Excluded Assets and the Retained
Liabilities furnished by Seller or any of Seller's Affiliates, agents,
employees, or representatives (including all copies, if any) and shall hold in
strict confidence all such documents and information to the extent and in
accordance with the terms and conditions of the Confidentiality Agreement
(except with respect to the NOx Technology as provided in Section 6.8(d)).
6.3 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions of
this Agreement, (i) each of Seller and Purchaser will cooperate and use
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all Permits, consents, approvals and
authorizations of all Governmental Authorities that are necessary or advisable
to consummate the transactions contemplated by this Agreement, and (ii) Seller
shall use its commercially reasonable efforts, and Purchaser shall cooperate
with Seller, to obtain all consents, authorizations or approvals, and to send
all notices, required in connection with the assignment or transfer of any
Permit, Assumed Contract or Lease to Purchaser as contemplated by this
Agreement; provided, however, that Seller shall have no obligation to give any
guarantee or other consideration in connection with any such consent,
authorization or approval. Without limiting the generality of the foregoing,
Seller and Purchaser shall cooperate with one another: (A) in the preparation
and filing of any required filings under the applicable Environmental Laws; (B)
in determining whether action by or in respect of, or filing with, any
Governmental Authority is required, proper or advisable or any actions,
consents, waivers or approvals are required to be obtained from parties to any
Assumed Contracts, in connection with the transactions contemplated by this
Agreement; and (C) in seeking timely to obtain any such actions, consents,
waivers or to make any such filings. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
(b) Notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall not constitute an agreement
to transfer, sell or otherwise assign any of the Assumed Contracts or Leases
that requires the consent of or notice to the other party thereto to avoid any
breach or default thereunder, to the extent any required consent, approval or
authorization in respect of such Contract, Lease or Permit obtained
(collectively, the "Unassigned Contracts"). Without limitation of any right
Purchaser or Seller may have not to consummate the transactions contemplated by
this Agreement pursuant to Section 3.2(c) and if Purchaser and Seller waive
such right and the Closing occurs, the beneficial interest in and to each
Unassigned Contract shall in any event pass to Purchaser at the Closing, and
Seller covenants and agrees to use commercially reasonable efforts to obtain
the consent, approval or authorization to such Unassigned Contract as promptly
thereafter as possible; provided, however, that Seller shall have no obligation
to give any guarantee or other consideration in connection with any such
consent, authorization or approval. If such consent, approval or authorization
cannot be obtained, Seller shall use commercially reasonable efforts, in any
lawful and economically reasonable arrangement to provide Purchaser with
Seller's and its Specified Affiliates' entire interest in the benefits under
each of the Unassigned Contracts. Seller shall, and shall cause each of its
Specified Affiliates to, exercise or exploit their respective rights and
options under all such Unassigned Contracts referred to in this Section 6.3(b)
only as reasonably directed by Purchaser; provided, that, except in cases of
gross negligence or willful misconduct on the part of Seller or its Specified
Affiliates (or their respective officers, employees, agents or
representatives), Purchaser shall be responsible, and shall indemnify, defend
and hold harmless Seller and its Specified Affiliates hereunder from and
against, for any liability or Damages to the extent incurred by Seller or any
of its Specified Affiliates as a result of such direction. If and solely to the
extent Seller provides the rights and benefits under an Unassigned Contract,
Purchaser shall accept the burdens and perform the obligations under such
Unassigned Contract as subcontractor of Seller or its Specified Affiliates to
the extent such burdens and obligations would have constituted an Assumed
Liability if such Unassigned Contract had been transferred to Purchaser at the
Closing. Furthermore, if the other party(ies) to an Unassigned Contract
subsequently consent to the assignment of such contract to Purchaser, Purchaser
shall thereupon agree to assume and perform all Liabilities arising thereunder
after the date of such consent, at which time such Unassigned Contract shall be
deemed a Purchased Asset and the Liabilities so assumed thereunder shall be
deemed Assumed Liabilities, without the payment of further consideration.
(c) In addition to the requirements set forth above
in this Section 6.3 (and subject to the limitations set forth therein), each of
Seller and Purchaser shall use commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
reasonably practicable the transactions contemplated by this Agreement,
including the obtaining of all necessary waivers, consents and approvals and
the fulfillment of each condition to the other party's obligations set forth in
Article III of this Agreement (it being understood and agreed that neither
Seller nor Purchaser shall be required to expend any amounts, assume any
obligations or incur any liabilities in connection with obtaining any
third-party waivers, consents or approvals).
6.4 Government Notification. Seller and Purchaser have
filed with the United States Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") pursuant to HSR Act, the notification and documentary material
required in connection with the acquisition of the Purchased Assets by
Purchaser, pursuant to this Agreement. Seller and Purchaser shall as soon as
practicable, comply with any request for additional information and documentary
practicable, comply with any request for additional information and documentary
material received from the FTC or Antitrust Division and shall coordinate and
cooperate with one another in exchanging such information and providing such
reasonable assistance as may be requested in connection with such request.
6.5 Bulk Transfer Laws. Without admitting the
applicability of the bulk transfer Laws of any jurisdiction, each of Seller and
Purchaser hereby waives compliance by the other party with any applicable bulk
sale or bulk transfer Laws of any jurisdiction in connection with the sale of
the Purchased Assets to Purchaser (other than any obligations of Seller with
respect to the application of the proceeds therefrom).
6.6 Public Announcements. Purchaser and Seller shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to this Agreement or the transactions
contemplated by this Agreement, and neither Purchaser nor Seller shall issue
any such press release or make any such public statement without the prior
approval of the other party to this Agreement, such approval not to be
unreasonably conditioned, delayed or withheld, except as may be required by
applicable Law or any securities exchange on which the securities of Seller or
its Affiliates are listed.
6.7 Accounts Receivable; Receipts and Disbursements.
(a) Accounts Receivable. In the event that Seller
receives any payments relating to any Accounts Receivable (other than
Intracompany Receivables) after the Closing, such payments shall be the
property of, and shall be forwarded and remitted to Purchaser on a monthly
basis. Seller shall advise Purchaser of any counterclaims or set offs of which
it receives notice subsequent to the Closing with respect to any such Accounts
Receivable.
(b) Intracompany Receivables. In the event that
Purchaser receives any payments after the Closing relating to any Intracompany
Receivables, such payments shall be the property of, and shall be forwarded and
remitted to Seller on a monthly basis. Notwithstanding the foregoing and for
the avoidance of doubt, Seller shall not be obligated to, and shall not owe or
make payments to Purchaser in respect of Intracompany Receivables, and
Purchaser shall not be obligated to, and shall not owe or make any payments to
Seller in respect of Intracompany Liabilities.
6.8 Transition Services.
(a) Services. In order to facilitate an orderly
transition of the Business to Purchaser, Seller agrees to provide to Purchaser
in respect of the Business, as reasonably required by Purchaser, the following
services:
(i) E-mail Services. Seller shall use
commercially reasonable efforts, prior to the Closing Date, to assist
Purchaser in transitioning the Transferred Employees to Purchaser's
e-mail systems by (A) instructing the Transferred Employees how to
save contact lists in the Lotus Notes system and transfer personal
files to a central server, and (B) providing such contact lists and
personal files to Purchaser.
(ii) Payroll Services. Seller shall use
commercially reasonable efforts, prior to the Closing Date, to obtain
from the applicable vendors the right to use the ADP payroll software
and the eTime time clock software, and to obtain from SourceNet
Solutions the permission to use its services, in each case for Seller
or a newly-created Affiliate of Seller, on Purchaser's behalf, to
continue processing payrolls for Transferred Employees (the "Payroll
Services") for 60 days following the Closing Date or such earlier date
that Purchaser shall designate to Seller (the "Payroll Transition
Period"). Such Payroll Services shall be subject to the following
conditions:
(A) No new employees may be added to the
Payroll Services during the Payroll Transition Period, and Purchaser
shall promptly notify Seller of any Transferred Employees that are
terminated by Purchaser. Seller and such Affiliate shall have no
liability in connection with payments made to any such terminated
Transferred Employees.
(B) Purchaser must provide to Seller all
required Federal, State, and Local Employer Identification Numbers,
along with Purchaser's current unemployment rates, at least 15
Business Days prior to the Closing Date.
(C) Seller or such Affiliate will not
withhold benefit deductions from employee payrolls. Seller or such
Affiliate will only withhold required federal, state, local and
payroll taxes. At or before the Closing, Seller or such Affiliate will
solicit from each Transferred Employee a new IRS Form W-4, to be
effective as of Closing. Seller or such Affiliate will continue tax
withholdings at the level in effect as of Closing for any Transferred
Employee who does not properly complete such a new Form W-4.
(D) Seller or such Affiliate will not be
responsible for any payroll or human resources administrative issues
in respect of the Transferred Employees, including updating employee
addresses, tracking cost centers, processing salary increases,
transferring employees between locations, tracking vacation or sick
time or providing any type of benefits in respect of the period after
the Closing Date.
(E) Seller or such Affiliate shall provide
the Payroll Services using Seller's existing payroll forms, including
Seller's check stock, provided that Seller or such Affiliate may use
appropriate disclaimers and/or other notices with respect to the fact
that Seller or such Affiliate is providing the Payroll Services on
Purchaser's behalf.
(F) On a weekly basis, Seller or such
Affiliate shall provide documentation to Purchaser of the Payroll
amount to be processed for that week (including wages and applicable
taxes) (the "Payroll Amount"). Purchaser shall execute a wire transfer
for the Payroll Amount to Seller's account in immediately available
funds by the end of business on the Business Day following the day
Seller or such Affiliate provides documentation of the Payroll Amount.
Seller's obligation to provide Payroll Services shall terminate
immediately if Purchaser defaults on its obligations under this
paragraph (F).
(iii) Procurement, Maintenance and Parts
Inventory Services. Seller shall use its commercially reasonable
efforts to allow continued use by Purchaser of the JDE procurement,
maintenance and parts inventory software systems (A) at the Charlevoix
Facility and the ▇▇▇▇▇ Facility for 60 days following the Closing Date
and (B) the Terminals for 30 days following the Closing Date.
(b) Third Party Consents. If Seller and Purchaser
are unable to obtain any of the third party consents required for the services
contemplated under this Section 6.8, each of Seller and Purchaser shall work
together in good faith to find alternate means to provide Purchaser with the
services contemplated in this Section 6.8; provided that neither Seller nor its
Affiliates shall be required to make any payments or incur any out-of-pocket
costs, obligations or liabilities in connection therewith, and Seller shall not
be obligated to provide any service for which a required third-party consent is
not obtained.
(c) Reimbursement. Purchaser shall reimburse Seller
for (i) the direct hourly or equivalent salary cost of the employee providing
the services described in this Section 6.8, (ii) the hiring of temporary
personnel from the payroll service provider, or other source, to set up the
Employer Identification Numbers and transfer all the Transferred Employees to
the new payroll service provider, (iii) all out of pocket costs and expenses in
providing such services, including communications costs, (iv) a per employee
pro rata share of Seller's or such Affiliate's allocated costs for providing
the Payroll Services and (v) all transaction charges directly associated with
Purchaser's payroll. Purchaser shall execute a wire transfer to Seller's
account in the amount of reimbursement requested by Seller within three
business days of receipt from Seller of the request.
(d) NOx Technology.
(i) Purchaser acknowledges that (A) Seller has
developed certain technology that reduces NOx emissions by injecting
water into a cement kiln flame (the "NOx Technology"), which
technology is currently implemented at the Charlevoix Facility, (B)
the NOx Technology is an Excluded Asset, (C) the NOx Technology is the
proprietary and confidential information of Seller, and (D) except as
set forth in this Section, Purchaser is acquiring no rights in the NOx
Technology.
(ii) Within 90 days after the Closing Date,
Purchaser shall remove the NOx Technology from all facilities owned or
controlled by Purchaser or its Affiliates.
(iii) Absent a written license agreement from
Seller, neither Purchaser nor any of its Affiliates may implement the
NOx Technology, or any improvement or derivative thereof, at any
facility owned or controlled by Purchaser or its Affiliates for the
longer of (A) any period in which Seller or its assignee owns or
controls any United States patent that would be infringed by the use
of the NOx Technology, including the Current NOx Patent Application
(and any patents claiming priority therefrom, and any divisions,
continuations, reissues, reexaminations, extensions and renewals
thereof) and (B) five years and after such five-year period, the
shorter of (1) any period in which Seller or its assignee owns or
controls any United States patent application that relates to the NOx
Technology, including the Current NOx Patent Application (and any
patent applications claiming priority therefrom, and any divisions,
continuations, reissues, reexaminations, extensions and renewals
thereof) and (2) eight years. Upon Seller's request, the senior
officer for Purchaser's United States operations shall certify
Purchaser's compliance with the provisions of this Section 6.8(d).
(iv) With respect to the NOx Technology, the
provisions of Section 6.16 shall survive the termination of this
Agreement indefinitely, provided that information disclosed in any
United States patent or patent application that is made available for
public examination by the United States Patent and Trademark Office
shall no longer be deemed the confidential information of Seller.
(e) Release From Liability. Except in the case of gross negligence or
willful misconduct on the part of Seller or its Affiliates (or their
respective officers, employees, agents and representatives), Purchaser
does hereby release and forever discharge Seller and its Affiliates
and any of their respective present, future and former agents,
representatives, attorneys, and associates and their respective
predecessors, successors, assigns, with respect to, and shall
indemnify, defend and hold harmless each such Person from and against,
any matter, liability or cause of action, arising out of or in any way
relating to, directly or indirectly, any of the matters described in
this Section 6.8.
6.9 Like-Kind Exchange.
(a) Seller, upon providing written notice at least
30 calendar days prior to Closing Date, may, with respect to some or all of the
Purchased Assets, elect to effect a simultaneous or non-simultaneous
tax-deferred exchange pursuant to Section 1031 of the Code and the regulations
thereunder. Purchaser expressly agrees to use reasonable efforts to cooperate
with Seller, upon Seller's reasonable request, in connection with any such
exchange, including by executing any and all documents, including escrow
instructions or agreements and consenting to Seller's assignment of its rights
hereunder to an exchange entity, which are reasonably necessary to carry out
such an exchange. Any and all representations, obligations, agreements,
warranties and covenants made by Seller to Purchaser in connection with this
Agreement shall remain in full force and effect and continue to inure to the
benefit of Purchaser, notwithstanding any assignment of this Agreement to a
third party in connection with such Section 1031 exchange. Nothing in this
Section 6.9 shall in any manner relieve Seller from any of its obligations
under this Agreement, and Seller shall remain primarily liable to Purchaser
pursuant to the terms of this Agreement.
(b) Purchaser's obligation to cooperate in a Section
1031 exchange is conditioned upon each of the following: (i) Purchaser shall
not be required to incur any additional costs, expenses or Liabilities
(including professional fees and transfer taxes) as a result of, or in
connection with, any action taken by Purchaser under Section 6.9(a) or such
Section 1031 exchange, and Seller shall indemnify and hold Purchaser harmless
from any Damages or any other cost, expense, liability or loss of Tax benefits
incurred by Purchaser in connection with any action taken by Purchaser under
Section 6.9(a) or such Section 1031 exchange, (ii) the Closing shall not be
delayed as a result of such Section 1031 exchange, (iii) all acknowledgments,
releases, representations, warranties, covenants and agreements made by Seller
(as set forth in this Agreement) shall remain in full force and effect in favor
of Purchaser as if such Section 1031 exchange had not been made and (iv)
Purchaser shall not be required to hold legal title to any assets other than
the Purchased Assets.
6.10 Insurance; Risk of Loss.
(a) Purchaser acknowledges that the Retained
Policies will not continue to insure the Purchased Assets or the Business after
the Closing Date. Purchaser hereby further acknowledges (and acknowledges on
behalf of its Affiliates) that after the Closing Date, if the Business suffers
any casualty or loss for which Purchaser is responsible under the terms of this
Agreement, such loss shall be payable solely from any substitute policies to be
obtained by the Purchaser. Each of Purchaser and Seller shall, and shall cause
its Affiliates to, not assert any claim with respect to indemnified Damages
under insurance policies maintained by the other party or any subsidiary,
division or Affiliate of the other party. Except as Seller shall otherwise
consent to in writing (which consent shall not be unreasonably withheld,
delayed or conditioned), such substitute policies shall include a waiver of any
rights of subrogation that the insurance carriers underwriting such policies
may have against Seller or Seller's Affiliates or under the Retained Policies.
(b) Except as set forth in this Section 6.10(b), the
risk of loss or damage by fire or other casualty to any of the Owned Real
Property or Tangible Personal Property before the Closing is retained by
Seller. In the event that any of the Owned Real Property or Tangible Personal
Property shall suffer any damage as a result of a fire or other casualty prior
to the Closing (each such event, a "Casualty Loss"), in addition to and without
limitation of any right of Purchaser not to consummate the transactions
contemplated by this Agreement pursuant to Section 3.4, Seller agrees to, at
its option, (i) repair the damage at its sole cost and expense before the
Closing, or (ii) make an appropriate reduction in the Purchase Price herein set
forth based on Seller's good faith estimate for the cost of such repair, or
(iii) assign to Purchaser at Closing all insurance claims and proceeds payable
to Seller as a result of such fire or other casualty, and to the extent the
costs of repair for the applicable Casualty Loss are in excess of the insurance
proceeds, the Purchase Price will be appropriately reduced only to the extent
of such excess costs (each a "Casualty Loss Election"). Notwithstanding the
foregoing, in the event that Seller's good faith estimate of the cost of
repairing any Casualty Loss does not exceed $50,000 and Seller makes a Casualty
Loss Election under subclause (iii), there shall be no adjustment of the
Purchase Price regardless of whether the insurance proceeds are sufficient to
cover the Casualty Loss. In addition to its right to make a Casualty Loss
Election pursuant to the foregoing, in the event that Seller's good faith
estimate of the cost of repairing any Casualty Loss exceeds $2,500,000 (the
"Threshold Damage Amount"), Seller shall also have the right, exercisable in
its sole discretion, to terminate this Agreement unless Purchaser waives any
rights it may have against Seller in respect of such Casualty Loss (a "Casualty
Termination Election"), in which case Seller and Purchaser shall have not
further obligations under this Agreement (other than obligations that are
expressly intended to survive the termination of this Agreement). In the event
that any of the Owned Real Property or Tangible Personal Property shall suffer
a Casualty Loss prior to the Closing, Seller shall deliver a written notice
thereof to Purchaser on or before the earlier of (i) ten days after Seller
obtains Knowledge of the damage or (ii) the Closing Date, which written notice
shall include Seller's good faith estimate of the cost to repair such damage
and an identification of Seller's Casualty Loss Election or Casualty
Termination Election, as the case may be. In the event that Seller fails to
timely deliver notice of its election to Purchaser, (A) if Seller's good faith
estimate of the cost of repairing the Casualty Loss does not exceed the
Threshold Damage Amount, Seller shall be deemed to have made a Casualty Loss
Election pursuant to clause (iii) above or (B) if Seller's good faith estimate
of the cost of repairing the Casualty Loss exceeds the Threshold Damage Amount,
Seller shall be deemed to have made a Casualty Termination Election and Seller
subsequently notifies Purchaser of such Casualty Loss prior to the Closing (and
the Closing does not occur). Seller shall have no right to terminate this
Agreement pursuant to this Section 6.10(b) if Seller's good faith estimate of
the cost to repair the damage does not exceed the Threshold Damage Amount.
(c) Except as set forth in this Section 6.10(c), the
risk of loss or damage to the Owned Real Property by condemnation before the
Closing is retained by the Seller. In the event any condemnation proceeding is
commenced with respect to the Owned Real Property, in addition to and without
limitation of any right of Purchaser not to perform its obligations under this
Agreement pursuant to Section 3.4(f), Seller shall assign to Purchaser at the
Closing all of Seller's right, title and interest in and to all awards made in
respect of such condemnation and shall pay over to the Purchaser all amounts
theretofore received by Seller in connection with such condemnation.
(d) Upon the Closing, the full risk of loss with
respect to the Owned Real Property and the Tangible Personal Property shall
pass to, and be assumed by, Purchaser.
6.11 Intracompany Arrangements. Notwithstanding any other
provision herein (other than Section 6.8), as of the Closing, all services,
commitments or other arrangements that existed pre-Closing among the Business
and other businesses of Seller or Seller's Affiliates shall cease.
6.12 Retained Names. To the extent any of the Retained
Names appear on any plants, buildings, signs, equipment or other structures
that constitute Purchased Assets, Purchaser shall, within 60 calendar days
after the Closing Date, remove or obliterate, or cause to be removed or
obliterated, the Retained Names from such plants, buildings, signs, equipment
or other structures. Seller shall use commercially reasonable efforts to
remove, or cause to be removed, from the Real Property on or prior to the
Closing all stationery, business forms, packaging, containers and other similar
personal property on which any of the Retained Names appear; provided, however,
to the extent any such items are inadvertently left on the Real Property,
Purchaser shall not use any such items without first removing or obliterating,
or causing to be removed or obliterated, the Retained Names from such
materials. For the avoidance of doubt, except as set forth in this Section
6.12, Purchaser shall have no rights to, and shall not use in any manner, the
Retained Names on or after the Closing.
6.13 ▇▇▇▇ Sound Terminal.
(a) The parties acknowledge that CMC, in accordance
with its obligations under Section 11.2 of the Cement Supply & Distribution
Agreement (the "▇▇▇▇▇▇ Supply Agreement"), dated as of December 18, 1989, by
and among CMC, ▇▇▇▇▇▇ Cement Limited (f/k/a 835675 Ontario Limited) and ▇▇▇▇▇▇
Paving Limited ("▇▇▇▇▇▇"), has delivered to ▇▇▇▇▇▇ a notice of Seller's receipt
of Purchaser's offer to purchase the ▇▇▇▇ Sound Terminal for a purchase price
of $20 million and on the other terms and subject to the conditions set forth
in this Agreement that relate to the ▇▇▇▇ Sound Terminal. In the event that
▇▇▇▇▇▇ exercises its right, in accordance with the ▇▇▇▇▇▇ Supply Agreement, to
purchase the ▇▇▇▇ Sound Terminal on the terms and subject to the conditions set
forth in such notice:
(i) the ▇▇▇▇ Sound Terminal shall no longer be
deemed to be a "Terminal" for purposes of this Agreement;
(ii) the ▇▇▇▇ Sound Terminal shall no longer be
deemed to be part of the Owned Real Property;
(iii) the Purchase Price shall be $369,200,000;
(iv) the current assets and current liabilities
of the ▇▇▇▇ Sound Terminal shall be disregarded for purposes of the
Preliminary Closing Statement and the Final Closing Statement;
(v) the Base Working Capital shall be
$28,461,000;
(vi) all items relating solely to the ▇▇▇▇ Sound
Terminal set forth in the Seller Disclosure Schedule shall be
disregarded, and for purposes of this Agreement (including Section
3.4(a) and Article VIII), Seller's representations and warranties set
forth in Article IV shall be deemed to have been made without
reference to the ▇▇▇▇ Sound Terminal and, for avoidance of doubt, the
representations and warranties of Seller set forth in Article IV shall
not be deemed untrue or incorrect as of the date of this Agreement by
virtue of the exercise by ▇▇▇▇▇▇ of its right to purchase the ▇▇▇▇
Sound Terminal under the ▇▇▇▇▇▇ Supply Agreement, or by virtue of any
matter relating to the ▇▇▇▇ Sound Terminal; and
(vii) the definition of "Restricted Cement
Region" set forth in Section 1.1 shall be deleted in its entirety and
the following language shall be substituted in lieu thereof:
"Restricted Cement Region" means (i) the State of Michigan and (ii)
the areas that fall within a 150 mile radius around each of (A) the
▇▇▇▇▇ Facility, and (B) the Terminals located in the cities of
Milwaukee, Manitowoc and Green Bay, Wisconsin."
(b) Each of Seller and Purchaser shall pay one-half
of the CDN$750,000 fee required to be paid by CMC pursuant to Section 11.2 of
the ▇▇▇▇▇▇ Supply Agreement.
6.14 Maintenance of Indemnification Rights. Purchaser
shall not, and shall cause each of its Affiliates and subsidiaries to not, take
or fail to take any action that would limit or otherwise adversely affect any
indemnification rights of Seller, Seller's Affiliates and their respective
directors, officers, shareholders, attorneys, accountants, agents and
employees, and their respective heirs, successors and assigns would have been
entitled to under the ▇▇▇▇▇ Purchase Agreement had the transactions
contemplated by this Agreement not occurred.
6.15 Vessels.
(a) Prior to the Closing, Purchaser shall, or shall
cause each of its Affiliates to, use its commercially reasonable efforts to
take all actions necessary to establish, or nominate, a Person that is a
Citizen and qualified to purchase and document the Conquest under 46 U.S.C. ss.
12102(a)(4) so as to permit Seller to transfer the Conquest and assign the
Challenger Agreements to Purchaser or its nominee pursuant to the terms of this
Agreement without contravention of the Shipping Act or any other requirements
of United States maritime law.
(b) The Seller or its Specified Affiliate shall
deliver the Conquest to the Purchaser or its nominee in class with all
equipment, machinery, items of outfit and spares, bunkers, any unused
lubricating oils and other materials on board, together with all equipment and
spare parts specific and exclusive to the Conquest stored on shore.
6.16 Confidentiality. From and after the Closing, Seller
agrees to, and shall cause its agents, representatives, Affiliates, employees,
officers and directors (collectively, the "Seller Representatives") to: (a)
treat and hold as confidential (and not disclose or provide access to any
Person to) any information primarily relating to the Business, including trade
secrets, processes, price, customer and supplier lists, pricing and marketing
plans, policies and strategies, details of client and consultant contracts,
operations and methods, (b) in the event that Seller or any of the Seller
Representatives becomes legally compelled to disclose any such information,
provide Purchaser with prompt written notice of such requirement so that
Purchaser may seek a protective order or other remedy or waive compliance with
this Section 6.16, and in the event that such protective order or other remedy
is not obtained, or Purchaser waives compliance with this Section 6.16, furnish
only that portion of such confidential information which is legally required to
be provided and exercise its commercially reasonable efforts to obtain
assurances that confidential treatment will be accorded such information, and
(c) except with respect to copies allowed under Section 2.1(a)(ix), promptly
furnish (prior to, at, or as soon as practicable following, the Closing) to
Purchaser all such confidential information (in whatever form or medium) then
in the possession of Seller or any of the Seller Representatives and destroy
any and all additional copies then in the possession of Seller or any of the
Seller Representatives of such information and of any analyses, compilations,
studies or other documents prepared, in whole or in part, on the basis thereof;
provided, however, that this Section 6.16 shall not apply to any information
(v) that is or becomes generally available to the public other than as a result
of a disclosure by Seller or any of the Seller Representatives, (w) that
becomes available to Seller or any of the Seller Representatives on a
non-confidential basis from a source that did not acquire such information from
Seller or Purchaser on a confidential basis, (x) to the extent reasonably
necessary for Seller to retain, perform and/or discharge any Retained
Liability, provided Seller exercises reasonable efforts to obtain reasonable
assurance that confidential treatment is accorded such information so
disclosed, or (y) that is disclosed in connection with the prosecution or
defense of a dispute between Purchaser and Seller with respect to this
Agreement and the other Transaction Documents or the transactions contemplated
hereby or thereby.
6.17 Notice of Developments. Prior to the Closing, each
of Seller and Purchaser shall promptly notify the other in writing of all
events, circumstances, facts and occurrences arising subsequent to the date of
this Agreement that has resulted in a breach of a representation or warranty or
covenant of Seller or Purchaser, as the case may be, in this Agreement in a
manner that would cause a condition set forth in Section 3.2, 3.3 or 3.4, as
the case may be, not to be satisfied.
6.18 Non-Competition.
(a) Non-Compete.
(i) Subject to Section 6.18(b), during the
five-year period immediately following the Closing Date (the
"Restricted Period"), neither Seller nor any Affiliate of Seller (for
so long during such period as such Person shall remain an Affiliate of
Seller) shall actively sell or distribute (including through any
distributorship arrangement to resell bulk ▇▇▇▇ portland cement on
behalf of Seller or any of its Affiliates) ▇▇▇▇ portland cement for
delivery in the Restricted Cement Region (the "Restricted Cement
Business").
(ii) Subject to Sections 6.18(b)(v) and
6.18(b)(vi), during the Restricted Period, neither Seller nor any
Affiliate of Seller (for so long during such period as such Person
shall remain an Affiliate of Seller) shall construct and commence
commercial operation of (A) a ▇▇▇▇ portland cement manufacturing
facility in the Restricted Building Region or (B) a ▇▇▇▇ portland
cement terminal in the area that falls within a 20 mile radius around
the Cleveland Terminal; provided, however, that the foregoing
restriction shall not apply with respect to the operation of any
manufacturing facility or ▇▇▇▇ portland cement terminal (or the
prosecution or completion of construction or development, or
commencement of commercial operation, of any project in respect of
such facility or terminal) of any Person that engages in the
Restricted Cement Business (or any of such Person's Affiliates or
subsidiaries) acquired in accordance with Section 6.18(b).
(iii) Nothing contained in this Agreement shall
be construed to prohibit Seller or any of its Affiliates or
subsidiaries from engaging in any businesses other than the Restricted
Businesses.
(b) Exceptions. Nothing contained in this Agreement
shall prohibit Seller or any of its subsidiaries or Affiliates from:
(i) acquiring (whether by merger, consolidation,
stock or asset purchase or other similar transaction) or holding any
or all of the shares of capital stock or any or all of the partnership
or other equity interest in, or all or substantially all of the
business or assets of, any Person that engages in the Restricted
Cement Business if such Restricted Cement Business does not constitute
a Significant Restricted Business. In such event, the conduct of such
Restricted Cement Business shall not be prohibited by this Agreement;
(ii) acquiring or holding shares of capital
stock or a partnership or other equity interest in any Person that
engages in the Restricted Cement Business if such Restricted Cement
Business constitutes a Significant Restricted Business, where such
shares or interest represent no more than (A) 10% of the outstanding
voting power, or 15% of the outstanding equity interest, in such
Person, if such Person does not have any class of equity securities
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or (B) 15% of the outstanding voting power or equity
interest in such Person, if such Person has any class of equity
securities registered under the Exchange Act; provided, however, that
in each such case, such shares or interests are purchased and/or held
solely for investment purposes and Seller has no management or similar
rights with respect to such Person, provided that, notwithstanding the
foregoing, Seller will be able to possess rights customarily held by a
minority investor (including the right to appoint no more than one
member of the board of directors of such Person);
(iii) acquiring (whether by merger,
consolidation, stock or asset purchase or other similar transaction)
all or substantially all of the shares of capital stock of, or all or
substantially all of the partnership or other equity interest in, or
all or substantially all of the assets or business of, any Person that
engages in the Restricted Cement Business where such Restricted Cement
Business constitutes a Significant Restricted Business; provided,
however, that, solely in the case of the acquisition of a Significant
Restricted Business, if either (A) the total sales of such Significant
Restricted Business during the most recently completed fiscal year
exceeded $70,000,000, or (B) the total revenues derived from such
Significant Restricted Business during the most recently completed
fiscal year exceeded 50% of such Person's total revenues during the
most recently completed fiscal year, then Seller shall use reasonable
efforts to sell to an unaffiliated third party within 12 months after
such acquisition such portion of the business or operations of such
Significant Restricted Business as shall be necessary so that the
revenues derived from the remaining Restricted Cement Business of such
Person following such sale would not constitute more than (x)
$70,000,000 or (y) 50% of the pro forma total revenues of such Person
during the most recently completed fiscal year, as the case may be (in
each case, after giving effect to such sale); provided, further,
however, that notwithstanding the foregoing, there shall be no such
divestiture obligation if the transaction in which such Significant
Restricted Business was acquired constituted a Significant Business
Combination Transaction. In each such event, the conduct of such
Restricted Cement Business pending such sale and the conduct of such
remaining Restricted Cement Business following such sale shall not be
prohibited by this Agreement;
(iv) engaging in (A) any sales of ▇▇▇▇ portland
cement to, or swaps of ▇▇▇▇ portland cement with, other cement
companies ("industry transactions") or (B) the Restricted Cement
Business solely to the extent Seller or any of its Affiliates is
selling ▇▇▇▇ portland cement to any Person for which Seller or any of
its Affiliates then has an account if no more than 20% of the cement
purchased by such Person (not to exceed 25,000 tons per annum) is
purchased for use in the Restricted Cement Region;
(v) entering into an agreement providing for, or
from consummating, a Significant Business Combination Transaction, and
in the event that Seller or any of its subsidiaries or Affiliates
consummates any Significant Business Combination Transaction, then
nothing contained in this Agreement shall prohibit Seller or any of
its Affiliates or subsidiaries (including, in each case, any such
Person who shall be a successor, by merger or otherwise, to Seller or
any of its subsidiaries or Affiliates or to all or substantially all
of the business or assets of any of the foregoing in connection with
or at any time after such Significant Business Combination
Transaction) from (A) engaging in the Restricted Cement Business, if
the other party to such Significant Business Combination Transaction
or any of its Affiliates or subsidiaries is engaged in the Restricted
Cement Business at the time of such transaction, or (B) taking any
action that would otherwise be prohibited under Section 6.18(a)(ii);
or
(vi) entering into an agreement providing for,
or from consummating, a Change of Control Transaction, and in the
event that Seller or any of its subsidiaries or Affiliates consummates
any Change of Control Transaction, then nothing contained in this
Agreement shall prohibit the other party to such transaction or any of
its subsidiaries or Affiliates (including, in each case any such
Person who shall be a successor, by merger or otherwise, to Seller or
any of its subsidiaries or Affiliates or to all or substantially all
of the business or assets of any of the foregoing in connection with
or at any time after such Change of Control Transaction) from (A)
engaging in the Restricted Cement Business or (B) taking any action
that would otherwise be prohibited under Section 6.18(a)(ii).
(c) Non-Solicitation. Except with respect to
Non-Transferred Employees, as a separate and independent covenant, Seller
agrees with Purchaser that, for a period of five years following the Closing,
Seller will not in any way, directly or indirectly, interfere with or attempt
to interfere with any officers, employees, representatives or agents of the
Business, or induce or attempt to induce any of them to leave the employ of
Purchaser or any of its Affiliates or violate the terms of their contracts, or
any employment arrangements, with Purchaser or any of its Affiliates; provided,
however, that (i) the foregoing will not prohibit a general solicitation or
general advertisement that is not directed to such employees, and (ii) in the
event that Seller or any of its subsidiaries or Affiliates consummates any
Significant Business Combination Transaction or Change of Control Transaction,
then the foregoing shall not apply to the other party to such transaction or
any of its subsidiaries or Affiliates (including, in each case any such Person
who shall be a successor, by merger or otherwise, to Seller or any of its
subsidiaries or Affiliates or to all or substantially all of the business or
assets of any of the foregoing in connection with, or at any time after, such
Significant Business Combination Transaction or Change of Control Transaction,
as the case may be).
(d) Seller acknowledges that the covenants of Seller
set forth in this Section 6.18 are an essential element of this Agreement and
that, but for the agreement of Seller to comply with these covenants, Purchaser
would not have entered into this Agreement. Seller acknowledges that this
Section 6.18 constitutes an independent covenant that shall not be affected by
performance or nonperformance of any other provisions in this Agreement by
Purchaser or any Affiliates or, with respect to the Conquest, the nominee, of
Purchaser unless a Governmental Authority determines that Seller's
non-compliance with this Section 6.18 is an appropriate remedy for any breach
of this Agreement by Purchaser or any Affiliates or, with respect to the
Conquest, the nominee, of Purchaser. Seller has independently consulted with
its counsel and after such consultation agrees that the covenants set forth in
this Section 6.18 are reasonable and proper. Seller agrees and acknowledges
that remedies at law for any breach of its obligations under this Section 6.18
are inadequate and that in addition thereto the Purchaser shall be entitled to
seek equitable relief, including injunction and specific performance, in the
event of any such breach.
6.19 White Oak Litigation. Seller agrees that, without
the prior written consent of Purchaser (which consent shall not be unreasonably
withheld, delayed or conditioned), it shall not enter into any settlement with
the ▇▇▇▇▇ Township in connection with the lawsuit filed in September 2004 in
the Circuit Court of the Fifteenth Judicial Circuit in ▇▇▇ County, Illinois.
6.20 Charlevoix Landfill Operating License. Each of
Seller and Purchaser acknowledge that: (a) Seller has received a Solid Waste
Disposal Area Operating License for the operation of a Type III Low Hazard
Industrial Landfill ("Charlevoix Landfill"), License No. 9069, in connection
with the Charlevoix Facility ("Charlevoix Landfill Operating License"), such
license being necessary to operate the Charlevoix Landfill; (b) the Charlevoix
Landfill Operating License is not transferable to Purchaser; and (c) there
exists an escrow account known as the Perpetual Care Fund (the "Landfill
Account"), which was established pursuant to that certain Solid Waste Landfill
Perpetual Care Fund Escrow Agreement dated as of December 14, 1998, by and
between Southdown, Inc., the Michigan Department of Environment Quality and
National City Bank of Indianapolis, IN, as escrow agent, the value of such
account to be determined as of the Closing Date, which value shall be the price
of this Purchased Asset. The parties agree that: (x) on or before the Closing
Date, the Landfill Account shall be transferred to Purchaser or its designees
as part of the Purchased Assets; (y) on or before the Closing Date, the parties
shall perform whatever actions are necessary to transfer the benefits of the
Landfill Account to Purchaser, including entering into an amendment of the
agreement governing the Landfill Account transferring Seller's interest in such
account to Purchaser or its designees; and (z) if Purchaser is not able to
obtain a license to operate the Charlevoix Landfill on or before the Closing
Date, Purchaser and Seller shall, in accordance with Section 6.3(c) hereof,
work together in good faith to facilitate Purchaser's ability to operate the
Charlevoix Landfill, including entering into an agreement providing that
Purchaser shall act as Seller's agent with respect to the operation of the
Charlevoix Landfill until such time as Purchaser obtains its own operating
license for the Charlevoix Landfill or receives a final denial of its
application for an operating license.
ARTICLE VII
EMPLOYEE MATTERS
7.1 Offers of Employment. No more than 21 and at least
three days before the Closing Date, Purchaser shall offer employment to (a) at
least 85% of the Facility Employees in the aggregate and (b) at least 85% of
the Facility Employees employed in each of the ▇▇▇▇▇ Facility and the
Charlevoix Facility. In making hiring determinations pursuant to this Section
7.1, Purchaser shall comply with all applicable Laws respecting employment
offers and hiring, including the National Labor Relations Act, Title VII of the
Civil Rights Act or 1964, the Americans with Disabilities Act and the Age
Discrimination in Employment Act. Seller shall provide Purchaser and its
representatives reasonable access to the Facility Employees to assist Purchaser
in its determination. Purchaser agrees that following the Closing Date, it
shall maintain employee benefit and compensation plans, programs and
arrangements for the benefit of the Transferred Employees (as defined below)
that in the aggregate provide a level of compensation and benefits that is
substantially similar to the level provided under the corresponding employee
benefit plans and arrangements of Purchaser or its Affiliates that are
applicable to their respective similarly situated employees, or, as applicable,
in accordance with the terms and conditions of any Assumed Collective
Bargaining Agreement. Each Facility Employee who receives an offer and accepts
such offer of employment shall be referred to herein as a "Transferred
Employee," and each other Business Employee (including those individuals
identified on Section 4.12(a) of the Seller Disclosure Schedule and the
Facility Employees who do not receive offers of employment from Purchaser)
shall be referred to herein as a "Non-Transferred Employee," provided, however,
that in the event a Transferred Employee fails to pass the drug test(s) given
by the Purchaser in the ordinary course of hiring new employees and in
accordance with applicable Law, such Transferred Employee shall be deemed a
Non-Transferred Employee for all purposes of this Agreement. Seller shall
terminate the employment of each Transferred Employee effective as of 11:59
p.m. on the Closing Date. Purchaser shall inform Seller not later than one
Business Day after the Closing Date of the identity of the Transferred
Employees, subject to subsequent updates based on the foregoing.
7.2 Employee-Related Obligations and Costs.
(a) Subject to Section 8.11, Seller agrees to remain
obligated for expenses in connection with (i) any claim of a Business Employee
arising under the workers' compensation laws of any state (a "Worker's
Compensation Claim") that was incurred on or prior to the Closing Date and (ii)
any Worker's Compensation Claim of a Non-Transferred Employee that was incurred
prior to, on or after the Closing Date. Effective as of the day following the
Closing Date, Purchaser shall assume all obligations and Liabilities for all
Worker's Compensation Claims arising from events occurring after the Closing
Date with respect to any Transferred Employee. A Worker's Compensation Claim is
deemed to be incurred when the facts and events giving rise to such claim
occur.
(b) Seller agrees to remain obligated to provide
continuation health care coverage (including the issuance of any required
notices), in accordance with Section 4980B of the Code and Section 601 et seq.
of ERISA ("COBRA"), to all Business Employees and their qualified dependents
and beneficiaries (x) who incur a qualifying event on or prior to the Closing
Date and (y) to whom Seller is on the Closing Date providing such continuation
coverage or under an obligation to provide such continuation coverage at the
election of the Business Employee, including solely as a result of the
transactions contemplated by this Agreement. Seller also agrees to remain
obligated to provide continuation coverage to all Non-Transferred Employees and
their qualified dependents and beneficiaries (x) who incur a qualifying event
prior to, on and after the Closing Date and (y) to whom Seller is on the
Closing Date providing such continuation coverage or under an obligation to
provide such continuation coverage at the election of the Non-Transferred
Employee. Purchaser shall have responsibility for any and all obligations under
COBRA with respect to any Transferred Employees and their qualified dependents
and beneficiaries who incur qualifying events following the Closing Date.
(c) Effective as of the day following the Closing
Date, Purchaser shall be responsible for (i) any Liability arising under the
WARN Act and any state or local equivalent in connection with the termination
of the employment of any Transferred Employee by Purchaser after the Closing
Date, (ii) issuance of any notices required by the WARN Act with respect to the
termination of any Transferred Employee after the Closing Date and (iii) any
obligation with respect to the Transferred Employees under any applicable state
or local equivalent arising or accruing after the Closing Date. Seller shall be
responsible for any Liability arising under the WARN Act and any state or local
equivalent in connection with the termination of the employment of any Business
Employee prior to or on the Closing Date and with the termination of employment
of any Non-Transferred Employee prior to, on or after the Closing Date. Each of
Seller and Purchaser shall cooperate to the extent necessary in determining
such other party's duties under the WARN Act and any state or local equivalent.
7.3 Severance. Seller shall remain solely responsible
for all Liabilities and claims with respect to severance as a result of or
related to the termination of employment of a Facility Employee prior to the
Closing (including severance (if any) payable to any Transferred Employee as a
result of the termination of employment with Seller or any of its Affiliates as
a consequence of the transactions contemplated hereby, or in the event a
Facility Employee who receives an offer of employment from Purchaser does not
accept such offer), and any such severance claims shall not count against the
Seller's Severance Cap. Seller shall also remain responsible for all
Liabilities and claims with respect to severance for (a) each Non-Transferred
Employee who is not offered employment with Purchaser because of the
Non-Transferred Employee's failure to pass a required, lawfully-administered
drug test, (b) up to an additional 15 Non-Transferred Employees (at an average
severance rate for all of the Non-Transferred Employees whose employment is
terminated, excluding a termination as a result of clauses (a) or (c) in this
Section 7.3), and (c) each of the individuals listed on Section 4.12(a) of the
Seller Disclosure Schedule (collectively (a), (b) and (c) are referred herein
as "Seller's Severance Cap"). Subject to the foregoing and once Seller's
Severance Cap has been met, Purchaser shall promptly reimburse Seller, upon
written demand, for all Liabilities with respect to all other severance for
Non-Transferred Employees. Purchaser shall also be responsible for all
Liabilities and claims with respect to severance for any Transferred Employee
as a result of any termination of employment with the Purchaser or one of its
Affiliates following the Closing. Any severance paid in accordance with the
immediately preceding sentence shall be in accordance with Purchaser or one of
its Affiliates' severance benefit plans as in effect at the time of the
termination of employment, or, as applicable, in accordance with the terms and
conditions of any Assumed Collective Bargaining Agreement.
7.4 Service Credit. As of the day immediately following
the Closing Date, Purchaser shall, and shall cause its Affiliates to, credit
Transferred Employees with all service with Seller and its Affiliates for
purposes of eligibility and vesting (but not for purposes of benefit accruals,
other than with respect to vacation benefits) under any employee benefit plans,
programs, agreements or arrangements maintained by Purchaser or its Affiliates,
to the extent such service was recognized by the Seller immediately prior to
the Closing Date, provided, that such crediting of service shall not operate to
duplicate any benefit or the funding of any such benefits. Effective as of
11:59 p.m. on the Closing Date, each Transferred Employee shall cease to accrue
benefits, earn service credit or otherwise actively participate under any
employee benefits plan, program, agreement or arrangement maintained by Seller
or any of its Affiliates.
7.5 Welfare Plans.Purchaser shall (a) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the
Transferred Employees under any welfare benefit plans that such employees may
be eligible to participate in after the Closing Date and (b) provide each
Transferred Employee with credit for any payments and deductibles paid prior to
the Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that the Transferred Employee is eligible
to participate in after the Closing Date.
7.6 Bonuses. As soon as practicable after December 31,
2004, Seller shall pay to each Transferred Employee a bonus (but only if
payable and not already paid) pursuant to any annual bonus plan maintained by
Seller or its Affiliates for Transferred Employees in respect of 2004,
including Seller's Plant Employee Compensation Plan and Seller's Logistics
Incentive Plan, in any event determined without regard to any requirement
otherwise applicable under such plan that a Transferred Employee be employed by
Seller on the date the bonus payment is made.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations and Warranties.
(a) The covenant Seller made pursuant to Section
6.17 and the representations and warranties of Seller contained in this
Agreement shall survive for a period of 18 months following the Closing Date;
provided, however, that (i) the representations and warranties made pursuant to
Sections 4.1, 4.2, 4.3, 4.9(d), 4.9(e) and 4.15 shall survive indefinitely,
(ii) the representations and warranties made pursuant to Section 4.14 shall
survive until 60 days after the expiration of the relevant statute of
limitations for the assessment or collection of any Tax and (iii) the
representations and warranties made pursuant to Sections 4.12 and 4.13 shall
survive the Closing until the third anniversary of the Closing Date. Neither
the period of survival nor the liability of Seller with respect to Seller's
representations and warranties shall be reduced by any investigation made at
any time by or on behalf of Purchaser. If written notice of a claim, which sets
forth the facts that Purchaser believes, in good faith, constitute a reasonable
basis for indemnification, has been given prior to the expiration of the
applicable representations and warranties by Purchaser to Seller, then the
relevant representations and warranties shall survive as to such claim, until
such claim has been finally resolved.
(b) The covenant Purchaser made pursuant to Section
6.17 and the representations and warranties of Purchaser contained in this
Agreement shall survive the Closing for a period of 18 months following the
Closing Date; provided, however, that the representations and warranties made
pursuant to Sections 5.1, 5.2, 5.3 and 5.6 shall survive indefinitely. Neither
the period of survival nor the liability of Purchaser with respect to
Purchaser's representations and warranties shall be reduced by any
investigation made at any time by or on behalf of Seller. If written notice of
a claim, which sets forth the facts that Seller believes, in good faith,
constitute a reasonable basis for indemnification, has been given prior to the
expiration of the applicable representations and warranties by Seller to
Purchaser, then the relevant representations and warranties shall survive as to
such claim, until such claim has been finally resolved.
8.2 Indemnification by Seller. From and after the
Closing and subject to the provisions of this Article VIII, Seller agrees to
pay and to indemnify, defend and hold Purchaser and its Affiliates and their
respective directors, officers, employees and agents harmless from and against
any and all claims and/or losses, Liabilities, damages, judgments, settlements,
costs and expenses (including interest and penalties recovered by a third party
with respect thereto, reasonable attorneys' fees, and expenses and reasonable
accountants' fees and expenses incurred in the investigation or defense of any
of the same or in asserting, preserving or enforcing any rights, but excluding,
unless payable to a third party, punitive, exemplary, special losses or
damages) (collectively, "Damages") arising out of or relating to any of the
following:
(a) Excluded Liabilities. Any Excluded Liability;
(b) Representations and Warranties. Any breach of
any representation or warranty made by Seller in Article IV of this Agreement,
the Deeds or the certificate to be delivered by Seller at the Closing pursuant
to Section 3.4(c) (it being understood that such representations and warranties
shall be interpreted without giving effect to any limitations or qualifications
as to "materiality" (including the word "material") or "Material Adverse
Effect" set forth therein);
(c) Covenants. Any breach of any covenant or
agreement of Seller contained in this Agreement or the other Transaction
Documents;
(d) Allocation. The failure by Seller to report the
sale of the Purchased Assets in accordance with the Final Allocation;
(e) Other Environmental Matters. The Environmental
Cost-Sharing Matters, subject to any relevant and applicable provisions of this
Agreement, including the limitations and conditions set forth in Section 8.8;
(f) Detroit Terminal. Except as provided in the
Detroit Lease Agreement, Liabilities with respect to claims and/or Damages of
unaffiliated third parties arising from, or related to, Purchaser's operation
of the Detroit Terminal, except to the extent any such Liabilities (i) are
caused by the negligence, gross negligence or willful misconduct of Purchaser,
any of its Affiliates or any of their respective employees, representatives or
agents (excluding, for this purpose, any employee, representative or agent of
Seller or any of its Affiliates) or (ii) relate to portland cement sold by
Purchaser and its Affiliates, including product liability claims for personal
injuries, property damages or other losses (such exceptions, collectively, the
"Purchaser Detroit Liabilities");
(g) Bulk Transfers. Liabilities arising from or
related to any failure to comply with laws relating to bulk transfers or bulk
sales with respect to the transactions contemplated by this Agreement
(notwithstanding the waiver contained in Section 6.5); and
(h) Charlevoix PSD Matter. Any fines and penalties
arising out of certain changes at the Charlevoix Facility undertaken during
outages in 2003 and 2004 that may be subject to enforcement, as described in
Section 2.2(a)(viii) of the Seller Disclosure Schedule, Charlevoix Facility,
item D. (the "Charlevoix PSD Matter"), and (ii) the reasonable costs associated
with the defense thereof, but only to the extent attributable to the period of
Seller's ownership or operation of the Charlevoix Facility and subject to the
limitations set forth in Section 8.4(f) (collectively, the "PSD Damages"). The
PSD Damages shall not include any costs to correct such violations (or alleged
violations) or non-compliance (or alleged non-compliance) with applicable
Environmental Law. Seller shall take the lead with respect to the defense of
this matter, provided, that (i) Purchaser shall retain the right to make final
determinations (subject to applicable Environmental Law) with respect to any
actions required to correct any violation or non-compliance with applicable
Environmental Law associated with such matter, (ii) Seller shall promptly
provide copies to Purchaser of all written correspondence from Seller to any
applicable Governmental Authority, and from any applicable Governmental
Authority to Seller, and (iii) Seller shall provide Purchaser with reasonable
advance notice of all planned meetings and telephone conferences with the
applicable Governmental Authority and Purchaser shall have the right to send
representative to attend and participate in such meetings.
8.3 Indemnification by Purchaser. From and after the
Closing and subject to the provisions of this Article VIII, Purchaser agrees to
pay and to indemnify, defend and hold Seller and its Affiliates and their
respective directors, officers, employees and agents harmless from and against
any and all claims and/or Damages arising out of or relating to any of the
following:
(a) Assumed Liabilities. Any Assumed Liability,
except to the extent such Assumed Liability is subject to indemnification by
Purchaser pursuant to Section 8.2(h) or Section 8.8;
(b) Representations and Warranties. Any breach of
any representation or warranty made by Purchaser in Article V of this Agreement
or the certificate to be delivered by Purchaser pursuant to Section 3.3(d) (it
being understood that such representations and warranties shall be interpreted
without giving effect to any limitations or qualifications as to "materiality"
(including the word "material") set forth therein);
(c) Covenants. Any breach of any covenant or
agreement of Purchaser contained in this Agreement or the other Transaction
Documents;
(d) Detroit Terminal. Any Purchaser Detroit
Liabilities; and
(e) Allocation. The failure by Purchaser to report
the purchase of the Purchased Assets in accordance with the Final Allocation.
8.4 Certain Limitations.
(a) Deductible. No indemnification pursuant to
Section 8.2(b) or Section 8.2(c), with respect to any breach by Seller of its
obligations under Section 6.17, shall be required with respect to any
individual Damage of Purchaser, unless (i) such item (of series of related
items) exceeds $40,000 and (ii) the aggregate of all Damages of Purchaser
described in Section 8.2(b) or Section 8.2(c), with respect to any breach by
Seller of its obligations under Section 6.17, with respect to of this Agreement
shall exceed $3,000,000, in which case Seller shall be liable only for the
Damages in excess of $3,000,000.
(b) Cap. Except in the case of actual fraud, the
maximum aggregate amount of Damages (other than with respect to Damages arising
from a breach of representation or warranty in Section 4.14) against which
Purchaser shall be entitled to be indemnified under (i) Sections 8.8 and
8.2(e), Section 8.2(c) solely with respect to any breach by Seller of its
obligations under Section 6.17, and Section 8.2(b) with respect to all claims
thereunder (other than with respect to claims for breach of a representation or
warranty that, pursuant to Section 8.1, survive the Closing and remain in full
force and effect indefinitely) shall be equal to 20% of the Purchase Price and
(ii) Section 8.2(b) with respect to all claims for breaches of representation
and warranty which, pursuant to Section 8.1, survive the Closing and remain in
full force and effect indefinitely, shall be equal to the Purchase Price.
Furthermore, as an additional limitation on Purchaser's indemnification rights
hereunder, the aggregate amount of Damages against which Purchaser shall be
entitled to be indemnified under Section 8.2(b), with respect to any breach by
Seller of its representations and warranties set forth in Sections 4.9(d) and
4.9(e) (collectively, "Title Representation Damages") shall be limited as
follows: (x) Damages with respect to each individual Terminal shall not exceed
the sum of the Purchase Price and the Assumed Liabilities allocated to such
Terminal (including all Tangible Personal Property and other assets used
primarily in connection with such Terminal) in the Final Allocation; (y)
Damages with respect to the ▇▇▇▇▇ Facility shall not exceed the sum of the
Purchase Price and the Assumed Liabilities allocated to the ▇▇▇▇▇ Facility
(including all Tangible Personal Property and other assets used primarily in
connection with the ▇▇▇▇▇ Facility) in the Final Allocation; and (z) Damages
with respect to the Charlevoix Facility shall not exceed the sum of the
Purchase Price and the Assumed Liabilities allocated to the Charlevoix Facility
and all of the Terminals (including all Tangible Personal Property and other
assets used primarily in connection with the Charlevoix Facility and such
Terminals) in the Final Allocation. For the avoidance of doubt, any Title
Representation Damages (x) are also subject to the other limitations set forth
in this Agreement and (y) count against the other limitations set forth in this
Agreement.
(c) Third Party Recoveries. The amount of any
Damages for which indemnification is provided to an Indemnified Party under
this Article VIII shall be net of any amounts recovered by the Indemnified
Party with respect to such Damages from any third party. Upon making any
payment to any Indemnified Party, the Indemnifying Party shall be subrogated to
all rights of the Indemnified Party against any third party (other than any
insurance carrier of Seller or its Affiliates or Purchaser or its Affiliates,
as the case may be) in respect of Damages to which such payment relates, and
such Indemnified Party will execute upon request all instruments reasonably
necessary to evidence and perfect such subrogation rights.
(d) Consequential and Incidental Damages. No
indemnification pursuant to Section 8.2 or Section 8.3 with respect to any
Damages that are consequential or incidental damages shall be required (i)
unless any such Damages related to a single item (or series of related items
resulting from the same event, fact or occurrence) exceed $1,000,000, in which
case Seller shall be liable for such Damages in excess of $1,000,000. Except in
the case of actual fraud, the maximum aggregate amount of Damages against which
either party shall be required to indemnify the other in respect of
consequential or incidental Damages shall be an amount equal to 10% of the
Purchase Price. Purchaser shall make commercially reasonable efforts to
mitigate any consequential or incidental Damages that an Indemnified Party
asserts under this Article VIII. For the avoidance of doubt, any consequential
or incidental damages (x) are also subject to the other limitations set forth
in this Agreement and (y) count against the other limitations set forth in this
Agreement.
(e) No Duplication. Notwithstanding anything in this
Article VIII to the contrary, Purchaser shall not be deemed to have incurred
any Damages with respect to any Liability to the extent such Liability was
included in the calculation of the Closing Working Capital pursuant to the
Final Closing Statement.
(f) Charlevoix PSD Matter. With respect to the
indemnification for the Charlevoix PSD Matter, Seller shall be responsible for
the first $250,000 in PSD Damages; Purchaser shall be responsible for the next
$250,000 in PSD Damages; and each party to this Agreement shall be responsible
for fifty percent (50%) of the PSD Damages in excess of $500,000.
8.5 Indemnification Process. The party or parties making
a claim for indemnification under Section 8.2 or Section 8.3 shall be, for the
purposes of this Agreement, referred to as the "Indemnified Party" and the
party or parties against whom such claims are asserted under this Article VIII
shall be, for the purposes of this Agreement, referred to as the "Indemnifying
Party." All claims by any Indemnified Party under this Article VIII shall be
asserted and resolved as follows:
(a) Notice. In the event that (i) any Action
(whether or not by or before a Governmental Authority) is asserted or
instituted by any Person other than Purchaser or Seller or their respective
Affiliates that could give rise to Damages for which an Indemnifying Party
could be liable to an Indemnified Party under this Agreement (such claim,
demand or proceeding, a "Third Party Claim") or (ii) any Indemnified Party
under this Agreement shall have a claim to be indemnified by any Indemnifying
Party under this Agreement that does not involve a Third Party Claim (such
claim, a "Direct Claim"), the Indemnified Party shall promptly send to the
Indemnifying Party a written notice specifying the nature of such claim, demand
or proceeding and the amount or estimated amount thereof if known (which amount
or estimated amount shall not be conclusive of the final amount, if any, of
such claim, demand or proceeding) (a "Claim Notice"); provided, however, that
the failure to provide such notice shall not release the Indemnifying Party
from any of its obligations under this Article VIII except to the extent that
the Indemnifying Party is materially prejudiced by such failure. In the event
of a Direct Claim, the Indemnifying Party shall notify the Indemnified Party
within 90 Business Days of receipt of a Claim Notice whether or not the
Indemnifying Party disputes such claim.
(b) Right to Contest Third Party Claims. In the
event of a Third Party Claim, if the Indemnifying Party acknowledges in writing
its obligations to indemnify the Indemnified Party hereunder against any
Damages that may result from such Third Party Claim, the Indemnifying Party
shall be entitled to appoint counsel of the Indemnifying Party's choice at the
expense of the Indemnifying Party to represent the Indemnified Party and any
others the Indemnifying Party may reasonably designate in connection with such
claim, demand or proceeding (in which case the Indemnifying Party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by any Indemnified Party except as set forth below). Notwithstanding
an Indemnifying Party's election to appoint counsel to represent an Indemnified
Party in connection with a Third Party Claim, an Indemnified Party shall have
the right to employ separate counsel, and the Indemnifying Party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
Indemnified Party reasonably believes that there exists a conflict of interest
that, under applicable principles of legal ethics, could prohibit a single
legal counsel from representing both the Indemnified Party and the Indemnifying
Party in such claim, demand or proceeding or (ii) the Indemnifying Party has
failed or is failing to prosecute or defend vigorously such claim, demand or
proceeding. If requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its counsel in contesting
any claim, demand or proceeding which the Indemnifying Party defends, or, if
appropriate and related to the claim, demand or proceeding in question, in
making any counterclaim against the person asserting the Third Party Claim, or
any cross-complaint against any Person.
(c) Settlement. No Third Party Claim may be settled
or compromised (i) by the Indemnified Party without the prior written consent
of the Indemnifying Party, which consent shall not be unreasonably conditioned,
withheld or delayed, or (ii) by the Indemnifying Party without the prior
written consent of the Indemnified Party, which consent shall not be
unreasonably conditioned, withheld or delayed; provided that if the
Indemnifying Party submits to the Indemnified Party a bona fide settlement
offer from a third party claimant of any Third Party Claim (which settlement
offer will include as an unconditional term of it the full and unconditional
release by the claimant or the plaintiff to the Indemnified Party from all
liability in respect of such claim) and the Indemnified Party refuses to
consent to such settlement, then thereafter the Indemnifying Party's liability
to the Indemnified Party with respect to such Third Party Claim will not exceed
the settlement amount included in such bona fide settlement offer, and the
Indemnified Party will either assume control and responsibility for the payment
of the defense of such Third Party Claim or pay the attorneys' fees and other
out-of-pocket costs and expenses incurred by the Indemnifying Party thereafter
in continuing the defense of such Third Party Claim. In the event any
Indemnified Party settles or compromises or consents to the entry of any
Judgment with respect to any Third Party Claim without the prior written
consent of the Indemnifying Party, such Indemnified Party shall be deemed to
have waived all rights against the Indemnifying Party for indemnification under
this Article VIII with respect to such Third Party Claim.
(d) Access to Information. From and after the
delivery of a Claim Notice under this Agreement, at the reasonable request of
the Indemnifying Party, each Indemnified Party shall grant the Indemnifying
Party and its representatives all reasonable access to the books, records and
properties of such Indemnified Party to the extent reasonably related to the
matters to which the Claim Notice relates. All such access shall be granted
during normal business hours and shall be granted under conditions that will
not interfere with the business and operations of such Indemnified Party. The
Indemnifying Party will not, and shall require that its representatives do not,
use (except in connection with such Claim Notice) or disclose to any third
person other than the Indemnifying Party's representatives (except as may be
required by applicable Law) any information obtained pursuant to this Section
8.5(d).
8.6 Characterization of Indemnification Payments.
Purchaser and Seller agree to treat any payment made under this Article VIII as
an adjustment to the Purchase Price.
8.7 Satisfaction of Indemnification Obligations. Subject
to the procedures set forth above and in accordance with the deadlines
specified in the preceding subsections, claims for indemnified Damages will be
satisfied as follows:
(a) By Seller. Seller will satisfy their liability
for indemnified Damages by paying the amount of such liability to Purchaser.
(b) By Purchaser. Purchaser will satisfy its
liability for such indemnified Damages by paying the amount of such liability
to Seller.
Payments pursuant to the foregoing will be by wire transfer, as the recipient
may direct in writing; provided, however, that in the absence of directions
within a reasonable period of time, payment may be made by cashier's check.
8.8 Additional Environmental Indemnification.
(a) Seller shall indemnify, defend and hold harmless
Purchaser and its Affiliates with respect to certain environmental matters that
would otherwise be Assumed Environmental Liabilities as to which Purchaser owes
a duty to defend, indemnify and hold harmless Seller and its Affiliates
pursuant to Section 8.3. To the extent, pursuant to the terms of this Section
8.8, that Seller does not or no longer has an obligation to indemnify, defend
and hold harmless Purchaser and its Affiliates with respect to such Assumed
Environmental Liabilities (including because time periods with respect to such
indemnification have expired or because Seller is only obligated to indemnify
Purchaser and its Affiliates for a portion of the Damages associated with such
matter), Purchaser shall be obligated to defend, indemnify and hold harmless
Seller and its Affiliates pursuant to Section 8.3.
(b) The following Actions, Liabilities and Damages
that are Assumed Environmental Liabilities are subject to indemnification by
Seller on the terms and subject to the conditions set forth in this Section
8.8, except (x) that with respect to any such Actions, Liabilities and Damages
that constitute Prairie Allocated Liabilities, Seller shall have no
indemnification obligation to the extent that either (A) Seller has an
indemnification right with respect thereto pursuant to Section 8.11(a) or (B)
Purchaser is not entitled to seek indemnification from Seller with respect
thereto under Section 8.11(b) and (y) to the extent that any such Actions,
Liabilities and Damages arise from or relate to Known Environmental Matters:
(i) any costs, including reasonable costs associated with the defense of such
matters, associated with correcting violations of or non-compliance with
Environmental Laws or Environmental Permits occurring prior to the Closing Date
with respect to the ownership, lease, maintenance or operation of the
Facilities, the Purchased Assets or the Business; (ii) Actions, Liabilities and
Damages for or associated with Remediation of Environmental Conditions, or for
property damage or damages to natural resources associated with such
Environmental Conditions, on, at, in, under or migrating from the Real
Property, where such Environmental Conditions first came into existence at such
locations prior to the Closing Date; and (iii) Actions, Liabilities and Damages
for loss of life or injury to persons arising from exposure, prior to the
Closing Date, to Hazardous Substances at, on, in, under, migrating from or
Released from the Facilities or Purchased Assets (including from exposure to
asbestos-containing materials).
(c) With respect to Environmental Cost-Sharing
Matters as to which notice, as provided by this Agreement, is provided to
Seller within six years after the Closing Date, Purchaser shall be responsible,
in the aggregate, for the first $5,000,000 in Damages associated with all such
matters. Subject to Section 8.8(d), Damages in excess of $5,000,000 with
respect to Environmental Cost-Sharing Matters shall be shared by Purchaser and
Seller as follows:
(i) With respect to Environmental Cost-Sharing
Matters as to which notice is provided to Seller in the first two
years after the Closing Date, Seller shall be responsible for 75% of
the Damages incurred with respect to such matters;
(ii) With respect to Environmental Cost-Sharing
Matters as to which notice is provided to Seller in the third and
fourth years after the Closing Date, Seller shall be responsible for
60% of the Damages incurred with respect to such matters; and
(iii) With respect to Environmental Cost-Sharing
Matters as to which notice is provided to Seller in the fifth and
sixth years after the Closing Date, Seller shall be responsible for
50% of the Damages incurred with respect to such matters.
(d) Seller's obligation to indemnify Purchaser and
its Affiliates pursuant to this Section 8.8 shall be subject to the limitation
set forth in Section 8.4(b).
(e) Seller's obligation to indemnify Purchaser and
its Affiliates pursuant to Section 8.8 shall expire six years after the Closing
Date except with respect to any matter for which a written notice of a claim,
which sets forth the facts that Purchaser believes, in good faith, constitute a
reasonable basis for indemnification, has been given prior to that date. Except
to the extent of Seller's indemnification obligation, if any, under this
Section 8.8, Purchaser shall be obligated to defend, indemnify and hold
harmless Seller with respect to the Environmental Cost-Sharing Matters pursuant
to Section 8.3(a) of this Agreement.
(f) In the event that Purchaser sells, transfers or
otherwise conveys any portion of the Purchased Assets, Seller's obligation to
indemnify Purchaser and its Affiliates pursuant to Section 8.8 shall only
survive with respect to Purchaser and for the benefit of the Person that is the
recipient of said portion of the Purchased Assets to the extent that said
Person abides by the terms and conditions of this Agreement that apply to said
indemnification.
8.9 Remediation Procedures and Standards.
(a) Purchaser shall promptly provide Seller with
written notice of any claim for indemnification relating to any Remediation
with respect to Environmental Conditions on, at, under or migrating from the
Real Property. Purchaser shall retain the right to take the lead with respect
to any such Remediation, provided, however, that except and only to the extent
necessary to address an emergency or imminent threat to human health or the
environment, the following limitations shall apply to such rights:
(i) Purchaser shall retain a qualified
independent environmental consultant, which consultant shall be
subject to Seller's approval (such approval not to be unreasonably
withheld).
(ii) Purchaser shall provide to Seller for
review and comment drafts of any proposed work plans, reports or other
submissions for any Remediation that Purchaser intends to deliver or
submit to the appropriate Governmental Authority prior to such
submission. Seller shall have 14 days to provide comments to Purchaser
regarding any such draft submissions, unless such review period is not
reasonably possible within the schedule or due date established by the
Governmental Authority, in which case Purchaser shall endeavor to
provide Seller as much time as reasonably possible under the schedule
(up to the 14 days) for its review. Such review and comments shall be
at Seller's own expense, which expense shall not count toward any
indemnification limit under this Agreement. Purchaser shall give good
faith consideration to Seller's comments regarding such draft
submissions; provided, however, that in the event that, after such
good faith consideration, there is a disagreement between Seller and
Purchaser regarding whether Seller's comments should be incorporated
into the draft, Purchaser shall have the final decision to include or
exclude such comments, it being understood that such decision shall
not have any effect on Seller's rights pursuant to this Agreement,
including, without limitation, a right to assert that any Remediation
resulting from said submission is in excess of the Most Cost Effective
Manner.
(iii) Purchaser shall promptly provide copies to
Seller of all written notices, final submissions, final work plans and
final reports.
(iv) Purchaser shall provide Seller with
reasonable advance notice of all planned meetings and telephone
conferences with the applicable Governmental Authority, and Seller, at
its own expense (which expense shall not count towards any
indemnification limit under this Agreement) shall have the right to
send representatives to attend and participate in such meetings.
(v) Seller may, at its own expense (which
expense shall not count toward any indemnification limit under this
Agreement), hire its own consultants, attorneys or other professionals
to monitor the Remediation, including any field work undertaken by the
Purchaser, and Purchaser shall provide Seller with the results of all
such field work. Notwithstanding the above, Seller shall not take any
actions that shall unreasonably interfere with Purchaser's performance
of the Remediation.
(b) With respect to any Remediation conducted by or
on behalf of Purchaser related to the Purchased Assets, Seller shall only be
liable for its share of the costs incurred to the extent such a Remediation is
conducted in the most cost effective manner ("Most Cost Effective Manner"). The
Most Cost Effective Manner shall (i) include the least stringent cleanup
standards that, based upon the use classification (industrial, commercial, or
residential) of a subject Real Property as of the Closing Date, are allowed
under applicable Environmental Law, and (ii) include the least costly methods
that are allowed under applicable Environmental Law and that are approved by or
otherwise acceptable to applicable Governmental Authorities to achieve such
standards, including the use of institutional or engineering controls to
eliminate or minimize exposure pathways; provided, however, that the Most Cost
Effective Manner shall not include any standard or method that (A) disrupts or
interferes with, in more than an insubstantial manner, the Business or the
operations of the Real Property as such property was used as of the Closing,
(B) from the perspective of a reasonable business person acting without
regarding to the availability of indemnification hereunder, unreasonably
exposes Purchaser to a risk of liability from third parties as a result of the
off-site migration of Hazardous Substances, or (C) with respect to
institutional or engineering controls, imposes for any Remediation in the
aggregate operation and maintenance costs of more than $25,000 per annum on
Purchaser or its successors or assigns. Purchaser shall be responsible for any
operation and maintenance with respect to any such institutional or engineering
controls and such costs shall not be subject to indemnification.
(c) Seller shall only be liable for its share of the
costs incurred to conduct a Remediation to the extent consistent with a
Remediation conducted in the Most Cost Effective Manner. If Purchaser
undertakes a Remediation that is not consistent with a Remediation conducted in
the Most Cost Effective Manner (such as a remediation standard to allow less
restrictive use of the property), Purchaser shall be responsible for any
additional costs associated with such action.
(d) Seller shall not be responsible for those costs
in connection with a Remediation at the Real Property to the extent that such
costs are caused by: (i) a Release of Hazardous Substances that first occurs
and originates after the Closing Date in connection with Purchaser's operation
of the applicable property after the Closing Date; (ii) Purchaser's negligent
or reckless action after the Closing Date resulting in the exacerbation of
Environmental Conditions otherwise subject to the indemnification pursuant to
this Agreement; (iii) the performance of a Remediation not required by
applicable Environmental Law or by a Governmental Authority or in response to a
third party Action; or (iv) Purchaser's voluntary closure of a waste management
treatment or storage unit, including a land based waste storage unit, or a
Hazardous Substances storage unit, such as an underground storage tank,
provided that Seller will continue to be liable for the costs of Remediation
for Releases of Hazardous Substances from such units into surrounding
environmental media to the extent otherwise provided in this Agreement. Sellers
shall also not be responsible for any consequential damages, including costs
incurred as a result of disruption of the business operations at the Real
Property, as a result of a requirement to undertake a Remediation subject to
indemnification pursuant to this Agreement.
8.10 Corrective Action Procedures and Standards.
(a) With respect to any claims for indemnification
related to violations of applicable Environmental Law or Environmental Permit,
other than matters that involve a Remediation of Environmental Conditions with
respect to the Release of Hazardous Substances at the Real Property, Purchaser
shall have the right, consistent with applicable Environmental Law, to
determine and implement the appropriate actions to correct any failures to
comply with applicable Environmental Law or Environmental Permit in effect as
of the Closing Date, provided that Seller shall have the right to control the
defense of any Actions seeking fines or penalties for violations of or
noncompliance with applicable Environmental Law prior to the Closing Date,
pursuant to Section 8.5 of this Agreement. Purchaser shall consult with Seller
in all material respects in connection with undertaking said corrective
actions, shall provide Seller with copies of all material correspondence
submitted to and received by any Governmental Authorities with respect to such
matters, and shall provide Seller with a reasonable opportunity to comment on
any material submissions to Governmental Authorities with respect to such
matters, including corrective action proposals; provided, that in the event of
a disagreement between Seller and Purchaser regarding whether Seller's comments
should be incorporated into the submission, Purchaser shall have the final
decision to include or exclude such comments, it being understood that such
decision shall not have any affect on Seller's rights pursuant to this
Agreement, including, without limitation, a right to assert that any corrective
action resulting from said submission is in excess of a corrective action
meeting the standard set forth in subparagraph (b) below. Purchaser shall
provide Seller with reasonable notice of all planned meetings and telephone
conferences with the applicable Governmental Authority, and Seller, at its own
expense (which expense shall not count towards any indemnification limit under
this Agreement) shall have the right to send representatives to attend and
participate in such meetings.
(b) Without limiting the foregoing, Seller shall not
be obligated to indemnify Purchaser for its share of the capital costs incurred
in connection with the implementation of a corrective action that are in excess
of the minimum amount required to achieve compliance with applicable
Environmental Law in effect as of the Closing Date, provided that the
corrective action for purposes of this Section 8.10(b) shall be sufficient to
allow Purchaser to operate the Facilities and the Purchased Assets in a manner
and at a level of production that is consistent with the operations of the
Facilities and the Purchased Assets during the 12 month period prior to the
date of this Agreement. Seller shall in no event be responsible for any
operating costs related to compliance with applicable Environmental Law after
the Closing Date. To the extent that Purchaser chooses to implement a
corrective action that goes beyond the standard set forth above, including
implementing a corrective action that allows for an expansion in operations at
a property or that is required to achieve compliance with Environmental Law
that does not become applicable to a property until after the Closing, Seller
shall not be responsible for its share of any additional or excess costs
associated with such corrective action.
(c) For the avoidance of doubt, corrective actions
contemplated by this Section 8.10 shall not include any Remediation related to
Releases of Hazardous Substances on the Real Property.
8.11 ▇▇▇▇▇ Purchase Agreement.
(a) Notwithstanding anything in this Agreement to
the contrary, in the event that Seller or any of its Affiliates suffers or
incurs any Liability or Damage with respect to any Prairie Allocated Liability
(other than any Known Environmental Liability), then Purchaser shall indemnify
and hold harmless Seller and/or such Affiliate from and against such Liability
or Damage to the full extent that Purchaser recovers from Prairie under the
▇▇▇▇▇ Purchase Agreement or in the event that Purchaser does not use
commercially reasonable efforts to pursue such claims, or Purchaser is in
breach of its obligations under Section 6.14, the amount that Purchaser would
have recovered from Prairie had Purchaser used commercially reasonable efforts
to pursue remedies under the ▇▇▇▇▇ Purchase Agreement, as in effect as of the
Closing, and without regard to the effect, if any, of a breach by Purchaser of
its obligations under Section 6.14 on the indemnification rights under the
▇▇▇▇▇ Purchase Agreement. Purchaser shall, and shall cause its Affiliates to,
use its commercially reasonable efforts to take all action and pursue all
claims for such indemnification under the ▇▇▇▇▇ Purchase Agreement with respect
to any such Liability or Damage.
(b) Notwithstanding anything in this Agreement to
the contrary, to the extent that any claim for indemnification that Purchaser
would have under this Article VIII but for the operation of this Section
8.11(b) arises out of or relates to a Prairie Allocated Liability, then (i)
Seller will have no obligation to indemnify any Purchaser Indemnified Party in
respect of such claim until Purchaser shall have used, and shall have caused
its Affiliates to have used, its commercially reasonable efforts to take all
action and pursue all claims for such indemnification under the ▇▇▇▇▇ Purchase
Agreement with respect to any such Liability or Damage and (ii) in addition to
the other limitations on indemnification set forth in this Article VIII,
Seller's indemnification obligation with respect to such matter shall be
limited to the amount by which such Liability or Damage exceeds the greater of
(x) the amount that Purchaser recovers from Prairie under the ▇▇▇▇▇ Purchase
Agreement or (y) in the event that Purchaser does not use commercially
reasonable efforts to pursue such claims, or Purchaser is in breach of its
obligations under Section 6.14, the amount that Purchaser would have recovered
from Prairie had Purchaser used commercially reasonable efforts to pursue
remedies under the ▇▇▇▇▇ Purchase Agreement, as in effect as of the Closing,
and without regard to the effect, if any, of a breach by Purchaser of its
obligations under Section 6.14 on the indemnification rights under the ▇▇▇▇▇
Purchase Agreement.
(c) Notwithstanding anything in this Agreement to
the contrary, Purchaser hereby completely releases, acquits and forever
discharges Seller and any of Seller's Affiliates from any and all Actions,
Damages and Liabilities of any nature whatsoever (including Actions, Damages
and Liabilities under Environmental Law), and hereby expressly waives any and
all other rights, that may available either at law or in equity with respect to
any Prairie Allocated Liability to the extent that either (i) Seller has an
indemnification right with respect thereto pursuant to Section 8.11(a) or (ii)
Purchaser is not entitled to seek indemnification from Seller with respect
thereto under Section 8.11(b).
(d) Notwithstanding anything in this Agreement to
the contrary, in the event that Purchaser or any of its Affiliates suffers or
incurs any Liability or Damage with respect to any Former Prairie Allocated
Liability, then Seller shall indemnify and hold harmless Purchaser and/or such
Affiliate from and against such Liability or Damage to the same extent that,
and on the same terms and conditions as, Prairie would have been required to
indemnify Purchaser under the terms of the ▇▇▇▇▇ Purchase Agreement had the
▇▇▇▇▇ Amendment No. 1 not become effective; provided that Seller shall have no
further liability or obligation under this Section 8.11(d) in the event that at
the time of such claim by Purchaser or its Affiliates, or at the time payment
of such claim would otherwise be due, (i) Prairie is insolvent, (ii) Prairie or
any of its significant subsidiaries is in payment default under the terms of
any material indebtedness with obligations in excess of $2,500,000, (iii)
Prairie shall have filed any petition for voluntary bankruptcy or similar
proceeding or (iv) a Governmental Authority shall have entered a judgment,
decree or order for relief in respect of Prairie in an involuntary bankruptcy
case or proceeding.
8.12 Exclusive Remedies. Except in the case of actual
fraud, Seller's and Purchaser's respective rights to indemnification under this
Article VIII with respect to any Damages (including Damages under Environmental
Law) shall be their sole and exclusive remedy and they shall not be entitled to
pursue, and hereby expressly waive, any and all rights that may otherwise be
available either at law or in equity with respect thereto. Any party's right to
indemnification hereunder shall not be affected by a party's waiver of its
right of termination pursuant to Article IX hereof if such right of termination
arises from a willful breach of this Agreement.
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination. This Agreement may be terminated and
the transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing:
(a) by the mutual written agreement of Purchaser and
Seller;
(b) by either Purchaser or Seller by giving written
notice of such termination to the other party, if the Closing shall not have
occurred by June 30, 2005, unless the failure of the Closing to occur by such
date shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party set
forth herein;
(c) by either Purchaser or Seller if there shall be
any Law that makes the consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited or if consummation of the
transactions contemplated by this Agreement would violate any nonappealable
final Judgment of any Governmental Authority having competent jurisdiction;
(d) by either Purchaser or Seller (provided that the
terminating party is not then in material breach of any material
representation, warranty, covenant or other material agreement contained
herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within 30 calendar days following
written notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; provided, however, that neither
party shall have the right to terminate this Agreement pursuant to this Section
9.1(d) unless the breach of representation or warranty, together with all other
such breaches, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under Section 3.3(a) (in the
case of a breach of representation or warranty by Purchaser) or Section 3.4(a)
(in the case of a breach of representation or warranty by Seller); or
(e) by either Purchaser or Seller (provided that the
terminating party is not then in material breach of any material
representation, warranty, covenant or other material agreement contained
herein) if there shall have been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the other party, which
breach shall not have been cured within 30 calendar days following receipt by
the breaching party of written notice of such breach from the other party
hereto, or which breach, by its nature, cannot be cured prior to the Closing;
provided, however, that neither party shall have the right to terminate this
Agreement pursuant to this Section 9.1(e) unless the breach of covenant or
agreement, together with all other such breaches, would entitle the party
receiving such covenant or agreement not to consummate the transactions
contemplated hereby under Section 3.3(b) (in the case of a breach of a covenant
or agreement by Purchaser) or Section 3.4(b) (in the case of a breach of a
covenant or agreement by Seller).
9.2 Effect of Termination. If this Agreement is
terminated as permitted under Section 9.1, such termination shall be without
liability to any party to this Agreement or to any Affiliate, shareholder,
director, officer or representative of such party, and following such
termination no party to this Agreement shall have any liability under this
Agreement or relating to the transactions contemplated by this Agreement to any
other party except as contemplated in Section 10.1; provided that no such
termination shall relieve any party to this Agreement that has willfully
breached any provision of this Agreement from liability for such breach, and
any such breaching party shall remain fully liable for any and all Damages
incurred or suffered by another party to this Agreement as a result of such
breach. The provisions of this Section 9.2, Section 9.3, Section 10.1 and the
Confidentiality Agreement shall survive any termination of this Agreement
pursuant to this Article IX.
9.3 Detroit Terminal Liquidated Damages. In the event
this Agreement is terminated by Seller pursuant to Section 9.1(b) as a result
of Purchaser failing to perform or observe the covenants and agreements of
Purchaser in this Agreement or Section 9.1(d) or 9.1(e) and Seller has sold its
cement terminal located in Detroit, Michigan (the "Detroit Terminal") to the
City of Detroit, Purchaser shall pay to Seller, as liquidated damages and in
lieu of any other damages or amounts payable solely with respect to the Detroit
Terminal, an amount equal to $3,000,000. Both Seller and Purchaser agree that
the actual damages that may be sustained by Seller with respect to the Detroit
Terminal as a result of Purchaser failing to fulfill its obligations under this
Agreement, for reasons unexcused by this Agreement, are uncertain and difficult
to ascertain and that liquidated damages specified in this Section 9.3 are,
therefore, an appropriate remedy. Notwithstanding the foregoing, this Section
9.3 shall not relieve Purchaser from any other liability for willfully
breaching any provision of this Agreement, and, in addition to the liquidated
damages contemplated by this Section 9.3, Purchaser shall remain fully liable
for any and all Damages incurred or suffered by Purchaser as a result of such
breach.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Expenses and Taxes.
(a) Except as set forth in Sections 3.5(f), 3.5(h)
and 6.13(b) and below, each of Seller and Purchaser shall pay all fees and
expenses incurred by it in connection with this Agreement and the transactions
contemplated by this Agreement; provided however, that Seller and Purchaser
agree that all applicable Conveyance Taxes that may be imposed upon, or payable
or collectible or incurred in connection with, this Agreement and the
transactions contemplated by this Agreement shall be borne 50% by Seller and
50% by Purchaser and all refunds, credits, rebates or other reductions of such
Taxes shall be allocated 50% to Seller and 50% to Purchaser. Each of Seller and
Purchaser agrees to file all necessary documentation (including all Tax
Returns) with respect to such Taxes in a timely manner. Seller and Purchaser
shall reasonably cooperate in reducing or obtaining exemptions from the
assessment of any Conveyance Taxes.
(b) With respect to the Transferred Employees,
Purchaser shall notify Seller as to which procedure set forth in Revenue
Procedure 2004-53, 2004-34 I.R.B. 320, will be followed. Purchaser shall notify
Seller on or before the later of 90 calendar days after the Closing Date or the
earliest date Seller could be required to file any Tax Return that could be
affected by such decision of Purchaser.
(c) After the Closing, Purchaser and Seller shall
reasonably cooperate in the filing of any Tax Returns, to the extent such
filing requires providing each other with necessary records and documents
relating to the Purchased Assets or the Business or providing access to
employees on a mutually convenient basis. Seller and Purchaser shall reasonably
cooperate in the same manner in defending or resolving any Tax audit,
examination or Tax-related litigation. Any information obtained under this
Section 10.1 shall be kept confidential, except as may be otherwise necessary
in connection with dealing with a Governmental Authority.
(d) At the other party's request, Seller or
Purchaser, as the case may be, shall use reasonable efforts to obtain and
deliver to the other party any Tax clearance certificates available from the
relevant taxing authorities.
(e) The covenants and agreements of the parties
hereto contained in this Section 10.1 and any related rights of indemnification
shall survive the Closing and shall remain in full force and effect until 60
days after the expiration of the applicable statute of limitations on an
assessment or collection of Tax, as such may be extended from time to time at
the request of any Governmental Authority.
10.2 Further Assurances. From time to time after the
Closing and without further consideration, Seller, upon the request of
Purchaser, shall execute and deliver such documents and instruments of
conveyance and transfer as Purchaser may reasonably request in order to
consummate more effectively the purchase and sale of the Purchased Assets as
contemplated by this Agreement and to vest in Purchaser title to the Purchased
Assets transferred under this Agreement.
10.3 Notices. Any notices or other communications
required or permitted under this Agreement or otherwise in connection herewith
shall be in writing and shall be deemed to have been duly given when delivered
in person or upon confirmation of receipt when transmitted by facsimile
transmission or on receipt after dispatch by internationally recognized courier
service or by registered or certified mail, postage prepaid, addressed, as
follows:
If to Seller:
CEMEX, Inc.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Purchaser to:
Votorantim Participacoes ▇.▇.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
Facsimile: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
With a copy to:
Votorantim Cimentos Ltda.
Praca ▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 40
Sao Paulo SP Brazil 04571-100
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
With a copy to:
St. Marys Cement Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Shearman & Sterling LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or such other address as the person to whom notice is to be given has furnished
in writing to the other parties. A notice of change in address shall not be
deemed to have been given until received by the addressee.
10.4 Headings and Schedules. The descriptive headings of
the several Articles and Sections of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement. The disclosure
or inclusion of any matter or item on any Schedule to the Seller Disclosure
Schedule or the Purchaser Disclosure Schedule shall not be deemed an
acknowledgment or admission that any such matter or item is required to be
disclosed or is material for purposes of the representations and warranties set
forth in this Agreement.
10.5 Applicable Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York, and as to
the Vessels, the general maritime and statutory law of the United States.
10.6 No Third Party Rights. This Agreement is intended to
be solely for the benefit of the parties to this Agreement and is not intended
to confer any benefits upon, or create any rights in favor of, any Person other
than the parties to this Agreement.
10.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute a single instrument.
10.8 Amendment. Except as set forth in Section 6.13, this
Agreement may not be amended except by an instrument in writing signed by
Purchaser and Seller.
10.9 Waiver. Either party to this Agreement may (a)
extend the time for the performance of any of the obligations or other acts of
the other party to this Agreement, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement
or in any document delivered by the other party pursuant to this Agreement or
(c) waive compliance with any of the agreements, or satisfaction of any of the
conditions, contained herein by the other party to this Agreement. Any
agreement on the part of a party to this Agreement to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
such party and will not restrict subsequent enforcement of any of the
obligations of this Agreement.
10.10 Severability. If any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions of this Agreement shall not be affected
thereby, and there shall be deemed substituted for the provision at issue a
valid, legal and enforceable provision as similar as possible to the provision
at issue.
10.11 Entire Agreement. This Agreement, the other
Transaction Documents and the Confidentiality Agreement set forth the entire
understanding and agreement between the parties as to the matters covered in
this Agreement, the other Transaction Documents and the Confidentiality
Agreement and supersede and replace any prior understanding, agreement or
statement of intent, in each case, written or oral, of any and every nature
with respect to the subject matter hereof and thereof. Purchaser acknowledges
that it has conducted its own independent review and analysis of the Business
and the Purchased Assets. In entering into this Agreement, Purchaser has relied
solely upon its own investigation and analysis and the representations and
warranties set forth in this Agreement, the Deeds and the certificate to be
delivered by Seller pursuant to Section 3.4(c).
10.12 Consent to Jurisdiction.
(a) All disputes, litigation, proceedings or other
legal actions by any party to this Agreement in connection with or relating to
this Agreement or any matters described or contemplated in this Agreement
(other than with respect to matters referred to in Section 2.5) shall be
instituted in the courts of the State of New York or of the United States in
the State of New York, in either case sitting in the Borough of Manhattan of
the City of New York. Each party to this Agreement irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and of the United
States sitting in the State of New York in connection with any such dispute,
litigation, action or proceeding arising out of or relating to this Agreement.
Each party to this Agreement irrevocably appoints CT Corporation System as its
agent for the sole purpose of receiving service of process or other legal
summons in connection with any such dispute, litigation, action or proceeding
brought in any such court.
(b) Each party to this Agreement irrevocably waives
the right to a trial by jury in connection with any matter arising out of this
Agreement and, to the fullest extent permitted by applicable Law, any defense
or objection it may now or hereafter have to the laying of venue of any
proceeding under this Agreement brought in the courts of the State of New York
or of the United States sitting in the Borough of Manhattan of the City of New
York and any claim that any proceeding under this Agreement brought in any such
court has been brought in an inconvenient forum.
10.13 Binding Effect; No Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors, permitted assigns and legal representatives. This Agreement is not
assignable by any party to this Agreement without the prior written consent of
the other party to this Agreement, which consent shall not be unreasonably
withheld, and any other purported assignment shall be null and void; and
provided, however, that Purchaser may assign, in its sole discretion, any or
all of its rights and interests hereunder (including the right to acquire one
or more of the Purchased Assets and excluding any rights under this Agreement
with respect to the Vessels) to one or more direct or indirect wholly owned
Subsidiaries of Purchaser; and provided further that no such assignment shall
relieve Purchaser of its obligations if such assignee does not perform any of
the obligations of Purchaser hereunder.
[SIGNATURES ARE ON THE NEXT PAGE]
Each of the parties to this Agreement has caused this
Agreement to be executed on its behalf by its duly authorized representative,
all as of the date first above written.
VOTORANTIM PARTICIPACOES S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Attorney-In-Fact
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Attorney-In-Fact
CEMEX, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President