Exhibit 99.3
ASSET PURCHASE AGREEMENT
dated as of April __, 2003
by and among
UNITED STATES STEEL CORPORATION
and
NATIONAL STEEL CORPORATION
and
THE SUBSIDIARIES OF NATIONAL STEEL CORPORATION
SET FORTH ON THE SIGNATURE PAGES HERETO
ARTICLE 1 DEFINITIONS ....................................................... 1
1.1 Defined Terms ..................................................... 1
1.2 Interpretation .................................................... 11
ARTICLE 2 TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES .................. 12
2.1 Assets to be Acquired ............................................. 12
2.2 Excluded Assets ................................................... 14
2.3 Liabilities to be Assumed by Buyer ................................ 15
2.4 Excluded Liabilities .............................................. 15
2.5 Changes in List of Assumed Contracts .............................. 17
ARTICLE 3 CLOSING; PURCHASE PRICE ........................................... 17
3.1 Closing; Transfer of Possession; Certain Deliveries ............... 17
3.2 Deposit Escrow .................................................... 18
3.3 Purchase Price .................................................... 18
3.4 Purchase Price Adjustment ......................................... 19
3.5 Allocation of Purchase Price ...................................... 20
3.6 Designation of Affiliates by Buyer ................................ 20
3.7 Section 338(h)(10) Election ....................................... 21
3.8 Designation of Exchange Accommodation Titleholder ................. 21
ARTICLE 4 INDEMNITY ESCROW .................................................. 21
4.1 Creation of Escrow ................................................ 21
4.2 Duration and Term ................................................. 21
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER .......................... 21
5.1 Due Organization .................................................. 22
5.2 Authorization; Validity ........................................... 22
5.3 No Violation ...................................................... 22
5.4 Third Party Approvals ............................................. 22
5.5 Title to Assets; Sufficiency and Condition of Assets .............. 23
5.6 Intellectual Property ............................................. 23
5.7 Compliance with Laws .............................................. 23
5.8 Title to Property ................................................. 24
5.9 Brokers and Finders ............................................... 24
5.10 Taxes ............................................................. 24
5.11 Labor Matters; Employee Relations ................................. 25
5.12 ERISA Compliance; Absence of Changes in Benefits Plans ............ 25
5.13 Litigation ........................................................ 25
5.14 Customers and Suppliers ........................................... 25
5.15 Accounts Receivable ............................................... 26
5.16 Inventory ......................................................... 26
5.17 Financial Statements and SEC Filings .............................. 26
5.18 Contracts ......................................................... 27
5.19 Permits ........................................................... 27
5.20 Environmental Matters ............................................. 27
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5.21 Capital Expenditures .............................................. 28
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER ........................... 28
6.1 Due Organization .................................................. 28
6.2 Authority; Validity ............................................... 28
6.3 No Violation ...................................................... 28
6.4 Third Party Approvals ............................................. 29
6.5 Brokers and Finders ............................................... 29
6.6 Compliance with Laws .............................................. 29
6.7 Litigation ........................................................ 29
ARTICLE 7 COVENANTS OF THE PARTIES .......................................... 30
7.1 Conduct of Business Pending the Closing ........................... 30
7.2 Bankruptcy Court Order ............................................ 31
7.3 Notification of Certain Matters ................................... 31
7.4 Access ............................................................ 31
7.5 Public Announcements .............................................. 32
7.6 Cure of Defaults .................................................. 33
7.7 ERISA and Employment Matters ...................................... 33
7.8 Further Agreements ................................................ 33
7.9 Payment of Transfer Taxes and Tax Filings ......................... 33
7.10 Utilities ......................................................... 34
7.11 Proration of Taxes and Certain Charges ............................ 34
7.12 Regulatory Approvals; Reasonable Efforts; Notification; Consent ... 35
7.13 [Removed]. ........................................................ 36
7.14 Rejected Contracts ................................................ 36
7.15 Further Assurances ................................................ 36
7.16 Union Negotiations ................................................ 36
7.17 Closing Financial Certificate ..................................... 36
7.18 Transition Services Agreement ..................................... 36
7.19 Credit Support Arrangements ....................................... 37
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF THE PARTIES .......................... 37
8.1 Conditions Precedent to Obligations of Buyer ...................... 37
8.2 Conditions Precedent to the Obligations of Sellers ................ 40
ARTICLE 9 TERMINATION ....................................................... 41
9.1 Termination of Agreement .......................................... 41
9.2 Consequences of Termination ....................................... 42
ARTICLE 10 INDEMNIFICATION ................................................... 42
10.1 Indemnification of Buyer .......................................... 42
10.2 Indemnification of Sellers ........................................ 42
10.3 Indemnification Procedures ........................................ 43
10.4 Survival of Representations and Warranties ........................ 45
10.5 Termination of Indemnification .................................... 45
10.6 Limitations on Indemnification .................................... 45
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ARTICLE 11 MISCELLANEOUS ..................................................... 46
11.1 Expenses .......................................................... 46
11.2 Assignment ........................................................ 46
11.3 Parties in Interest ............................................... 47
11.4 Notices ........................................................... 47
11.5 Choice of Law ..................................................... 48
11.6 Entire Agreement; Amendments and Waivers .......................... 48
11.7 Counterparts ...................................................... 49
11.8 Invalidity ........................................................ 49
11.9 Headings .......................................................... 49
11.10 Exclusive Jurisdiction ............................................ 49
11.11 WAIVER OF RIGHT TO TRIAL BY JURY .................................. 49
11.12 Beneficiaries ..................................................... 49
11.13 Counting .......................................................... 49
11.14 Preparation of this Agreement ..................................... 49
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Deposit Escrow Agreement
Exhibit C Form of Headquarters Lease
Exhibit D Form of Indemnity Escrow Agreement
Exhibit E Form of Trademark License Agreement
Exhibit F Form of ▇▇▇▇ of Sale
Exhibit G Bankruptcy Court Approval
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of April __, 2003 (the "Agreement
Date") by and among National Steel Corporation, a Delaware corporation (the
"Company"), the Subsidiaries of the Company set forth on the signature pages
hereto and in Schedule 1 (collectively with the Company, the "Sellers" and each
a "Seller") and United States Steel Corporation, a Delaware corporation
(together with any designated Subsidiaries, "Buyer").
WITNESSETH:
WHEREAS, Sellers are engaged in, among other things, the production,
transportation and sale of coke and steel products;
WHEREAS, Sellers each commenced a case (collectively, the "Chapter 11
Case") on March 6, 2002 under chapter 11 of title 11 of the United States Code,
11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Northern District of Illinois, Eastern Division (the
"Bankruptcy Court"); and
WHEREAS, Sellers wish to sell to Buyer the assets of the Business as are
specified herein, and Buyer wishes to purchase such assets and to assume those
liabilities relating to the Business as are specified herein, all in the manner
and subject to the terms and conditions set forth in this Agreement and pursuant
to, inter alia, Sections 363 and 365 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the premises, and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following respective meanings:
"Accounts Payable" shall mean those trade accounts payable of Sellers
relating to the Business or the Acquired Assets, incurred in bona fide business
transactions in the ordinary course of business after the commencement of the
Chapter 11 Case. Accounts Payable shall not include any Cure Amounts or any
Excluded Liabilities.
"Accounts Receivable" shall mean: (i) all of Sellers' trade accounts
receivable relating to the Business and other rights to payment from customers
of the Business and the full benefit of all security for such accounts or rights
to payment, including all trade accounts receivable representing amounts
receivable in respect of goods shipped or products sold or services rendered to
customers of the Business; (ii) all other accounts or notes receivable of
Sellers and the full benefit of all security for such accounts or notes
receivable arising in the conduct of the Business; and (iii) any claim, remedy
or other right related to any of the foregoing, in each case existing on the
Agreement Date or arising in the ordinary course of the conduct of the Business
after the Agreement Date and in each case that have not been satisfied or
discharged prior to the
close of business on the Business Day immediately preceding the Closing Date or
have not been written off or sent to collection prior to the close of business
on the Business Day immediately preceding the Closing Date (it being understood
that the receipt of a check prior to the close of business on the Business Day
immediately preceding the Closing Date shall constitute satisfaction or
discharge of the applicable account or note receivable to the extent of the
payment represented thereby).
"Acquired Assets" shall have the meaning specified in Section 2.1.
"Acquired Entities" shall have the meaning specified in Section 2.1(o).
"Acquired Facilities" shall mean the following plants and facilities of
Sellers: Great Lakes Plant; Midwest Plant; Granite City Plant; Seller
headquarters (Mishawaka, IN); ProCoil processing and distribution center
(Canton, MI); and National Steel Pellet Company (Mesabi Iron Range, MN).
"Acquired Real Property" shall mean collectively the Owned Real Property
and the Leased Real Property.
"Adjustment Payment Date" shall have the meaning specified in Section
3.4(f).
"Affiliate" shall mean, with respect to any Person, any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such Person, including any officer, director or greater than
10% shareholder of such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits, Schedules and the Disclosure Schedule, in each case as amended,
restated, supplemented or otherwise modified from time to time.
"Agreement Date" shall have the meaning specified in the preamble.
"Allocation" shall have the meaning specified in Section 3.5.
"Antitrust Law" shall mean the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign Laws or Orders that require notification to a
Governmental Entity of mergers and acquisitions or that are designed or intended
to prohibit, restrict or regulate mergers and acquisitions and actions having
the purpose or effect of monopolization or restraint of trade.
"Assignment and Assumption Agreement" shall mean the assignment and
assumption agreement to be entered into by Sellers and Buyer concurrently with
the Closing, substantially in the form of Exhibit A.
"Assumed Contracts" shall have the meaning specified in Section 2.1(c).
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"Assumed Liabilities" shall have the meaning specified in Section 2.3.
"Bad Debts Reserve" shall mean the Company's provision for doubtful
accounts, determined in accordance with GAAP and the Company's accounting
policies, attached hereto as Schedule 1.1(a), consistently applied by the
Company.
"Bankruptcy Code" shall have the meaning specified in the recitals.
"Bankruptcy Court" shall have the meaning specified in the recitals.
"Bankruptcy Court Approval" shall have the meaning specified in Section
8.1(d).
"Basket Amount" shall have the meaning specified in Section 10.6(a).
"Benefits Plan" shall mean any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) sponsored, maintained, contributed to or required to be
contributed to at any time by the Company or any of its Subsidiaries for any of
their respective present or former employees, retirees or spouses, dependents or
other beneficiaries of present or former employees or retirees.
"Business" shall mean the production, sale and transportation of coke and
steel products carried on by Sellers, including the mining of ore and the
production of iron ore pellets at National Steel Pellet Company, but excluding
any other production of iron ore pellets and mining of ore and excluding the
mining of coal.
"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday on which banking institutions in the State of New York are not required
to open.
"Buyer" shall have the meaning specified in the preamble.
"Buyer Indemnitees" shall have the meaning specified in Section 10.1.
"Buyer Material Adverse Effect" shall mean any state of facts, events,
changes or effects, that, individually or aggregated with other states of facts,
events, changes or effects, (a) is materially adverse to or materially impairs
the ability of Buyer to perform its obligations under this Agreement, or (b)
prevents or materially delays consummation of any of the transactions
contemplated by this Agreement.
"Cash Consideration" shall have the meaning specified in Section 3.3.
"Cash Discount Reserve" shall mean the Company's reserve for discounts
credited against Accounts Receivable paid in advance of their due date,
determined in accordance with GAAP and the Company's accounting policies,
attached hereto as Schedule 1.1(a), consistently applied by the Company.
"Chapter 11 Case" shall have the meaning specified in the recitals.
"Claims Reserve" shall mean the Company's reserves, determined in
accordance with GAAP and the Company's accounting policies, attached hereto as
Schedule 1.1(a), consistently
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applied by the Company, to satisfy claims made by customers with respect to
products of the Company or any of its Subsidiaries.
"Closing" shall have the meaning specified in Section 3.1(a).
"Closing Date" shall have the meaning specified in Section 3.1(a).
"Closing Date Items" shall have the meaning specified in Section 3.4(c).
"Closing Financial Certificate" shall have the meaning specified in Section
7.17.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning specified in the preamble.
"Company Financial Statements" shall have the meaning specified in Section
5.17(a).
"Company Reserves" shall mean, collectively, the Bad Debts Reserve, the
Cash Discount Reserve and the Claims Reserve.
"Company SEC Documents" shall have the meaning specified in Section
5.17(b).
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated as of September 14, 2001 between the Company and Buyer.
"Contract" shall mean any contract, lease, license, purchase order, sales
order or other agreement, practice, arrangement, understanding or commitment,
whether or not in written form, that is binding upon a Person or its property.
"Cure Amounts" shall have the meaning specified in Section 2.4(n).
"Deposit Escrow" shall have the meaning specified in Section 3.2.
"Deposit Escrow Agreement" shall mean the Deposit Escrow Agreement of even
date herewith entered into by and among Buyer, the Company as the representative
of Sellers and the Escrow Agent substantially in the form of Exhibit B.
"DIP Order" shall mean that certain Final Order (I) Authorizing Debtors in
Possession to Enter Into Postpetition Credit Agreement and Obtain Postpetition
Financing Pursuant to Sections 363 and 364 of the Bankruptcy Code, (II) Granting
Liens, Security Interests and Superpriority Claims and (III) Providing For the
Payment of Secured Prepetition Indebtedness entered by the Bankruptcy Court on
April 2, 2002 and found at Docket No. 345 in the Chapter 11 Case.
"Disclosure Schedule" shall have the meaning specified in the first
paragraph of Article 5.
"Environmental Laws" shall mean all Laws relating to protection of human
health and the environment, including the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S)(S)9601 et. seq., the Resource
Conservation and Recovery Act, 42
4
U.S.C. (S)(S) 6901 et. seq., the Toxic Substances Control Act, 15 U.S.C. (S)(S)
2601, et. seq., the Clean Water Act, 33 U.S.C. (S)(S) 1251 et. seq., the Oil
Pollution Act, 33 U.S.C. (S)(S) 2701 et. seq., the Clean Air Act, 42 U.S.C.
(S)(S) 7401 et. seq. and the Occupational Safety and Health Act, 29 U.S.C.
(S)(S) 651 et. seq., and state and local equivalents of all of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean ▇.▇. ▇▇▇▇▇▇ Trust Company, N.A.
"Estimated Inventory Value" shall mean the Inventory Value (excluding the
Inventory Value of the Inventory of National Steel Pellet Company) determined as
of the close of business on the last day of the month immediately prior to the
Closing Date.
"Estimated Net Receivables Amount" shall mean the aggregate amount of
Accounts Receivable (excluding the amount of Accounts Receivable of National
Steel Pellet Company) minus the aggregate amount of Accounts Payable (excluding
the amount of Accounts Payable of National Steel Pellet Company) minus the
Company Reserves (excluding the amount of Company Reserves related to National
Steel Pellet Company) calculated as of the close of business on the last day of
the month immediately prior to the Closing Date.
"Estimated Working Capital Adjustment" shall have the meaning specified in
Section 3.4(b).
"Estimated Working Capital Amount" shall have the meaning specified in
Section 3.4(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the SEC
thereunder or under any successor federal statute.
"Excluded Assets" shall have the meaning specified in Section 2.2.
"Excluded Liabilities" shall have the meaning specified in Section 2.4.
"Final Order" shall mean an order or judgment of the Bankruptcy Court (i)
that is not the subject of a pending appeal, petition for certiorari, motion for
reconsideration or other proceeding for review, rehearing or reargument, (ii)
that has not been reversed, stayed, modified or amended, and (iii) respecting
which the time to appeal, to petition for certiorari, to move for
reconsideration or to seek review, rehearing or reargument shall have expired,
as a result of which such order shall have become final in accordance with Rule
8002 of the Federal Rules of Bankruptcy Procedure and other applicable Laws.
"Financing" shall mean the financing provided pursuant to any credit
agreement or other Contract evidencing indebtedness entered into by any Seller
after the commencement of the Chapter 11 Case.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
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"Governmental Entity" shall mean any (i) federal, state, local, municipal,
foreign or other government; (ii) governmental or quasi-governmental authority
of any nature (including any governmental agency, branch, department, official,
or entity and any court or other tribunal); or (iii) body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature, including any
arbitration tribunal.
"Hazardous Substance" shall have the meaning specified in Section 5.20.
"Headquarters Lease" shall mean the lease for a portion of the building
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, to be entered into by
and between Buyer and the Company concurrently with the Closing, substantially
in the form of Exhibit C.
"Hired Non-CB Employee" shall have the meaning specified in Section 7.7.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and any successor law and the rules and regulations thereunder
or under any successor law.
"Identified Employee" shall mean those Non-CB Employees identified by Buyer
prior to the Closing Date to whom Buyer shall offer employment effective as of
the Closing Date.
"Indemnified Party" shall have the meaning specified in Section 10.3(a).
"Indemnifying Party" shall have the meaning specified in Section 10.3(a).
"Indemnity Escrow" shall have the meaning specified in Section 3.1(c)(ii).
"Indemnity Escrow Agreement" shall mean the Indemnity Escrow Agreement to
be entered into by and among Buyer, the Company and the Escrow Agent
concurrently with the Closing, substantially in the form of Exhibit D.
"Indemnity Termination Date" shall have the meaning specified in Section
10.5.
"Independent Accounting Firm" shall have the meaning specified in Section
3.4(d).
"Intellectual Property" shall have the meaning specified in Section 2.1(k).
"Inventory" shall have the meaning specified in Section 2.1(e).
"Inventory Value" shall mean the value of all Inventory included in the
Acquired Assets determined in accordance with GAAP and the Company's inventory
policies, attached hereto as Schedule 1.1(a), consistently applied by Sellers.
"Knowledge", with respect to Sellers or the Company and its Subsidiaries,
shall mean the knowledge of those individuals listed on Schedule 1.1(b) attached
hereto, together with any other successor individuals who hold the positions
with the Company listed on Schedule 1.1(b), in each case, including facts of
which such individuals should be aware in the reasonably prudent exercise of
their duties.
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"Law" shall mean any federal, state, provincial, local or foreign statute,
law, ordinance, regulation, rule, code, order, principle of common law, judgment
or decree enacted, promulgated, issued, enforced or entered by any Governmental
Entity, or court of competent jurisdiction, or other requirement or rule of law.
"Leased Machinery and Equipment" shall have the meaning specified in
Section 2.1(b).
"Leased Real Property" shall have the meaning specified in Section 2.1(a).
"Letter of Agreement" shall have the meaning specified in Section 7.16.
"Liabilities" shall mean, as to any Person, all debts, adverse claims,
liabilities, commitments, responsibilities, and obligations of any kind or
nature whatsoever, direct or indirect, absolute or contingent, including
liabilities for compliance, investigation, remediation, removal and response
under Environmental Laws, of such Person, whether accrued, vested or otherwise,
whether known or unknown and whether or not actually reflected, or required to
be reflected, in such Person's balance sheet or other books and records.
"Lien" shall mean any claim, pledge, option, charge, hypothecation,
easement, security interest, right-of-way, encroachment, mortgage, deed of
trust, defect of title, restriction on transferability, restriction on use or
other encumbrance.
"Losses" shall have the meaning specified in Section 10.1.
"Machinery and Equipment" shall have the meaning specified in Section
2.1(b).
"Material Adverse Effect" shall mean any state of facts, events, changes or
effects that, individually or aggregated with other states of facts, events,
changes or effects, (a) is materially adverse to or materially impairs, (i) the
value, condition or use of the Acquired Assets taken as a whole or the value or
condition, financial or otherwise, of the Business taken as a whole, other than
(x) changes in economic or business conditions generally or in the steel
industry specifically (provided that the Business is not materially
disproportionately affected), (y) changes in laws and regulations impacting the
steel industry generally (except as otherwise provided in Section 8.1(g)(i)
hereof), or (z) changes or effects resulting from the execution or announcement
of this Agreement, provided, however, the Company shall have the burden of
proving that the execution or announcement of the Agreement caused such changes
or effects, or (ii) the ability of any party hereto to perform its obligations
under this Agreement, or (b) prevents or materially delays consummation of any
of the transactions contemplated by this Agreement.
"Material Contract" shall mean any Contract with respect to the Business to
which the Company or any of its Subsidiaries is a party or by which any of the
Acquired Assets are bound and (i) which is outside of the ordinary course of
business; (ii) to which any Significant Customer is a party; (iii) to which any
Significant Supplier is a party; (iv) pursuant to which the Sellers would be
required to make payments in excess of $10 million from and after the Agreement
Date; (v) master agreements, blanket purchase orders or other Contracts, which
relate to the transportation or disposal of Hazardous Substances, other than
receipts, bills of lading, trip tickets and purchase orders issued pursuant to
such master agreements, purchase agreements or other Contracts related to the
transportation or disposal of Hazardous Substances; (vi) which is
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an employment agreement or severance agreement or is a collective bargaining
agreement with any labor union; (vii) which creates a joint venture or
partnership or which otherwise involves the sharing of profits, losses, costs or
Liabilities with any other Person; (viii) which is a lease for any real property
or any material Machinery and Equipment used or held for use in the Business;
(ix) which is an Assumed Contract, other than an Ordinary Course Contract; or
(x) to which any officer or director of the Company or any of its Subsidiaries,
or any Affiliate of any such officer or director is a party.
"Net Receivables Amount" shall have the meaning specified in Section
3.4(e).
"Non-CB Employees" shall mean employees of any Seller not represented by a
labor union for collective bargaining.
"Notices" shall have the meaning specified in Section 11.4.
"Objection Notice" shall have the meaning specified in Section 3.4(d).
"Order" shall mean any judgment, order, injunction, writ, ruling, decree,
stipulation or award of any Governmental Entity or private arbitration tribunal.
"Ordinary Course Contract" shall mean any Contract related to the Business
and the Acquired Assets entered into by any Seller after the Agreement Date and
prior to the Closing Date in the ordinary course of business, for the provision
of goods or services to or by any Seller in a bona fide business transaction,
and which (i) is for a term that does not exceed 12 months following the Closing
or that is terminable by such Seller, without Liability, at will or upon advance
notice not to exceed 30 days, and (ii) the performance of which does not involve
consideration in excess of (A) $1 million in any twelve-month period following
the Closing, (B) with the consent of Buyer, which consent shall not be
unreasonably withheld, $10 million in any twelve-month period following the
Closing, or (C) prevailing market terms, solely with respect to purchases of
goods on spot markets for a term not to exceed 30 days; provided, however, in no
event shall a Contract be deemed an Ordinary Course Contract if (v) such
Contract is a Material Contract, (w) such Contract is with any current or former
employee of the Company or any of its Subsidiaries, (x) such Contract is with
respect to any Financing, (y) the counterparty to such Contract is also party to
a Contract with a Seller entered into prior to the commencement of the Chapter
11 Case as to which such Seller has not satisfied all Liabilities thereunder,
other than any such Contract that is on prevailing market terms or (z) the
execution, delivery and performance of such Contract by any Seller would violate
any provision of this Agreement, including the covenants set forth in Section
7.1.
"Owned Machinery and Equipment" shall have the meaning specified in Section
2.1(b).
"Owned Real Property" shall have the meaning specified in Section 2.1(a).
"Pension Plan" shall mean any employee benefit pension plan (as defined in
Section 3(2) of ERISA) sponsored, maintained, contributed to or required to be
contributed to at any time by the Company or any of its Subsidiaries for any of
their respective present or former employees or retirees or spouses, dependents
or other beneficiaries of present or former employees or retirees.
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"Permits" shall mean permits, licenses, registrations, certificates of
occupancy, approvals, consents, clearances and other authorizations issued by
any Governmental Entity.
"Permitted Liens" shall mean: (i) Liens for Taxes not yet due and payable;
(ii) easements, licenses or similar non-monetary liens or non-monetary matters
of record on Acquired Real Property or any zoning and other restrictions imposed
by a Governmental Entity that do not, individually or in the aggregate,
adversely impact the operation of the Business or the use of the Acquired
Assets; (iii) encumbrances arising under leases or subleases of Acquired Real
Property, which do not materially detract from the value of such Acquired Real
Property or interfere with the use of or conduct of business on the Acquired
Real Property; or (iv) such other Liens or title exceptions as Buyer may approve
in writing in its sole discretion.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization, a joint stock company, a labor union, an estate, a
Governmental Entity or any other entity.
"Plans" shall mean all Benefits Plans and all Pension Plans and each other
plan, program, policy, practice or arrangement (written or oral, formal or
informal, whether done on an individual ad hoc basis or as part of a consistent
pattern or practice of providing benefits to similarly situated individuals)
relating to deferred compensation, bonus, performance compensation, stock
purchase, stock option, stock appreciation, severance, vacation, sick leave,
holiday pay, fringe benefits, personnel policy, reimbursement program,
incentive, insurance, welfare or similar plan, program, policy, practice or
arrangement, in each case sponsored, maintained or contributed to, or required
to be maintained or contributed to, by the Company or any of its Subsidiaries or
any other Person or entity that, together with any of the Company or its
Subsidiaries, is treated as a single employer within the meaning of Section 4001
of ERISA for the benefit of any present or former officer, employee or director,
retiree or spouses, dependents or other beneficiaries of any of the foregoing.
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative, or informal), other than the Chapter 11 Case, commenced, brought,
conducted or heard by or before or otherwise involving, any Governmental Entity
or arbitrator.
"Purchase Price" shall have the meaning specified in Section 3.3.
"Railroad Assets" shall mean any Acquired Assets or any Subsidiaries of the
Company as to which a change of control is regulated by the Surface
Transportation Board.
"Release" shall have the meaning specified in Section 5.20.
"Representative" shall mean, with respect to any Person, such Person's
officers, directors, employees, agents, representatives and financing sources
(including any investment banker, financial advisor, accountant, legal counsel,
agent, representative or expert retained by or acting on behalf of such Person
or its Subsidiaries).
"Sale Motion" shall have the meaning specified in Section 7.2(c).
9
"SEC" shall mean the United States Securities and Exchange Commission and
any successor Governmental Entity.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Act shall include reference to the comparable section,
if any, of such successor federal statute.
"Seller" shall have the meaning specified in the preamble.
"Seller Credit Support Arrangements" shall have the meaning specified in
Section 7.19.
"Seller Indemnitees" shall have the meaning specified in Section 10.2.
"Significant Customers" shall have the meaning specified in Section 5.14.
"Significant Suppliers" shall have the meaning specified in Section 5.14.
"Statement" shall have the meaning specified in Section 3.4(c).
"Subsidiary" shall mean, with respect to any Person (a) a corporation, a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (b) a partnership in which such Person or a subsidiary of such
person is, at the date of determination, a general partner of such partnership,
or (c) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (i) at
least a majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"Supplies" shall have the meaning specified in Section 2.1(d).
"Taxation," "Tax" or "Taxes" shall mean all forms of taxation, assessment,
levy, duty or other governmental charge imposed by any Governmental Entity,
including any income, alternative or add-on minimum, accumulated earnings,
personal holding company, franchise, capital stock, environmental, profits,
windfall profits, gross receipts, sales, use, value added, transfer,
registration, stamp, premium, excise, customs duties, severance, real property,
personal property, ad valorem, occupancy, license, occupation, employment,
payroll, social security, (including national insurance contributions)
disability, unemployment, withholding, corporation, inheritance, value added,
stamp duty reserve, estimated or other similar tax, assessment, levy, duty
(including duties of customs and excise) or other governmental charge of any
kind whatsoever, replaced by or replacing any of them chargeable by any Taxation
Authority together with all penalties, interest and additions thereto, whether
disputed or not.
"Tax Authority" or "Taxation Authority" shall mean any taxing or other
authority (whether within or outside the U.S.) competent to impose Tax.
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"Tax Return" shall mean any and all returns, declarations, reports,
documents, claims for refund, or information returns, statements or filings
which are required to be supplied to any Tax Authority, including any schedule
or attachment thereto, and including any amendments thereof.
"Third Party Claim" shall have the meaning specified in Section 10.3(a).
"Trademark License Agreement" shall mean the Trademark License Agreement to
be entered into by and among Buyer and the Company concurrently with the
Closing, substantially in the form of Exhibit E.
"Trademarks" shall mean all trade names, logos, common law trademarks and
servicemarks and all registrations and applications therefor.
"Transition Services Agreement" shall have the meaning specified in Section
7.18.
"Transfer Tax" or "Transfer Taxes" shall mean any federal, state,
provincial, county, local, foreign and other sales, use, transfer, conveyance,
documentary transfer, recording or other similar Tax, fee or charge imposed upon
the sale, transfer or assignment of property or any interest therein or the
recording thereof, and any penalty, addition to Tax or interest with respect
thereto, but such term shall not include any Tax on, based upon or measured by,
the net income, gains or profits from such sale, transfer or assignment of the
property or any interest therein.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification Act
of 1988, as amended, and any successor Law, and the rules and regulations
thereunder and under any successor Law.
"Working Capital Adjustment" shall have the meaning specified in Section
3.4(e).
"Working Capital Amount" shall have the meaning specified in Section
3.4(e).
1.2 Interpretation.
(a) Whenever the words "include," "includes" or "including" are used
in this Agreement they shall be deemed to be followed by the words "without
limitation."
(b) Words denoting any gender shall include all genders. Where a word
or phrase is defined herein, each of its other grammatical forms shall have a
corresponding meaning.
(c) A reference to any party to this Agreement or any other agreement
or document shall include such party's successors and permitted assigns.
(d) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(e) All references to "$" and dollars shall be deemed to refer to
United States currency.
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(f) All references to any financial or accounting terms shall be
defined in accordance with GAAP.
(g) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(h) The meanings given to terms defined herein shall be equally
applicable to both singular and plural forms of such terms.
ARTICLE 2
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Assets to be Acquired. At the Closing, and upon the terms and
conditions set forth herein and subject to the approval of the Bankruptcy Court
pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, Sellers shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept, all of the right, title and interest, free and clear of all
Liens (other than Liens included in the Assumed Liabilities and Permitted
Liens), of Sellers in each and all of the Acquired Assets. "Acquired Assets"
shall mean all properties, assets and rights, except as set forth herein, of
every nature, tangible and intangible, of Sellers used, or held for use, in the
Business, real or personal, now existing or hereafter acquired, whether or not
reflected on the books or financial statements of the Sellers as the same shall
exist on the Closing Date, including the following assets:
(a) all right, title and interest of Sellers in the real property set
forth on Schedule 2.1(a)-1, together with all buildings, structures, fixtures,
and improvements erected thereon, and all rights, privileges, easements,
licenses, hereditaments and other appurtenances relating thereto (the "Owned
Real Property"), and all right, title and interest of Sellers in the real
property set forth on Schedule 2.1(a)-2, together with all buildings,
structures, fixtures, and improvements erected thereon, and all rights,
privileges, easements, licenses, hereditaments and other appurtenances relating
thereto (the "Leased Real Property"); provided, however, that the Acquired
Assets shall not include any of the real property set forth on Schedule 2.2(i)
or any other real property that is not identified on Schedule 2.1(a)-1 or
Schedule 2.1(a)-2;
(b) all (i) Sellers' owned equipment, machinery, furniture, fixtures
and improvements and tooling used or held for use in the Business (the "Owned
Machinery and Equipment"), (ii) rights of Sellers to the equipment, machinery,
furniture, fixtures and improvements and tooling used or held for use in the
Business, which are leased pursuant to an Assumed Contract (the "Leased
Machinery and Equipment" and collectively with the Owned Machinery and
Equipment, the "Machinery and Equipment"), and (iii) rights of Sellers to the
warranties, express or implied, and licenses received from manufacturers and
sellers of the Machinery and Equipment;
(c) those leases (including leases and subleases of Acquired Real
Property and of Machinery and Equipment) and other Contracts (together with all
of Seller's deposits thereunder) entered into by any Seller that are executory
and unexpired as of the Closing Date
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and are set forth on Schedule 2.1(c), any other Contract added to the list of
Assumed Contracts in accordance with Section 2.5, and the Ordinary Course
Contracts (collectively, the "Assumed Contracts");
(d) all supplies, items, spare parts and other materials utilized to
operate and maintain the Machinery and Equipment or to process raw materials and
work in process used or held for use in the Business (the "Supplies");
(e) all inventories of raw materials, slabs, works in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies used or held for use in the Business (the
"Inventory");
(f) all cars, trucks, fork lifts, other industrial vehicles and other
motor vehicles owned by the Sellers and used or held for use in the Business or
leased by the Sellers where the lease for such vehicle is an Assumed Contract;
(g) all railroad cars, railroad switching, service and repair
facilities, rolling stock and vehicles, machinery and related equipment used or
held for use in the Business;
(h) all Accounts Receivable;
(i) all Permits used in or necessary to conduct the Business or
applicable to the Acquired Assets and all pending applications therefor,
including those Permits set forth on Schedule 2.1(i);
(j) copies or originals of all books, records, files or papers,
whether in hard copy or electronic format, used in the Business or in respect of
the Acquired Assets, including engineering information, test results, training
manuals, sales and promotional literature, plans, processes, sales and purchase
correspondence, personnel and employment records (other than records with
respect to former employees or employees who do not become employees of Buyer as
of the Closing Date), customer lists, vendor lists, catalogs, research material,
technical information, diagrams, drawings, quality control data, maintenance
schedules, operating and production records, safety and environmental reports,
data, studies and documents, fixed asset ledgers, Tax Returns regarding real
property, personal property and ad valorem taxes with respect to the Acquired
Assets, including any exemption or abatement agreements or certifications and
supporting documentation for such Tax Returns, including any such items
classified as privileged, confidential or proprietary material, and any right
and interest any Seller may have to possession or control of the knowledge of,
any such material by, and related expertise of, any employee, agent, contractor
or supplier of any Seller;
(k) all right, title or interest in or to any computer software
(including process control software), source code and object code, and all
documentation related thereto, and any patents, patent registrations, patent
applications, Trademarks (other than the Trademarks set forth on Schedule
2.2(k)), copyrights, copyright applications, copyright registrations, know-how,
processes, trade secrets, proprietary data, formulae, and other intangible
property used or held for use in the Business (collectively, the "Intellectual
Property"), including those listed on Schedule 2.1(k); and all rights thereunder
or in respect thereof, including rights to ▇▇▇ and collect and remedies against
past, present and future infringements or misappropriations thereof, and rights
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of priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof used or held for use
in the Business; provided, however, with respect to any Intellectual Property
not set forth on Schedule 2.1(k)(i), to the extent Sellers have not obtained the
necessary consents to assign any such Intellectual Property to Buyer on or
before the Closing Date, then notwithstanding anything to the contrary contained
herein, until such consents are obtained, this Agreement shall not constitute an
agreement to assign such Intellectual Property, and Sellers shall (A) use all
commercially reasonable efforts to obtain such consents and (B) enter into any
reasonable arrangement designed to provide Buyer with the benefits of, and cause
Buyer to bear the costs and obligations of, Sellers' ownership of such
Intellectual Property;
(l) all goodwill associated with the Business or the Acquired Assets;
(m) all credits and allowances for air and water emissions and water
intakes Sellers have, are entitled to or have applied for, with respect to the
Acquired Facilities, including any air emissions for which Sellers have credit
or which Sellers have banked, applied to bank or agreed to sell or trade;
(n) all prepaid expenses and deposits of Sellers made in connection
with the Business, including those set forth on Schedule 2.1(n); and
(o) all of any Seller's equity interest in Double G Coatings, L.P.,
Delray Connecting Railroad Company and Steel Health Resources LLC (collectively,
the "Acquired Entities").
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT,
(i) THE ACQUIRED ASSETS ARE BEING SOLD ON AN "AS IS", "WHERE IS" BASIS AND (ii)
NO SELLER MAKES ANY OTHER WARRANTIES, INCLUDING MERCHANTABILITY, FITNESS OR
OTHERWISE WITH RESPECT TO THE ACQUIRED ASSETS.
2.2 Excluded Assets. The Acquired Assets do not include Sellers' right,
title or interest in or to any of the following properties and assets of Sellers
(collectively, the "Excluded Assets"):
(a) cash (including checks received prior to the close of business on
the Closing Date, whether or not deposited or cleared prior to the close of
business on the Closing Date), commercial paper, marketable securities,
certificates of deposit and other bank deposits, treasury bills and other cash
equivalents;
(b) shares of capital stock of any Seller or securities convertible
into, exchangeable or exercisable for shares of capital stock of any Seller;
(c) any Contract that is not an Assumed Contract;
(d) any assets of any Plan, including any plan or arrangement
providing pension benefits or post-retirement health or medical benefits to any
present or former employee
14
of the Company or any of its Subsidiaries and any rights under any such Plan or
any Contract between any employee or consultant and the Company or any of its
Affiliates;
(e) all avoidance actions or similar causes of action, arising under
Sections 544 through 553 of the Bankruptcy Code, other than any such actions
related to any Assumed Contract;
(f) all rights to or claims for refunds, overpayments or rebates of
Taxes for periods ending on or prior to the Closing Date;
(g) all claims that Sellers may have against any third Person with
respect to any other Excluded Assets;
(h) all rights of Sellers under any collective bargaining agreement,
agreement with any labor union, employment agreement or severance agreement;
(i) all real property that is set forth on Schedule 2.2(i) and any
other real property that is not set forth on Schedule 2.1(a)-1 or Schedule
2.1(a)-2;
(j) the company seal, minute books, charter documents, stock or
equity record books and such other books and records as pertain to the
organization, existence or capitalization of Sellers; and
(k) the properties and assets set forth in Schedule 2.2(k).
2.3 Liabilities to be Assumed by Buyer. At the Closing, Buyer will assume
only the following obligations of Sellers (the "Assumed Liabilities") and no
others: (i) the Accounts Payable; (ii) all Liabilities of Sellers under the
Assumed Contracts; provided, however, Buyer shall not assume or agree to pay,
discharge or perform any Liabilities arising out of any breach by Sellers of any
provision of any Assumed Contract, including Liability for breach, misfeasance
or under any other theory relating to Sellers' conduct prior to the Closing; and
(iii) those Liabilities listed on Schedule 2.3.
2.4 Excluded Liabilities. Other than the Assumed Liabilities, Buyer shall
not and does not assume any other Liability whatsoever (including Liabilities
relating to the conduct of the Business or to the Acquired Assets (and the use
thereof) at any time on or prior to the Closing Date), whether relating to or
arising out of the Business or Acquired Assets or otherwise, fixed or
contingent, disclosed (whether on the Disclosure Schedule or otherwise), or
undisclosed (collectively, the "Excluded Liabilities"). Without limiting the
foregoing, Buyer shall not and does not assume any of the following (each of
which shall be included within the definition of "Excluded Liability"):
(a) all Liabilities relating to or arising, whether before, on or
after the Closing, out of, or in connection with, any of the Excluded Assets;
(b) all Liabilities, other than the Accounts Payable, that arise
(whether under the Assumed Contracts or otherwise) with respect to the Acquired
Assets or the use thereof on or prior to the Closing Date or relate to periods
ending on or prior to the Closing Date or are to be
15
observed, paid, discharged or performed on or prior to the Closing Date (in each
case, including any Liabilities that result from, relate to or arise out of tort
or other product liability claim);
(c) litigation and related claims and Liabilities or any other claims
against the Company or any of its Subsidiaries of any kind or nature whatsoever,
other than Accounts Payable, involving or relating to facts, events or
circumstances arising or occurring on or prior to the Closing Date, no matter
when raised (including Liability for breach, misfeasance or under any other
theory relating to the Company's or any such Subsidiary's conduct, performance
or non-performance);
(d) all Liabilities relating to any Contract between any employee or
consultant and the Company or any of its Subsidiaries;
(e) all Liabilities relating to any environmental, health or safety
matter (including any Liability or obligation arising under any Environmental
Law) arising out of or relating to the Company's or any of its Subsidiary's
operation of their respective businesses or their leasing, ownership or
operation of real property;
(f) all Liabilities for damages to persons or property arising out of
alleged defects in products sold by the Company or any of its Subsidiaries, or
arising under warranties, express or implied, issued by the Company or any of
its Subsidiaries;
(g) all Liabilities in excess of the Claims Reserve to repair or
replace, or to refund the sale price (plus related expenses) of, products sold
and delivered by the Company or any of its Subsidiaries prior to the Closing
Date;
(h) all Liabilities of the Company or any of its Subsidiaries under
any collective bargaining agreement, agreement with any labor union, employment
agreement or severance agreement;
(i) all Liabilities of the Company or any of its Subsidiaries, or of
any trust or other entity established to provide employee benefits, to their
present or former employees, retirees or spouses, dependents or other
beneficiaries of present or former employees or retirees, including all
Liabilities attributable to, incurred in connection with, arising from or
relating to, any Plan, whether formal or informal and whether legally binding or
not;
(j) all Liabilities of the Company or any of its Subsidiaries
attributable to, incurred in connection with, arising from, or relating to, a
violation of any Laws governing employee relations, including
anti-discrimination Laws, wage and hour Laws, labor relations Laws and
occupational safety and health Laws;
(k) all Liabilities related to (i) the termination of employment of
any employees of Sellers, including employees of Sellers who become employees of
Buyer, including all Liabilities arising under the WARN Act, and (ii) earned but
unpaid salary, bonuses, accrued but unpaid vacation days, accrued but unpaid
medical and dental expenses, accrued and unpaid other forms of compensation and
all other accrued welfare benefits of all employees of the Company or any of its
Subsidiaries, including employees of Seller who become employees of Buyer and,
whether or not accrued, any obligations under Section 4980B of the Code to
provide
16
continuation of group medical coverage with respect to any such employee or
other qualified beneficiary;
(l) except as set forth in Section 7.9, all Liabilities for any and
all Transfer Taxes due as a result of the transactions contemplated by this
Agreement;
(m) except as set forth in Section 7.9, all Liabilities for any and
all Taxes due or payable by the Company or any of its Subsidiaries for any
period ending on or before the Closing Date or as a result of the operation of
the Business or the ownership of the Acquired Assets on or before the Closing
Date, without regard to whether such taxes are within the scope of the
representation set forth in Section 5.10 hereof;
(n) all amounts payable pursuant to Section 365(b)(1)(A) or (B) of
the Bankruptcy Code in order to effectuate, pursuant to the Bankruptcy Code, the
assumption by Sellers and assignment by Buyer of Assumed Contracts under the
Bankruptcy Court Approval (the "Cure Amounts"), other than as specifically set
forth herein;
(o) other than Accounts Payable, all notes, bonds or other evidences
of indebtedness, including any of the foregoing entered into with respect to any
of the Acquired Facilities; and
(p) all Liabilities for fraud, breach, misfeasance or under any other
theory relating to conduct, performance or non-performance of the Company or any
of its Subsidiaries.
2.5 Changes in List of Assumed Contracts. From time to time after the date
hereof and prior to the Closing, (i) Buyer may remove Contracts, other than
Ordinary Course Contracts, from the list of Assumed Contracts, (ii) Buyer and
the Company, by mutual agreement, may add Contracts to the list of Assumed
Contracts, and (iii) Buyer, in its sole discretion, may add to the list of
Assumed Contracts any material Contract the existence and terms of which were
not disclosed to Buyer in reasonable detail prior to the Agreement Date. If any
Contract is added to the list of Assumed Contracts, Sellers shall take such
steps as are necessary, including payment of all Cure Amounts, to cause such
Contract to be assumed by, and assigned to, Buyer.
ARTICLE 3
CLOSING; PURCHASE PRICE
3.1 Closing; Transfer of Possession; Certain Deliveries.
(a) The consummation of the transactions contemplated herein (the
"Closing") shall take place on the second Business Day after the satisfaction of
all of the conditions set forth in Article 8 (or the waiver thereof by the party
entitled to waive that condition) or on such other date as the parties hereto
shall mutually agree. The Closing shall be held at the offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), at 10:00 a.m., local time, unless the parties
hereto otherwise agree. The actual date of the Closing is herein called the
"Closing Date." For purposes of this Agreement, from and after the Closing, the
Closing shall be deemed to have occurred at 12:01 A.M. on the Closing Date.
(b) At the Closing, Sellers shall deliver to Buyer:
17
(i) duly executed bills of sale, substantially in the form of
Exhibit F attached hereto, transferring the Acquired Assets to Buyer;
(ii) duly executed real property special warranty (or the
equivalent) deeds in recordable form, in form and substance acceptable to Buyer,
to effect the sale, transfer, assignment and delivery of the Acquired Real
Property;
(iii) the Assignment and Assumption Agreement, duly executed by
Sellers;
(iv) all other instruments of conveyance and transfer, in form
and substance reasonably acceptable to Buyer, as are necessary to convey the
Acquired Assets to Buyer; and
(v) all other previously undelivered certificates, agreements
and other documents required to be delivered by Sellers at or prior to the
Closing in connection with the transactions contemplated by this Agreement.
(c) At the Closing, Buyer shall deliver:
(i) to Sellers, the Purchase Price, less the Indemnity Escrow,
in accordance with the provisions of Section 3.3;
(ii) to the Escrow Agent, $25 million in immediately available
funds (the "Indemnity Escrow"), to be held for a period of 12 months from the
Closing Date and disbursed in accordance with the terms and conditions of the
Indemnity Escrow Agreement;
(iii) the Assignment and Assumption Agreement, duly executed by
Buyer; and
(iv) all other previously undelivered certificates, agreements
and other documents required to be delivered by Buyer at or prior to the Closing
in connection with the transactions contemplated by this Agreement.
3.2 Deposit Escrow. On the Agreement Date, Buyer has executed and
delivered to Sellers the Deposit Escrow Agreement and deposited with the Escrow
Agent $6.5 million (the "Deposit Escrow"). The Deposit Escrow shall be held and
disbursed pursuant to the terms of the Deposit Escrow Agreement and this
Agreement.
3.3 Purchase Price. In consideration of the Acquired Assets, and subject
to the terms and conditions of this Agreement, Buyer shall assume the Assumed
Liabilities as provided in Section 2.3 and at the Closing shall pay to Sellers
an aggregate purchase price (together with the amount of the Indemnity Escrow,
the "Purchase Price") of $975 million comprised of: (a) the Deposit Escrow,
which shall be transferred directly to Sellers by the Escrow Agent; (b) subject
to Section 3.4(a) and Section 3.4(b), $768.5 million (including the Indemnity
Escrow) in immediately available funds, by wire transfer to an account or
accounts designated by Sellers, other than the Indemnity Escrow, which shall be
delivered to the Escrow Agent (collectively, together with the Deposit Escrow,
the "Cash Consideration"); and (c) $200 million by
18
assumption of the Assumed Liabilities. Each Seller shall receive that portion of
the Cash Consideration set forth opposite such Seller's name on Schedule 3.3
hereof.
3.4 Purchase Price Adjustment.
(a) The Purchase Price shall be increased for lease payments made by
Sellers pursuant to those Assumed Contracts set forth on Schedule 3.4(a) in
respect of lease payments due and payable on or after January 1, 2003, as
follows: (i) the Cash Consideration shall be increased by $1.00 for each $1.00
of lease payments set forth on Schedule 3.4(a) made by Seller, not to exceed $2
million in the aggregate; and (ii) with respect to lease payments in excess of
$2 million in the aggregate, the Cash Consideration shall be increased by $0.75
for each $1.00 of lease payments set forth on Schedule 3.4(a) made by Seller.
(b) The Purchase Price may be reduced at the Closing, at Buyer's
election, on the basis of the Estimated Net Receivables Amount and the Estimated
Inventory Value set forth on the Closing Financial Certificate delivered by the
Company pursuant to Section 7.17. If the Estimated Net Receivables Amount plus
the Estimated Inventory Value (the "Estimated Working Capital Amount") is less
than $450 million, then Buyer may, at Buyer's election, reduce the Cash
Consideration to be paid to Sellers at the Closing by the amount of such
shortfall (the "Estimated Working Capital Adjustment").
(c) The Purchase Price shall be adjusted pursuant to subsection (e)
of this Section 3.4 after the Closing. Within sixty (60) days following the
Closing Date, Buyer shall prepare and deliver to the Company a Notice (the
"Statement") setting forth the Net Receivables Amount and the Inventory Value
(together, the "Closing Date Items"), as of the close of business on the Closing
Date. The Closing Date Items shall be determined in accordance with GAAP and the
same accounting principles, procedures and methods that were used to prepare the
Company Financial Statements. After the Closing Date, at Buyer's request, the
Company and each of the other Sellers shall assist Buyer and its Representatives
in the preparation of the Statement and shall provide Buyer and its
Representatives any information reasonably requested and shall further provide
them with access at all reasonable times during regular business hours and upon
reasonable notice to personnel, books and records of the Company and each of the
other Sellers for such purpose.
(d) Unless the Company notifies Buyer in writing within 30 days after
Buyer's delivery of the Statement of any objection to any component of the
computation of the Closing Items set forth therein (the "Objection Notice"),
such computation shall be final and binding. The Objection Notice shall specify
the amount of and the basis for the objections set forth therein. The Objection
Notice shall include only objections based on (i) mathematical errors in
computation of the Closing Date Items, or (ii) Closing Date Items not having
been prepared in accordance with GAAP or the same accounting principles,
procedures and methods that were used to prepare the Company Financial
Statements. If Buyer and the Company cannot resolve any such objections, then
such objections shall be resolved by an independent nationally recognized
accounting firm reasonably acceptable to Buyer and the Company (the "Independent
Accounting Firm"). The determination of the Independent Accounting Firm shall be
made as promptly as practicable, and in no event later than 75 days after
delivery of the Statement, and shall be final and binding on the parties, absent
manifest error, which error may only be
19
corrected by such Independent Accounting Firm. The fees and expenses of the
Independent Accounting Firm shall be paid one-half by Buyer and one-half by the
Company.
(e) If the aggregate amount of Accounts Receivable included in the
Acquired Assets (excluding the amount of Accounts Receivable of National Steel
Pellet Company included in the Acquired Assets) minus (i) the aggregate amount
of Accounts Payable included in the Assumed Liabilities (excluding the amount of
Accounts Payable of National Steel Pellet Company included in the Assumed
Liabilities) and (ii) the Company Reserves (excluding the amount of Company
Reserves related to National Steel Pellet Company) (the "Net Receivables
Amount"), plus the Inventory Value (excluding the Inventory Value of the
Inventory of National Steel Pellet Company included in the Acquired Assets) (the
"Working Capital Amount") is less than $450 million then the Purchase Price
shall be decreased by the amount of the shortfall (the "Working Capital
Adjustment"). Any Working Capital Adjustment resulting from this Section 3.4(e)
shall be offset by any reduction to the Purchase Price made at the Closing based
on the Estimated Working Capital Adjustment.
(f) The amount of the Working Capital Adjustment shall be paid on the
Adjustment Payment Date. The "Adjustment Payment Date" shall be the date that is
35 days after the delivery of the Statement; provided, however, if Sellers
dispute the Statement, the Adjustment Payment Date shall be the date that is 15
days after the final determination of the Closing Date Items in accordance with
the provisions of Section 3.4(d).
3.5 Allocation of Purchase Price. Buyer and each Seller shall agree upon
an allocation of the Purchase Price and the Assumed Liabilities among the
Acquired Assets (the "Allocation") for all income Tax purposes. The Allocation
shall be consistent with the Code and based on an initial proposal by Buyer.
Sellers will have the right to raise reasonable objections to the Allocation
within 15 days after Buyer's delivery thereof, in which event Buyer and Sellers
will negotiate in good faith to resolve such dispute. If Buyer and Sellers
cannot resolve such dispute within 15 days after Sellers notify Buyer of such
objections, such dispute with respect to the Allocation shall be presented to
the Independent Accounting Firm, which shall, within 30 days thereafter, render
a decision, which shall be final and binding upon each of the parties. The fees,
costs and expenses incurred in connection therewith shall be shared in equal
amounts by Buyer and Sellers. Buyer and Sellers each shall report and file all
Tax Returns (including amended Tax Returns and claims for refunds) consistent
with the Allocation, and shall take no position contrary thereto or inconsistent
therewith (including in any audits or examinations by any Tax Authority or any
other Proceedings). Buyer and Sellers shall cooperate in the preparation of, and
shall timely file, any forms (including Form 8594) with respect to the
Allocation, including any amendments to such forms required with respect to any
adjustment to the Purchase Price, pursuant to this Agreement. Notwithstanding
any other provisions of this Agreement, the foregoing agreement shall survive
the Closing Date without limitation.
3.6 Designation of Affiliates by Buyer. Prior to the Closing, Buyer may
designate one or more of its Subsidiaries to acquire at the Closing all or part
of the Acquired Assets, in which event all references to "Buyer" shall be deemed
to refer to each such Subsidiary with respect to the Acquired Assets to be
acquired by such Subsidiary; provided, however, that no designation otherwise
permitted by this Section 3.6 shall relieve Buyer from any of its liabilities or
obligations hereunder.
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3.7 Section 338(h)(10) Election. Sellers shall cooperate with Buyer's
request to make an election under Section 338(h)(10) of the Code to treat the
purchase and sale of any Seller's equity interest in any of the Acquired
Entities as a purchase and sale of the assets of the entity, to the extent
permitted by the Code.
3.8 Designation of Exchange Accommodation Titleholder. Prior to Closing,
Buyer may designate one or more Persons as a "qualified intermediary" within the
meaning of Internal Revenue Service Regulation "1.1031(k)-1(g)(4), or an
"exchange accommodation titleholder" within the meaning of Internal Revenue
Service Revenue Procedure 2000-37, 2000-2 CB 308, to acquire at the Closing all
or part of Buyer's rights to this Agreement or the Acquired Assets in order to
effectuate a like-kind exchange under Section 1031 of the Code. Buyer's
Liabilities under this Agreement shall be no greater, and no less, than such
Liabilities would have been had the Buyer or its Subsidiaries directly acquired
the Acquired Assets.
ARTICLE 4
INDEMNITY ESCROW
4.1 Creation of Escrow. At the Closing, as collateral security for the
payment of any indemnification obligations of Sellers pursuant to Article 10
hereof, the Indemnity Escrow shall be delivered to the Escrow Agent.
4.2 Duration and Term. The Indemnity Escrow shall be held, invested and
disbursed by the Escrow Agent in accordance with the terms of the Indemnity
Escrow Agreement. The Escrow Agent shall hold the Indemnity Escrow pursuant to
the Indemnity Escrow Agreement until the later of: (a) the first Business Day
following the Indemnity Termination Date; or (b) the resolution of any claim for
indemnification or payment that is pending on the Indemnity Termination Date,
but only to the extent of the amount of such pending claim.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
In connection with the following representations and warranties, attached
to this Agreement is a disclosure schedule (the "Disclosure Schedule") arranged
in numbered parts corresponding to the Section numbering in this Agreement of
the following representations and warranties. The information disclosed in any
numbered part of the Disclosure Schedule shall be deemed to relate to and to
qualify only the particular representation or warranty set forth in the
corresponding numbered Section in this Agreement and shall not be deemed to
relate to or qualify any other representation or warranty unless so stated
otherwise, specifying each other representation and warranty to which it
relates. No reference to or disclosure of any item in the Disclosure Schedule
shall be construed as an admission or indication that such item or other matter
is material or that such item or other matter is required to be referred to or
disclosed in the Disclosure Schedule. Sellers jointly and severally hereby
represent and warrant to Buyer that, as of the Agreement Date and as of the
Closing Date (except with respect to representations and warranties made as of a
particular date, which shall be deemed to be made only as of such date), except
as set forth on the Disclosure Schedule:
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5.1 Due Organization. Each Seller is a corporation, limited liability
company or partnership, duly organized under the laws of its jurisdiction of
incorporation or formation, with full power and authority to conduct its
business as presently conducted, to own or use its properties and assets and to
perform all of its obligations under all Assumed Contracts. Each Seller is duly
qualified to do business and in good standing under the Laws of each
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified and in good standing
would not reasonably be expected to have a Material Adverse Effect. Schedule 5.1
of the Disclosure Schedule lists the form of organization, the jurisdiction of
incorporation or formation, and the holders of the outstanding capital stock or
other equity interests of each Seller and the Acquired Entities.
5.2 Authorization; Validity. Each Seller has the requisite power and
authority to execute and deliver this Agreement and the other documents and
instruments to be executed and delivered by it pursuant hereto and to perform
its obligations hereunder and thereunder. The execution and delivery of this
Agreement by each Seller and the other agreements to be executed and delivered
by such Seller pursuant hereto, and the performance by such Seller of its
obligations hereunder, including the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of each Seller, including by any action or required approval of the
equityholder or equityholders of each Seller. This Agreement has been duly and
validly executed and delivered by each Seller and (assuming this Agreement
constitutes a valid and binding obligation of Buyer and each of the other
agreements to be executed and delivered by parties pursuant hereto other than
Sellers constitute a valid and binding obligation of such other parties and
subject to Bankruptcy Court Approval) constitutes, and each of the other
agreements to be executed and delivered by each Seller pursuant hereto upon such
Seller's execution and delivery will constitute, valid and legally binding
obligations of such Seller enforceable against such Seller in accordance with
its respective terms.
5.3 No Violation. Subject to receipt and maintenance of the Orders,
consents, approvals, waivers and authorizations referred to in Section 5.4 and
the Bankruptcy Court Approval, the execution, delivery and performance by each
Seller of this Agreement and the transactions contemplated hereby, do not and
will not: (a) conflict with or result in, with or without the giving of notice
or lapse of time or both, any violation of or constitute a breach or default, or
give rise to any right of acceleration, payment, amendment, cancellation or
termination, under (i) the certificate of incorporation, bylaws or other
formation documents of such Seller, (ii) any mortgage, indenture, lease,
Contract, or other agreement to which any Seller is a party or by which any of
any Seller's assets or properties are subject, including any Assumed Contract,
or (iii) any Law or Order pertaining to the Business, the Acquired Assets or to
which any Seller is otherwise subject, except in the cases of clauses (ii) and
(iii) where such conflict, violation, breach, default or right would not
reasonably be expected to have a Material Adverse Effect; or (b) result in the
creation of any Lien (other than Liens included in the Assumed Liabilities and
Permitted Liens) upon any of the Acquired Assets.
5.4 Third Party Approvals. Schedule 5.4 of the Disclosure Schedule sets
forth a true and complete list of each Order, consent, approval, waiver or
authorization of any Governmental Entity and each material consent, approval,
waiver or authorization of any other Person that is required in connection with
the execution, delivery and performance by Sellers of this
22
Agreement and the other documents and instruments to be executed and delivered
by Sellers pursuant hereto and the transactions contemplated hereby and thereby
other than (a) Orders, consents, approvals, waivers or authorizations of, or
declarations or filings with, the Bankruptcy Court, (b) filings pursuant to the
HSR Act, and (c) approvals required by the Surface Transportation Board in
connection with the sale of the Railroad Assets.
5.5 Title to Assets; Sufficiency and Condition of Assets. All of each
Seller's right, title and interest in and to the Acquired Assets (or in the case
of any leased or licensed Acquired Assets, each Seller's rights under such
leases or licenses) shall be transferred to Buyer at Closing, free and clear of
all Liens (other than Liens included in the Assumed Liabilities and Permitted
Liens). At Closing, Sellers will have good and marketable title to each of the
Acquired Assets, except for those Acquired Assets leased by Sellers, as to which
Sellers will have valid leasehold interests. The Acquired Assets constitute all
of the properties, assets and rights used by the Sellers or necessary or useful
for Buyer to conduct and operate the Business as conducted and operated by
Sellers. All of the Acquired Assets are in good order and repair for assets of
comparable age and past use and are capable of being used in the ordinary course
of business in the manner necessary to operate the Business, except where the
failure to be in such condition would not, individually or in the aggregate,
have a Material Adverse Effect. The condition of each Acquired Asset that is
leased pursuant to an Assumed Contract is in compliance with the provisions of
such Assumed Contract.
5.6 Intellectual Property.
(a) Schedule 5.6(a) of the Disclosure Schedule sets forth a true and
complete list of all material Intellectual Property used or held for use in the
Business and all jurisdictions where such Intellectual Property is registered or
protected or where applications have been filed, together with all patent,
registration and application numbers. Sellers own and have the right to use, or,
in the case of licensed rights, have valid rights to use, such Intellectual
Property, free and clear of all Liens (other than Permitted Liens).
(b) Schedule 5.6(b) of the Disclosure Schedule sets forth a true and
complete list of all material licenses, sublicenses and other agreements
pursuant to which (i) any Seller has authorized any other Person to use
Intellectual Property, or (ii) any Person has authorized any Seller to use any
Intellectual Property.
(c) To the Knowledge of Sellers, the Intellectual Property does not
infringe upon, violate or misappropriate the rights of any Person. Consummation
of the transactions contemplated hereby will not result in the loss or
impairment of any of the material Intellectual Property or any material right
pertaining thereto. Sellers have taken reasonable precautions and security
measures to protect the secrecy, confidentiality and value of the trade secrets
of the Business. As of the Agreement Date, no Seller has Knowledge of any
infringement or unauthorized use by any Person of any material Intellectual
Property.
5.7 Compliance with Laws. Except with respect to those matters covered by
Section 5.11 and Environmental Laws (which are covered by Section 5.20), (i)
each Seller is in compliance with all applicable Laws, except where the failure
to be in compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and
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(ii) as of the Agreement Date, no Seller has received any notice of any alleged
violation of any Law applicable to it. No Seller is in default in any material
respect of any Order applicable to the Acquired Assets or the transactions
contemplated under this Agreement. No investigations, inquiries or reviews by
any Governmental Entity with respect to the Business have been commenced, nor to
the Knowledge of any Seller, are any contemplated that would impose any material
Liability on Buyer or, from and after the Closing Date, the Acquired Assets or
the Business.
5.8 Title to Property.
(a) Schedule 5.8(a) identifies all of the real property owned or
leased by the Company or any of its Subsidiaries and used or held for use in the
Business.
(b) Neither the Company nor any of its Subsidiaries has received any
written notice of, or has Knowledge of, condemnation or eminent domain
proceedings pending or threatened that affect the Acquired Real Property.
Neither the Company nor any of its Subsidiaries has received any written notice
of, or, except where any such violations would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, has any
Knowledge of, any zoning, ordinance, building, fire or health code or other
legal violation affecting any such Acquired Real Property.
(c) There are no encroachments or other facts or conditions affecting
any of the Acquired Real Property that would be revealed by an accurate survey
or inspection thereof, which encroachments, facts or conditions would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. None of the buildings and structures on such Acquired Real
Property encroaches in any material respect upon real property of another Person
or upon the area of any easement affecting the Acquired Real Property.
5.9 Brokers and Finders. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission from Buyer in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries.
5.10 Taxes.
(a) The Company and its Subsidiaries have timely filed with the
appropriate Tax Authorities all material Tax Returns required to be filed by any
of them. All Tax Returns filed by the Company and its Subsidiaries are true,
complete and correct in all material respects. All Taxes covered by such Tax
Returns (whether or not shown on any Tax Return) have been timely paid, except
for Taxes (i) disclosed on Schedule 5.10(a)(i) of the Disclosure Schedule, (ii)
which are being contested in good faith in appropriate Proceedings and disclosed
on Schedule 5.10(a)(ii), or (iii) which, individually or in the aggregate, would
not reasonably be expected to result in any material Liability to Buyer or
Sellers.
(b) None of the Acquired Assets is subject to a safe harbor lease
within the meaning of Section 168(f)(8) of the Internal Revenue Code of 1954 as
in effect prior to the enactment of the Tax Reform Act of 1986, Public Law
99-514.
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5.11 Labor Matters; Employee Relations.
(a) There are no material claims or Proceedings pending or, to the
Knowledge of any Seller, threatened, between the Company or its Subsidiaries and
any employees of the Company or any of its Subsidiaries. There are no strikes,
slowdowns, work stoppages, lockouts, or, to the Knowledge of any Seller, threats
thereof, by or with respect to any employees of the Company or its Subsidiaries.
(b) The Company and each of its Subsidiaries is and has been in
compliance with all applicable Laws respecting employment, except where the
failure to be in compliance would not reasonably be expected to have a Material
Adverse Effect.
5.12 ERISA Compliance; Absence of Changes in Benefits Plans. Schedule 5.12
of the Disclosure Schedule sets forth a true and complete list, as of the
Agreement Date, of all Plans. True and complete copies of each of the following
documents, including any amendments made on or prior to the Agreement Date, have
been made available by Sellers to Buyer: (i) each Plan and all amendments
thereto, and the most recent descriptions thereof which have been distributed to
plan participants; (ii) all funding arrangements with respect to the Plans;
(iii) all actuarial or other assumptions used to calculate funding obligations
with respect to any Plan or any change in the manner in which such contributions
are determined; and (iv) a brief description of any Plan which is not in
writing. No "reportable event," as defined in Section 4043(b) of ERISA and the
regulations promulgated thereunder, has occurred under any Plan and to the
Knowledge of the Sellers no action is contemplated by any Seller or any other
Person that would constitute a reportable event, in each case which could
reasonably result in the imposition of any Liabilities upon Buyer. No Seller
participates in any Plan that is a "multiemployer plan," as such term is defined
in Section 4001(a)(3) of ERISA in respect of any employee of the Business.
5.13 Litigation. Other than the Chapter 11 Case, there are no material
actions pending, or, to the Sellers' Knowledge, threatened against any Seller in
connection with the Acquired Assets or the Business or which could give rise to
or increase an Assumed Liability. There are no Orders against any Seller or any
of their respective properties or businesses that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.14 Customers and Suppliers. Schedule 5.14 of the Disclosure Schedule sets
forth a complete and accurate list of all Significant Customers and Significant
Suppliers. "Significant Customers" are: (i) the 10 customers that have purchased
the most, in terms of dollar value, products or services sold by the Business
during the year ended December 31, 2001; and (ii) the 10 customers that have
purchased the most, in terms of dollar value, products or services sold by the
Business during the year ended December 31, 2002. "Significant Suppliers" are:
(y) the 10 suppliers that have sold the most, in terms of dollar value, products
or services to the Business during the year ended December 31, 2001; and (z) the
10 suppliers that have sold the most, in terms of dollar value, products or
services to the Business during the year ended December 31, 2002. As of the
Agreement Date, no Significant Customer or Significant Supplier has given any
Seller notice terminating, canceling or materially reducing, or threatening to
terminate, cancel or materially reduce, any Contract or relationship with
Seller. As of the Agreement Date, no Significant Customer (i) has notified the
Company or any Subsidiary that the Company or any Subsidiary no longer meets the
customers' quality specifications or any certification
25
requirements imposed upon steel suppliers or (ii) to Sellers' Knowledge, has
threatened to terminate such certification. During the three-month period
immediately preceding the Agreement Date, there has been no material increase in
(i) the dollar amount of customer claims relating to the quality of Sellers'
products or services, or (ii) the percentage of products shipped by Sellers that
do not conform, as determined consistently with the Sellers' past practices, to
original or prime product requirements (whether full or limited warranty), in
each case as compared with the comparable period of the preceding calendar year.
5.15 Accounts Receivable. Schedule 5.15 of the Disclosure Schedule is a
complete and accurate list, as of March 31, 2003, of the Accounts Receivable of
Sellers, including an aging of all Accounts Receivable showing amounts due in
30-day aging categories. Sellers have provided reserves for Accounts Receivable
in accordance with GAAP and the Company's accounting policies attached hereto as
Schedule 1.1(a), consistently applied by Sellers. On the Closing Date, Sellers
will deliver to Buyer a complete and accurate list, as of a date within five
Business Days of the Closing Date, of the Accounts Receivable. All Accounts
Receivable represent valid obligations arising from bona fide business
transactions in the ordinary course of business consistent with past practice.
Subject to the Company Reserves and any write-down of any Accounts Receivable in
connection with the Working Capital Adjustment in Section 3.4, there is no
contest, claim, counterclaim, defense or right of set-off under any Contract or
otherwise with any obligor of any Account Receivable relating to the amount or
validity of such Account Receivable.
5.16 Inventory. All Inventory is in good and merchantable quality and is
useable and saleable in the ordinary course of business, except for those items
the value of which (i) has been reduced in accordance with GAAP and the
Company's inventory policies, attached hereto as Schedule 1.1(a), consistently
applied by Sellers or (ii) is or will be reduced in connection with the Working
Capital Adjustment in Section 3.4.
5.17 Financial Statements and SEC Filings.
(a) The Company has delivered or made available to Buyer a true,
correct and complete copy of the audited consolidated balance sheet of the
Company as of December 31, 2002, and audited consolidated statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
year then ended (the "Company Financial Statements"). The Company Financial
Statements are consistent in all material respects with the books and records of
the Business. The Company Financial Statements (including the related notes)
have been prepared in accordance with GAAP consistently applied and fairly
present the results of operations and financial condition of the Company and its
Subsidiaries for the periods covered thereby. Other than the Financing, since
December 31, 2002, Seller has not borrowed, incurred, assumed, prepaid,
guaranteed, or become subject to any material liability or modified any existing
material liability (absolute, accrued or contingent) other than (i) in the
ordinary course of business consistent with past practice in nature and amount,
(ii) as shown on the Company Financial Statements or (iii) which has been
discharged, satisfied or paid in the ordinary course of business since December
31, 2002.
(b) Each of the forms, reports and documents filed by the Company
with the SEC since December 31, 2001 (the "Company SEC Documents") complied in
all material
26
respects with all applicable requirements of the Securities Act and the Exchange
Act as in effect on the dates so filed. With respect to the Acquired Assets, the
Assumed Liabilities and the Business, none of the Company SEC Documents (as of
the respective filing dates or, if amended, as of the date of the last such
amendment filed prior to the Agreement Date) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
5.18 Contracts. All of the Assumed Contracts are in full force and effect
and constitute valid and binding agreements of the Company or the Subsidiary
party thereto, enforceable in accordance with their respective terms, and to the
knowledge of the Company or any Subsidiary that is a party to any such Assumed
Contract, the other parties thereto, subject, as to enforceability against each
such other party, to bankruptcy, moratorium or other insolvency laws and to
equitable principles of general application (regardless if enforcement is sought
at law or in equity). With respect to the Assumed Contracts, upon entry of the
Bankruptcy Court Approval and payment of the Cure Amounts, (i) neither the
Company nor any Subsidiary will be in breach or default of its obligations
thereunder, (ii) to the Knowledge of the Company or any of its Subsidiaries, no
conditions exist that with notice or lapse of time or both would constitute a
default thereunder, and (iii) to the Knowledge of the Company or any of its
Subsidiaries, no other party to any of the Assumed Contracts is in breach or
default thereunder, except in each case where such breach or default would not
reasonably be expected to have a Material Adverse Effect. Schedule 5.18 of the
Disclosure Schedule sets forth a complete and correct list, as of the Agreement
Date, of all Material Contracts other than those Contracts that are "Material
Contracts" solely because such Contracts are "Assumed Contracts."
5.19 Permits. Schedule 5.19 of the Disclosure Schedule sets forth a true,
complete and correct list of all material Permits held by the Company or its
Subsidiaries as of the Agreement Date in connection with the Business or the
Acquired Assets (including the date of expiration of each Permit). Each Permit
is valid and in full force and effect and neither the Company nor any of its
Subsidiaries is in default under or in violation of, and no condition exists
that with notice or lapse of time or both would constitute a default under or a
violation of, any such Permit, except for such defaults or violations which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
5.20 Environmental Matters. Each Seller and each Acquired Entity is in
compliance with all Environmental Laws. Sellers possess and are in compliance
with all Permits required under Environmental Laws for the conduct of the
Business. There are no pending or, to the Knowledge of the Company or any of its
Subsidiaries, threatened Proceedings against the Company or any of its
Subsidiaries alleging a violation of or Liability under any Environmental Law.
There has been no Release of any Hazardous Substance that will or is reasonably
likely to require abatement or correction under Environmental Laws at (A) any of
the Acquired Real Property or (B) any property to which any Seller sent waste
materials for treatment, storage or disposal since January 1, 2001. Sellers have
provided to Buyer copies of all information necessary for an understanding of
the presence or migration of any Hazardous Substance on, in or under the
Acquired Real Property. Schedule 5.20 of the Disclosure Schedule sets forth: (i)
with respect to the Acquired Assets and Assumed Liabilities, all accruals or
reserves of the Company or any of its Subsidiaries relating to matters arising
under any Environmental Law as
27
of November 30, 2002; and (ii) a list, as of the Agreement Date, of all
environmental audits and all Notices of Violation relating to the Business, the
Acquired Assets and the Assumed Liabilities. As used herein, "Release" means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment; and "Hazardous
Substance" means any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. (S)(S) 9601
et. seq., and petroleum, including crude oil and any fraction or any derivative
thereof.
5.21 Capital Expenditures. As of the Agreement Date, the Company has made
available to Buyer the most recent capital spending plans of the Company and its
Subsidiaries relating to the Business or the Acquired Assets, including any
plans relating to any matter arising under any Environmental Law.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers, as of the Agreement Date
and as of the Closing Date (except with respect to representations and
warranties made as of a particular date, which shall be deemed to be made only
as of such date), as follows (and Buyer makes no other representations or
warranties to Sellers):
6.1 Due Organization. Buyer is a corporation validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
corporate power and authority to own, lease and operate the assets to be sold
hereunder and to conduct its business as presently conducted. Buyer is duly
qualified to do business and in good standing under the laws of each
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified and in good standing
would not reasonably be expected to have a Buyer Material Adverse Effect.
6.2 Authority; Validity. Buyer has the requisite power and authority to
execute and deliver this Agreement and the other documents and instruments to be
executed and delivered by Buyer pursuant hereto and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
other agreements to be executed and delivered by Buyer pursuant hereto, and the
consummation by Buyer of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action on the part of Buyer.
This Agreement has been duly and validly executed and delivered by Buyer and
constitutes, and each of the other agreements to be executed and delivered by
Buyer pursuant hereto upon its execution and delivery by Buyer will constitute
(assuming in each case the due and valid authorization, execution and delivery
thereof by the other parties thereto and the entry of the Bankruptcy Court
Approval by the Bankruptcy Court), valid and legally binding obligations of
Buyer enforceable against Buyer in accordance with its terms.
6.3 No Violation. The execution, delivery and performance by Buyer of this
Agreement and the transactions contemplated hereby do not and will not conflict
with or result in, with or without the giving of notice or lapse of time or
both, any violation of or constitute a
28
breach or default, or give rise to any right of acceleration, payment,
amendment, cancellation or termination, under (a) the certificate of
incorporation or bylaws of Buyer, (b) any mortgage, indenture, lease, Contract
or other agreement to which Buyer is a party or by which Buyer or any of its
properties or assets is bound or subject, or (c) any Law or Order to which Buyer
is bound or subject, except in the cases of clauses (b), and (c) where such
conflict, breach, default or right would not, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect.
6.4 Third Party Approvals. Except for any approvals required in order to
comply with the provisions of the HSR Act and approvals required by the Surface
Transportation Board in connection with the acquisition of the Railroad Assets,
the execution, delivery and performance by Buyer of this Agreement and the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
and the transactions contemplated hereby and thereby do not require any
consents, waivers, authorizations or approvals of, or filings with, any
Governmental Entity or any other Person which have not been obtained by Buyer.
6.5 Brokers and Finders. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission from Sellers in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Buyer.
6.6 Compliance with Laws. Buyer is in compliance with all applicable Laws,
except where the failure to be in compliance would not reasonably be expected to
have a Buyer Material Adverse Effect.
6.7 Litigation. Except as disclosed in the Buyer SEC Documents, there are
no actions pending against the Company or any of its Subsidiaries or any of
their respective properties that would, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect.
29
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 Conduct of Business Pending the Closing. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement in accordance with its terms or the Closing, the Company shall,
and shall cause each of its Subsidiaries to, carry on the Business in the
ordinary course of business and, to the extent consistent therewith, use all
commercially reasonable efforts to preserve the Business intact and preserve the
goodwill of and relationships with Governmental Entities, customers, suppliers,
partners, lessors, licensors, licensees, contractors, distributors, agents,
officers and employees and others having business dealings with the Business,
provided that the foregoing shall not prevent Sellers from rejecting Contracts
that are not Assumed Contracts. During the period from the date of this
Agreement through the Closing Date, the Company shall endeavor to maintain the
Net Receivables Amount, the Inventory Value and each component of Inventory at
or in excess of the amounts set forth on Schedule 7.1. Without limiting the
generality of the first sentence of this Section 7.1, during the period from the
date of this Agreement through the Closing Date, the Company shall not, and
shall not permit any of its Subsidiaries to, without the prior written consent
of Buyer:
(a) abandon any rights under any of the Assumed Contracts; terminate,
amend, modify or supplement the terms of any Assumed Contract; or fail to honor
or perform, the Assumed Contracts;
(b) other than sales of Inventory in the ordinary course of business
or the disposition of obsolete equipment, lease, license, surrender, relinquish,
sell, transfer, convey, assign or otherwise dispose of any Acquired Assets;
(c) mortgage, pledge or subject to Liens (other than Permitted
Liens), any property, business or any of the Acquired Assets, other than as
would not result in any Liability that would be or would increase an Assumed
Liability as of or subsequent to the Closing;
(d) incur or permit to be incurred any Liability (other than Accounts
Payable or in connection with the performance of Assumed Contracts) that would
be or would increase an Assumed Liability as of or subsequent to the Closing;
(e) fail to replenish the Inventory and Supplies of the Business in
the ordinary course of business;
(f) increase the salary of any Identified Employee at or after the
time such person becomes an Identified Employee, other than in the ordinary
course of business consistent with past practice;
(g) make or rescind any material Tax election or take any material
Tax position (unless required by law) or file any Tax Return or change its
fiscal year or financial or Tax accounting methods, policies or practices, or
settle any Tax Liability, except in each case as would not reasonably be
expected to affect the Buyer;
(h) institute, settle or agree to settle any litigation, action or
Proceeding before any court or Governmental Entity relating to the Acquired
Assets, or modify in any manner that
30
is adverse to the Business or the Acquired Assets, rescind or terminate a
material Permit, allowance, or credit (or application therefor) relating to the
Business or the Acquired Assets;
(i) transfer or grant any rights under, modify any existing rights
under, or enter into any settlement regarding the breach or infringement of, any
material Intellectual Property; or
(j) enter into any Contract to do any of the foregoing.
7.2 Bankruptcy Court Order.
(a) Not later than the first business day following the Agreement
Date, each of the Sellers shall file with the Bankruptcy Court applications or
motions seeking that the Bankruptcy Court enter the Bankruptcy Court Approval
(the "Sale Motion").
(b) Buyer agrees that it will promptly take such actions as are
reasonably requested by Sellers, on behalf of Sellers, to assist in obtaining
the Bankruptcy Court Approval, including furnishing affidavits or other
documents or information for filing with the Bankruptcy Court for purposes,
among others, of demonstrating that Buyer is a "good faith" Buyer under Section
363(m) of the Bankruptcy Code. In the event the Bankruptcy Court Approval shall
be appealed, Sellers shall use all reasonable efforts to defend such appeal.
7.3 Notification of Certain Matters. Sellers shall give prompt Notice to
Buyer, and Buyer shall give prompt Notice to Sellers, of (i) any notice or other
communication from any Person alleging that the consent of such Person which is
or may be required in connection with the transactions contemplated by this
Agreement is not likely to be obtained prior to Closing, and (ii) any written
objection or Proceeding that challenges the transactions contemplated hereby or
the entry of the Bankruptcy Court Approval. Sellers shall give prompt Notice to
Buyer of (i) any notice of any alleged violation of Law applicable to any
Seller; (ii) the commencement of any investigation, inquiry or review by any
Governmental Entity with respect to the Business or that any such investigation,
inquiry or review, to the Knowledge of any Seller, is contemplated; (iii) the
infringement or unauthorized use by any Person of any material Intellectual
Property (of which any Seller has Knowledge); and (iv) the execution of any
Material Contract (and Sellers shall deliver or make available a copy thereof to
Buyer). Sellers shall use commercially reasonable efforts to give prompt Notice
to Buyer of the execution of any Ordinary Course Contract and, upon the request
of Buyer to make available to Buyer copies of any such Ordinary Course
Contracts.
7.4 Access.
(a) Subject to applicable Law, from the date hereof until the Closing
Date, Sellers (i) shall give Buyer and its Representatives reasonable access
during normal business hours to the offices, properties, officers, employees,
accountants, auditors, counsel and other representatives, books and records of
the Company and its Subsidiaries; provided, however, that Buyer's inspection of
Sellers' properties shall not, without the consent of the Company, which consent
shall not be unreasonably withheld or delayed, include the environmental
sampling of any environmental media, including air, soil, surface water or
groundwater, (ii) shall furnish to Buyer and its Representatives such financial,
operating and property related data and other
31
information as such persons reasonably request, and (iii) shall instruct the
Company's and its Subsidiaries' employees, counsel and financial advisors to
cooperate reasonably with Buyer in its investigation of the business of the
Company and its Subsidiaries. All such information shall be provided subject to
the provisions of the Confidentiality Agreement. In addition, notwithstanding
any provision of the Confidentiality Agreement to the contrary, Buyer shall,
with the prior consent of the Company, which consent shall not be unreasonably
withheld or delayed, have the right to contact and negotiate directly with
Seller's joint venturers and other partners, parties to the Assumed Contracts
and lenders with respect to any Acquired Assets or Assumed Liabilities. The
Company shall have the right to participate in such negotiations and agrees to
cooperate with Buyer, at Buyer's request, in any such negotiations. It is
acknowledged and understood that no investigation by Buyer or other information
received by Buyer shall operate as a waiver or otherwise affect any
representation, warranty or other agreement given or made by Seller hereunder.
Buyer agrees that any on-site inspections of any Acquired Real Property,
including any inspection or study pursuant to Section 7.4(b)(ii) or Section
7.4(b)(iii), shall be conducted in the presence of Sellers or its
Representatives. All inspections shall be conducted so as not to interfere
unreasonably with the use of the Acquired Real Property by Sellers.
(b) From and after the Closing Date, Sellers shall give Buyer and
Buyer's Representatives reasonable access during normal business hours to the
offices, facilities, plants, properties, officers, employees, books and records
of Sellers pertaining to the Business, and Sellers shall cause their
Representatives to furnish to Buyer such financial, technical, operating and
other information pertaining to the Business as Buyer's Representatives shall
from time to time reasonably request and to discuss such information with such
Representatives. Sellers shall, and shall cause each of their Affiliates to,
cooperate with Buyer as may reasonably be requested by Buyer for purposes of (i)
enabling an independent accounting firm selected by Buyer to conduct an audit of
the Business, including access to the Company's independent auditors' working
papers pertaining to the Business or the Assets; (ii) undertaking, with the
consent of the Company, which consent shall not be unreasonably withheld or
delayed, any study of the condition or value of the Acquired Assets including
any environmental assessment; and (iii) undertaking any study relating to
Sellers' compliance with Laws, including Environmental Laws; and the Company
acknowledges that information or access may be requested and used for such
purpose.
(c) From and after the Closing Date, Buyer shall give Sellers and
Sellers' Representative reasonable access during normal business hours to the
books and records pertaining to the Excluded Assets and Excluded Liabilities
and, to the extent that Sellers retain any Liabilities with respect to such
items, the Acquired Assets or Assumed Liabilities. Buyer shall, and shall cause
each of its Affiliates to, cooperate with Sellers as may reasonably be requested
by Sellers for such purposes.
7.5 Public Announcements. From the Agreement Date until the earlier of the
Closing or the termination of this Agreement, Buyer and the Company will consult
with each other before issuing, and provide each other the opportunity to review
and comment upon, any press release, any court filing or pleading filed with the
Bankruptcy Court relating primarily to this Agreement or the transactions
contemplated hereby, or other public statements with respect to the transactions
contemplated by this Agreement, and neither Buyer nor any Seller shall issue
32
any such press release or make any such public statement without the prior
approval of the other party, in each case except as may be required by Law,
court process or by obligations pursuant to any listing agreement with any
national securities exchange. Buyer and each Seller shall cause its Affiliates,
employees, officers and directors to comply with this Section 7.5.
7.6 Cure of Defaults. Subject to Bankruptcy Court Approval, the Sellers
shall, on or prior to the Closing, cure any and all defaults and breaches under
and satisfy any Liability arising from or relating to pre-Closing periods under
the Assumed Contracts so that such Assumed Contracts may be assumed by Sellers
and assigned to Buyer in accordance with the provisions of Section 365 of the
Bankruptcy Code and this Agreement. Each Seller agrees that it will promptly
take such actions as are reasonably necessary or desirable to obtain a Final
Order of the Bankruptcy Court providing for the assumption and assignment of the
Assumed Contracts.
7.7 ERISA and Employment Matters. Buyer shall offer employment, effective
as of the Closing Date, to the Identified Employees on such terms as Buyer shall
determine in its sole discretion. Seller shall terminate the employment of all
Hired Non-CB Employees immediately prior to the Closing Date and shall comply
with any and all requirements of the WARN Act in connection therewith. Sellers
shall indemnify and hold harmless Buyer from all costs, liabilities and
expenses, including reasonable attorneys' fees, incurred by Buyer as a result of
any violation of, or failure to comply with, the WARN Act based on the
transactions contemplated by this Agreement. For purposes of the WARN Act and
this Section 7.7, "Closing Date" shall mean the "effective date" of the
transaction contemplated by this Agreement, as defined in the WARN Act. Each
Identified Employee who accepts Buyer's offer of employment shall be deemed to
be a "Hired Non-CB Employee" on the day such employee commences active
employment with Buyer (not earlier than the Closing Date). With respect to
Buyer's medical insurance coverage benefit plans, such plans shall (i) provide
coverage to each Hired Non-CB Employee as of the day such employee commences
active employment with Buyer and (ii) waive pre-existing condition limitations
to the same extent waived under the applicable plan of Buyer, except that the
benefits under such plans, including any new plans, may be adjusted or limited
to take into account similar benefits provided under any federal or state
assistance programs, subject to applicable Law.
7.8 Further Agreements. Sellers shall use all commercially reasonable
efforts to promptly deliver to Buyer any mail or other communication received by
Sellers after the Closing Date pertaining to the Acquired Assets, the Business
or the Assumed Liabilities. Buyer shall use all commercially reasonable efforts
to promptly deliver to Sellers any mail or other communication received by it
after the Closing Date pertaining to the Excluded Assets or any Excluded
Liabilities and any cash, checks or other instruments of payment in respect
thereof. From and after the Closing Date, Sellers shall use all commercially
reasonable efforts to refer all inquiries with respect to the Business, the
Acquired Assets and the Assumed Liabilities to Buyer, and Buyer shall use all
commercially reasonable efforts to refer all inquiries with respect to the
Excluded Assets and the Excluded Liabilities to Sellers.
7.9 Payment of Transfer Taxes and Tax Filings. All Transfer Taxes arising
out of the transfer of the Assets and any Transfer Taxes required to effect any
recording or filing with respect thereto shall be borne one-half by Buyer and
one-half by Sellers. The Transfer Taxes shall be calculated assuming that no
exemption from Transfer Taxes is available, unless
33
otherwise indicated in the Bankruptcy Court Approval or, at Closing, Sellers or
Buyer, as appropriate, provides an appropriate resale exemption certificate or
other evidence acceptable to Buyer or Seller, as appropriate, of exemption from
such Transfer Taxes. Sellers and Buyer shall cooperate to timely prepare and
file any Tax Returns relating to such Transfer Taxes, including any claim for
exemption or exclusion from the application or imposition of any Transfer Taxes.
Sellers shall pay such Transfer Taxes and shall file all necessary documentation
and returns with respect to such Transfer Taxes when due, and shall promptly,
following the filing thereof, furnish a copy of such return or other filing and
a copy of a receipt showing payment of any such Transfer Tax to Buyer.
Notwithstanding the foregoing, the Sale Motion shall seek, among other things,
that the Bankruptcy Court Approval contain a provision that the sale, transfer,
assignment and conveyance of the Acquired Assets to Buyer hereunder shall be
entitled to the protections afforded under Section 1146(c) of the Bankruptcy
Code. Each party hereto shall furnish or cause to be furnished to the other,
upon request, as promptly as practicable, such information and assistance
relating to the Assets and the Business as is reasonably necessary for filing of
all Tax Returns, including any claim for exemption or exclusion from the
application or imposition of any Taxes or making of any election related to
Taxes, the preparation for any audit by any taxing authority and the prosecution
or defense of any claim, suit or proceeding relating to any Tax Return.
7.10 Utilities. To the extent practicable, the parties hereto shall notify
the gas, water, sewage treatment, telephone and electric utility companies that
Buyer shall be responsible for the payment of all obligations of the Business or
the Acquired Assets incurred therefor on or after the Closing Date. Sellers
shall request the gas, water and electric utility companies to cause meters to
be read as of the Closing Date, and Sellers shall be responsible for the payment
of all charges for such services incurred and provided through the Closing Date.
Sellers shall cause the telephone companies to render a ▇▇▇▇ for telephone
service incurred through the Closing Date, and Sellers shall be responsible for
the payment of such bills. In the event that after the Closing Date, any
provider of phone, gas, water or electric utilities seeks payment from Buyer of
unpaid phone, gas, water or electric utilities provided to Sellers on or prior
to the Closing Date, Sellers shall pay such unpaid amounts as promptly as is
required (after reasonable Notice from Buyer) to avoid any discontinuation of
utility service to Buyer. To the extent that Buyer pays such unpaid amounts,
Sellers shall promptly reimburse Buyer for the cost of such payments; provided,
however, Sellers shall not be obligated to reimburse Buyer for any such amounts
included in Accounts Payable for purposes of the Working Capital Adjustment.
7.11 Proration of Taxes and Certain Charges.
(a) Except as otherwise expressly provided herein, all real property
Taxes, personal property Taxes or similar ad valorem obligations levied with
respect to the Acquired Assets for any taxable period that includes the day
before the Closing Date and ends after the Closing Date, whether imposed or
assessed before or after the Closing Date, shall be prorated between Sellers and
Buyer as of 12:01 A.M. on the Closing Date. If any Taxes subject to proration
are paid by Buyer, on the one hand, or Sellers, on the other hand, the
proportionate amount of such Taxes paid (or in the event a refund of any portion
of such Taxes previously paid is received, such refund) shall be paid promptly
by (or to) the other after the payment of such Taxes (or promptly following the
receipt of any such refund); provided, however, Sellers shall
34
not be obligated to reimburse Buyer for any such amounts included in Accounts
Payable for purposes of the Working Capital Adjustment.
(b) Except as otherwise expressly provided herein, all installments
of special assessments or other charges on or with respect to the Acquired
Assets payable by Sellers for any period in which the Closing Date shall occur,
including base rent, common area maintenance, royalties, all municipal, utility
or authority charges for water, sewer, electric or gas charges, garbage or waste
removal, and cost of fuel, shall be apportioned as of the Closing Date and each
party shall pay its proportionate share promptly upon the receipt of any ▇▇▇▇,
statement or other charge with respect thereto. If such charges or rates are
assessed either based upon time or for a specified period, such charges or rates
shall be prorated as of 12:01 A.M. on the Closing Date. If such charges or rates
are assessed based upon usage of utility or similar services, such charges shall
be prorated based upon meter readings taken on the Closing Date.
(c) Except as otherwise expressly provided herein, all amounts due
pursuant to the terms of the Assumed Contracts, other than those Contracts set
forth on Schedule 3.4(a) attached hereto, for any period in which the Closing
Date shall occur shall be prorated as of 12:01 A.M. on the Closing Date.
(d) If any amounts subject to proration pursuant to subsections (b)
or (c) of this Section 7.11 are paid by Buyer, on the one hand, or Sellers, on
the other hand, the other party shall promptly reimburse the payor the other
party's proportionate amount of such payment; provided, however, Sellers shall
not be obligated to reimburse Buyer for any such amounts included in Accounts
Payable for purposes of the Working Capital Adjustment.
7.12 Regulatory Approvals; Reasonable Efforts; Notification; Consent.
(a) Each of the parties will use all reasonable efforts to take, or
cause to be taken, all actions and use all reasonable efforts to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including (i) the obtaining of all other necessary actions, nonactions, waivers,
and Permits from Governmental Entities and the making of all other necessary
registrations and filings (including filings under the HSR Act), (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
and (iii) the execution and delivery of any additional certificates, agreements,
instruments, reports, schedules, statements, consents, documents and information
necessary to consummate the transactions contemplated by this Agreement.
(b) Except as required by Law, each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the transactions contemplated by this Agreement. If any party hereto or
Affiliate thereof receives a request for additional information or documentary
material from any such Government Entity with respect to the transactions
contemplated by this Agreement, then such party will use its reasonable efforts
to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. Each party hereto
35
shall bear its respective filing fees associated with the filings required under
the HSR Act or under any Antitrust Law.
(c) Neither Buyer nor any of its Subsidiaries shall be required to
(A) divest, or cause or permit the Company or its Subsidiaries or Affiliates to
divest, any of their respective businesses, product lines or assets, (B) hold
the Acquired Assets separately, or (C) take or agree to take any other actions
or agree to any limitations that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or an adverse effect on
the value, financial condition, business or results of operations of Buyer or
its pre-closing Subsidiaries that would be material to an entity having assets,
liabilities, revenues and earnings similar in amount to those of the Company.
Buyer shall not be required to waive any of the conditions to this Agreement set
forth in Article 8.
7.13 [Removed]
7.14 Rejected Contracts. No Seller shall reject any Assumed Contract in any
bankruptcy proceeding following the date hereof without the prior written
consent of the Buyer.
7.15 Further Assurances. Subject to the terms and conditions herein
provided, following the Closing Date, Sellers shall execute and deliver to Buyer
such bills of sale, endorsements, assignments and other good and sufficient
instruments of assignment, transfer and conveyance, in form and substance
reasonably satisfactory to Buyer, as shall be necessary to vest in Buyer all of
Sellers' right, title and interest in and to the Acquired Assets. Simultaneously
with such delivery, Sellers shall take such reasonable steps as may be
reasonably necessary or appropriate at and after the Closing, so that Buyer
shall be placed in actual possession and operating control of the Acquired
Assets. Sellers shall, and shall cause their respective Affiliates to, provide
copies or otherwise make available to Buyer and Buyer's Representatives, all
information and records (financial and otherwise) relating to, or otherwise used
or useful in the Business, and not otherwise included in the Acquired Assets.
7.16 Union Negotiations. Buyer and the United Steelworkers of America have
entered into a letter of agreement (the "Letter of Agreement") which includes a
tentative collective bargaining agreement including those items set forth on
Schedule 7.16. Buyer agrees that it shall use all reasonable efforts to propose
collective bargaining agreements and initiate negotiations of such collective
bargaining agreements with each of the Security, Police, Fire Professionals of
America International Union, the International Chemical Workers Union, the
Bricklayers & Allied Craftworkers International Union and the Laborers'
International Union of North America and shall keep the Company reasonably
informed of the progress of any such negotiations.
7.17 Closing Financial Certificate. The Company shall prepare, in good
faith, and deliver to Buyer, at least three Business Days prior to the Closing
Date, a certificate signed by the Company's Chief Executive Officer and Chief
Financial Officer (the "Closing Financial Certificate") setting forth the
Estimated Net Receivables Amount and the Estimated Inventory Value.
7.18 Transition Services Agreement. Each of Buyer and the Company shall use
all reasonable efforts to negotiate a mutually satisfactory transition services
agreement, pursuant to
36
which Buyer or one of its Affiliates shall provide, in exchange for payment
therefor, specified services to the Company (the "Transition Services
Agreement"), to be entered into as of the Closing Date. The Transition Services
Agreement shall not obligate Buyer to be responsible for any Excluded
Liabilities.
7.19 Credit Support Arrangements. Buyer acknowledges that, in the course of
the conduct of the Business by Sellers, Sellers have entered into various
arrangements (the "Seller Credit Support Arrangements"), including letters of
credit, guaranty, surety and other similar obligations (all as set forth on
Schedule 2.2(k)). Buyer and Sellers agree that the Seller Credit Support
Arrangements are not intended to inure to the benefit of Buyer after the Closing
and that Sellers intend to monetize the Seller Credit Support Arrangements after
the Closing. Buyer agrees that Sellers shall have no responsibility to continue
any of the Seller Credit Support Arrangements in order to satisfy obligations
with respect to the Business and the Acquired Assets arising after the Closing
Date. Buyer agrees that, to the extent that the Seller Credit Support
Arrangements serve to secure performance of obligations relating to the Business
or the Acquired Assets which arise after the Closing, Buyer will enter into
replacement credit support arrangements if and as necessary to secure such
post-Closing obligations. Sellers and Buyer agree that: (i) Sellers are solely
responsible for all workers' compensation claims with respect to injuries or
other occurrences which occur prior to the Closing, and Buyer shall have no
obligation to enter into replacement credit support arrangements to the extent
they relate to such obligations; and (ii) Buyer shall be solely responsible for
all workers' compensation claims with respect to injuries or other occurrences
which occur after the Closing, and Buyer will enter into credit support
arrangements if and as necessary to the extent they relate to such obligations.
In addition, Buyer agrees to cooperate with Sellers to enable Sellers to
monetize the Seller Credit Support Arrangements for which Buyer is not required
to enter into replacement credit support arrangements in accordance with the
immediately preceding two sentences. Seller shall reimburse Buyer for reasonable
out-of-pocket expenses of Buyer in connection with such cooperation, it being
understood that such cooperation will not include any obligation to pay the
counterparties to such Seller Credit Support Arrangements.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF THE PARTIES
8.1 Conditions Precedent to Obligations of Buyer. The obligation of Buyer
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by Buyer in Buyer's sole discretion) at or prior to the
Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties of Sellers contained herein shall be true and
correct in all material respects on the date hereof and shall be true and
correct in all respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date, except to the extent that any such representation or warranty
is expressly made as of a specified date, in which case such representation or
warranty shall have been true and correct as of such date; provided, however,
that the failure of any such representations or warranties to be true and
correct on and as of the Closing Date shall not constitute a basis for Buyer to
refuse to consummate the transactions contemplated hereby unless such failure,
either
37
individually or in the aggregate, has resulted in or would reasonably be
expected to result in, a Material Adverse Effect; provided, further, that for
the purposes of this Section 8.1(a), all references to materiality in Article 5
shall be disregarded; and provided further, that for the purposes of the
indemnification provision in Section 10.1(a) the references to materiality and
Material Adverse Effect in this Section 8.1(a) shall be disregarded.
(b) Performance of Obligations. Sellers shall have performed in all
material respects all obligations and agreements contained in this Agreement
required to be performed by them on or prior to the Closing Date.
(c) Officer's Certificate. Buyer shall have received a certificate,
dated the Closing Date, of an executive officer of each Seller to the effect
that the conditions specified in Sections 8.1(a) and (b) above have been
fulfilled.
(d) Bankruptcy Court Approval. The Bankruptcy Court shall have
entered an order or orders (the "Bankruptcy Court Approval") substantially in
the form set forth in Exhibit G hereto, which, among other things, (i) approves,
pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, (A) the execution,
delivery and performance by Sellers of this Agreement, including each and every
term and condition hereof, and the other instruments and agreements contemplated
hereby, (B) the sale of the Assets to Buyer on the terms set forth herein, and
(C) the performance by Sellers of their respective obligations under this
Agreement; (ii) authorizes and directs the Sellers to assume and assign to Buyer
the Assumed Contracts; and (iii) finds that Buyer is a "good faith" buyer within
the meaning of Section 363(m) of the Bankruptcy Code. The Bankruptcy Court
Approval shall be in full force and effect and shall not have been stayed,
enjoined or modified. Sellers shall have delivered to Buyer (i) a certified copy
of the order or orders providing for Bankruptcy Court Approval, and (ii) copies
of all affidavits of service of Sellers' motion seeking Bankruptcy Court
Approval or notice of such motion filed by or on behalf of Sellers.
(e) Assumed Contracts. All of the material Assumed Contracts shall
(i) be in full force and effect and assignable to and assumable by Buyer without
the consent of the other party thereto or consent thereto shall have been
obtained, and (ii) have had all of any Seller's breaches and defaults thereunder
cured in accordance with Section 7.6 hereof.
(f) No Material Adverse Change.
(i) Since December 31, 2002, no event, occurrence, fact,
condition, change, development or effect shall have occurred or shall exist
that, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on the Company and Sellers, taken as a whole.
(ii) For the three-month period ending on the last day of the
month immediately preceding the Closing Date:
(A) the aggregate revenues from coated steel shipped to
the automotive market from the Company and its Subsidiaries shall not be less
than $95 million; and
38
(B) the aggregate revenues from chrome, tin and
blackplate shipped to the container market from the Company and its Subsidiaries
shall not be less than $65 million.
(g) No Intercompany Indebtedness; No Liens. Each of Delray Connecting
Railroad Company, Double G Coatings, L.P. and Steel Health Resources, LLC shall
have been released from its obligation to repay indebtedness owing at or
accruing prior to Closing to the Company or any of its Subsidiaries and no
indebtedness of any Seller to the Company or any of its Subsidiaries shall give
rise to or increase an Assumed Liability. The assets of Delray Connecting
Railroad Company shall be free and clear of all Liens (other than Permitted
Liens).
(h) No Violation of Orders. No provisions of any applicable Law or
Order enacted, entered, promulgated, enforced or issued by any Governmental
Entity shall be in effect that (i) prevents the sale and purchase of the
Acquired Assets or any of the other transactions contemplated by this Agreement,
(ii) would adversely affect or interfere with the operation of the Business as
contemplated to be conducted after the Closing in a manner that would reasonably
be expected to constitute a Material Adverse Effect, or (iii) would require
Buyer or any of its Affiliates to sell or otherwise dispose of, hold separate or
otherwise divest itself of, any of the Acquired Assets or any of the assets,
properties or business of Buyer or any of its Affiliates.
(i) HSR Act. Any applicable waiting period under the HSR Act or any
other applicable Antitrust Laws, in each case, if required, shall have expired
or shall have been earlier terminated, and all necessary approvals under all
applicable Antitrust Laws shall have been obtained.
(j) Title Insurance. At Buyer's sole cost and expense, a title
insurance company acceptable to Buyer in its sole discretion shall have issued a
commitment to issue to Buyer an ALTA (or local equivalent) owner's coverage
policy of title insurance for each of the properties described on Schedule
2.1(a)-1 and Schedule 2.1(a)-2, insuring the interest to be acquired by Buyer in
each property, subject only to standard survey exceptions and Permitted Liens,
and in each case in an amount acceptable to Buyer in its sole discretion, but in
no event in an amount greater than the fair market value of each property.
(k) Indemnity Escrow Agreement. Sellers shall have executed and
delivered to Buyer the Indemnity Escrow Agreement.
(l) Transition Services Agreement. The Company shall have executed
and delivered to Buyer the Transition Services Agreement.
(m) Headquarters Lease. The Company shall have executed and delivered
to Buyer the Headquarters Lease.
(n) Trademark License Agreement. The Company shall have executed and
delivered to Buyer the Trademark License Agreement.
(o) Closing Financial Certificate. The Company shall have delivered
to Buyer the duly executed Closing Financial Certificate.
39
8.2 Conditions Precedent to the Obligations of Sellers. The obligation of
Sellers to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by Seller) at or prior to the Closing Date of
each of the following conditions:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Buyer contained herein shall be true and correct in all
material respects on the date hereof in and shall be true and correct in all
respects on and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date,
except to the extent that any such representations or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct as of such date; provided, however, that the failure of any
such representations or warranties to be true and correct on and as of the
Closing Date shall not constitute a basis for Sellers to refuse to consummate
the transactions contemplated hereby unless such failure, either individually or
in the aggregate, has resulted in or would reasonably be expected to result in,
a Buyer Material Adverse Effect; provided, further, that for the purposes of
this Section 8.2(a), all references to materiality in Article 6 shall be
disregarded; and provided, further, that for the purposes of the indemnification
provision in Section 10.2(a), the references to materiality and Buyer Material
Adverse Effect in this Section 8.2(a) shall be disregarded.
(b) Performance of Obligations. Buyer shall have performed in all
material respects all obligations and agreements contained in this Agreement
required to be performed by it prior to or on the Closing Date.
(c) Officer's Certificate. Sellers shall have received a certificate,
dated the Closing Date, of an officer of Buyer to the effect that the conditions
specified in Sections 8.2(a) and (b) above have been fulfilled.
(d) Bankruptcy Court Approval. The Bankruptcy Court Approval shall be
in full force and effect and shall not have been stayed, enjoined or modified.
(e) No Injunction. No preliminary or permanent injunction or other
Order issued by, and no Proceeding or Order by or before any Governmental Entity
nor any Law or Order promulgated or enacted by any Governmental Entity shall be
in effect or pending which declares this Agreement invalid or unenforceable in
any respect or which materially delays, restrains, enjoins or otherwise
prohibits or seeks to restrain, enjoin or otherwise prohibit the transactions
contemplated hereby.
(f) HSR Act. Any applicable waiting period under the HSR Act or any
other applicable Antitrust Laws, in each case, if required, shall have expired
or shall have been earlier terminated, and all necessary approvals under all
applicable Antitrust Laws shall have been obtained.
(g) Indemnity Escrow Agreement. Buyer shall have executed and
delivered to Sellers the Indemnity Escrow Agreement.
(h) Transition Services Agreement. Buyer shall have executed and
delivered to Sellers the Transition Services Agreement.
40
(i) Headquarters Lease. Buyer shall have executed and delivered to
Sellers the Headquarters Lease.
(j) Trademark License Agreement. Buyer shall have executed and
delivered to Sellers the Trademark License Agreement.
ARTICLE 9
TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing:
(a) by written agreement of the Company and Buyer;
(b) by either Buyer or the Company:
(i) if the Closing shall not have occurred on or before the
date that is the earliest of (x) May 21, 2003; and (y) twenty-two Business Days
following the entry of the Bankruptcy Court Approval; provided, however, that
the terminating party is not in material and willful breach of any of its
representations and warranties contained in this Agreement and has not failed in
any material respect to perform any of its obligations hereunder; or
(ii) if there shall be any Law or regulation that makes
consummation of the transactions contemplated hereby illegal or otherwise
prohibited, or if any judgment, injunction, order or decree permanently
restraining, prohibiting or enjoining Buyer or the Company from consummating the
transactions contemplated hereby is entered and such judgment, injunction, order
or decree shall become final;
(c) by Buyer:
(i) if there shall have been a breach by any Seller of any of
its representations, warranties, covenants or agreements contained in this
Agreement, which breach would result in the failure to satisfy one or more of
the conditions set forth in Section 8.1, and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within 15
days after written Notice thereof shall have been received by the Company; or
(ii) if (A) the Bankruptcy Court Approval shall not have been
entered on or before April 22, 2003 or (B) the Bankruptcy Court Approval shall
fail to be in full force and effect or shall have been stayed, enjoined,
reversed, modified or amended in any respect without the prior written consent
of Buyer; or
(d) by the Company if there shall have been a breach by Buyer of any
of its representations, warranties, covenants or agreements contained in this
Agreement, which breach would result in the failure to satisfy one or more of
the conditions set forth in Section 8.2, and such breach shall be incapable of
being cured or, if capable of being cured, shall not have been cured within 15
days after written Notice thereof shall have been received by Buyer.
41
9.2 Consequences of Termination. In the event of any termination of this
Agreement by either or both of Buyer and the Company pursuant to Section 9.1,
written Notice thereof shall forthwith be given by the terminating party to the
other party hereto, specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall thereupon terminate and become
void and of no further force and effect, and the transactions contemplated
hereby shall be abandoned without further action of the parties hereto;
provided, however, that such termination shall not relieve any party hereto of
any Liability for willful breach of this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification of Buyer. Subject to the time and other limitations in
Articles 4 and 10, Sellers, jointly and severally, covenant and agree to
indemnify and hold harmless Buyer, its officers, directors, employees, agents
and Affiliates (the "Buyer Indemnitees") from and against, and pay or reimburse
the Buyer Indemnitees for, any and all Liabilities, losses, claims, damages,
punitive damages, causes of action, lawsuits, administrative proceedings
(including informal proceedings), investigations, audits, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties, fines,
interest (including interest from the date of such damages) and costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements of every kind, nature and description) (collectively, "Losses")
resulting from or arising out of:
(a) the inaccuracy of any representation or warranty made by any
Seller herein or in any certificate delivered pursuant to this Agreement;
(b) any failure of any Seller to perform any covenant or agreement
hereunder or to fulfill any other obligation in respect hereof; and
(c) any Excluded Assets or any Excluded Liabilities, including fines,
penalties and claims by any Person for damages or monetary relief to the extent
such fines, penalties or claims are with respect to pre-Closing periods and
relate to facts, events or circumstances arising or occurring on or prior to the
Closing Date. The foregoing indemnification by Sellers shall not extend to or
include Liabilities for investigation, remediation, restoration, including
restoration of injuries to natural resources, response or RCRA corrective action
with respect to the matters set forth on Schedule 10.1(c).
Sellers' obligations under this Article 10 shall not be affected or reduced
by any knowledge of Buyer at or prior to the Closing of any breach by any Seller
of any representation, warranty, covenant or agreement, regardless of whether
Buyer gave written Notice thereof to Seller, or vice versa, and regardless of
whether Buyer elected to consummate the transactions contemplated hereby despite
such knowledge.
10.2 Indemnification of Sellers. Buyer hereby agrees to indemnify and hold
harmless each Seller, its officers, directors, employees, agents and Affiliates
(the "Seller Indemnitees") from and against, and pay or reimburse the Seller
Indemnitees for, any and all Losses resulting from or arising out of:
42
(a) the inaccuracy of any representation or warranty made by Buyer
herein or in any certificate delivered pursuant to this Agreement;
(b) any failure of Buyer to perform any covenant or agreement made or
contained in this Agreement or to fulfill any other obligation in respect
hereof;
(c) the Assumed Liabilities; and
(d) Liabilities with respect to, arising out of or relating to, the
ownership, possession or use of the Acquired Assets and the operation of the
Business on or after the Closing Date.
10.3 Indemnification Procedures.
(a) In order for a Buyer Indemnitee or a Seller Indemnitee (an
"Indemnified Party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving a claim or demand made
by any person or entity against the Indemnified Party (a "Third Party Claim"),
such Indemnified Party must notify the parties obligated to provide
indemnification pursuant to Section 10.1 or 10.2 hereof (each, an "Indemnifying
Party") in writing, and in reasonable detail, of the Third Party Claim promptly
after receipt by such Indemnified Party of written Notice of the Third Party
Claim; provided, however, that failure to give any Notice or make any deliveries
required under this Article 10 shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure. Such notice shall state the nature and
the basis of such claim and, if estimable, a reasonable estimate of the amount
thereof. Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, promptly after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim.
(b) The Indemnifying Party shall have the right to defend and settle,
at its own expense and by its own counsel (provided that such counsel is not
reasonably objected to by the Indemnified Party), any Third Party Claim;
provided that, and for so long as, the Indemnifying Party pursues the same in
good faith and diligently and provided that the Third Party Claim does not
relate to an actual or potential Loss to which Section 10.3(e) applies in which
the Indemnified Party is Buyer. If the Indemnifying Party undertakes to defend
or settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Indemnifying Party and
its counsel in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party that are in the Indemnified Party's possession or
control and making employees of the Indemnified Party available on a mutually
convenient basis to provide additional information and explanation of any
materials provided hereunder. Notwithstanding the foregoing, the Indemnified
Party shall have the right to participate in any matter through counsel of its
own choosing at its own expense (unless there is a conflict of interest that
prevents counsel for the Indemnifying Party from representing the Indemnified
Party, in which case the Indemnifying Party will reimburse the Indemnified Party
for the reasonable expenses of its counsel). After the Indemnifying Party has
notified the Indemnified Party of its intention to
43
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except to the extent such participation is requested by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses and
out-of-pocket expenses, and except in the case of a Third Party Claim relating
to an actual or potential Loss to which Section 10.3(e) applies in which Buyer
is the Indemnified Party.
(c) No Indemnifying Party shall, without the written consent of the
Indemnified Party, effect the settlement or compromise of, or consent to entry
of any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the Indemnified Party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the Indemnified Party from all Liability arising out of
such action or claim, (ii) does not include a statement as to, or an admission
of, fault, culpability or a failure to act by or on behalf of any Indemnified
Party, and (iii) does not include any injunctive or non-monetary relief.
(d) If the Indemnifying Party does not assume the defense of any
Third Party Claim, then the Indemnified Party may defend against such Third
Party Claim in such manner as it reasonably deems appropriate at the expense of
the Indemnifying Party.
(e) Notwithstanding anything to the contrary in this Article 10, if
at any time, in the reasonable opinion of Buyer as the Indemnified Party (notice
of which opinion shall be given in writing to the Indemnifying Party), any Third
Party Claim seeks material, prospective, non-monetary relief against Buyer, its
operation of the Business or its use or operation of the Acquired Assets, then
such Indemnified Party shall have the right to control or assume (as the case
may be) the defense of any such Third Party Claim and the amount of any judgment
or settlement and the reasonable costs and expenses of defense (including, but
not limited to, fees and disbursements of counsel and experts) shall be included
as part of the indemnification obligations of the Indemnifying Party hereunder.
If the Indemnified Party elects to exercise such right, then the Indemnifying
Party shall have the right to participate in, but not control, the defense of
such Third Party Claim at the sole cost and expense of the Indemnifying Party.
(f) Notice given by Buyer to the Company shall constitute valid
Notice to all Seller Indemnitees, and with respect to any Third Party Claim with
respect to which more than one Seller Indemnitee is an indemnified party or a
potential indemnified party, all such Seller Indemnitees shall select a single
Seller Indemnitee to act as representative for all such Seller Indemnitees with
respect to such Third Party Claim, and (i) such representative shall be
authorized to make authorizations and consents on behalf of each such Seller
Indemnitee, and (ii) Buyer shall, with respect to all matters relating to such
Third Party Claim, be entitled to rely on the statements, authorizations and
consents of such representative as being the statement, authorization or consent
of each such Seller Indemnitee.
(g) In the event an Indemnified Party has indemnification claim
against any Indemnifying Party under the Agreement that does not involve a Third
Party Claim being
44
asserted against or sought to be collected from such Indemnified Party, the
Indemnified Party shall deliver Notice of such claim with reasonable promptness
to the Indemnifying Party. The failure by any Indemnified Party so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Party, except to the extent that the
Indemnifying Party has been actually prejudiced by such failure. Such notice
shall state the nature and the basis of such claim, and, if estimable, a
reasonable estimate of the amount thereof. If the Indemnifying Party notifies
the Indemnified Party that it does not dispute the claim described in such
Notice or does not respond to such claim within 60 days of receipt thereof, the
Loss arising from the claim specified in such Notice will be conclusively deemed
a liability of the Indemnifying Party and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand following the final
determination thereof. In the event of any dispute of a claim, the Indemnifying
Party and the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations within a
period of thirty (30) days, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
10.4 Survival of Representations and Warranties. The representations and
warranties made in this Agreement shall survive for a period of 12 months from
the Closing Date and shall not be extinguished by the Closing or any
investigation made by or on behalf of any party hereto.
10.5 Termination of Indemnification. The obligations to indemnify and hold
harmless any party pursuant to Section 10.1 or Section 10.2 shall terminate on
the date that is 12 months after the Closing Date (the "Indemnity Termination
Date"). If, prior to the Indemnity Termination Date, an Indemnified Party shall
have given notice to the Indemnifying Party of a claim for indemnification then
the right to indemnification with respect to such claim shall remain in effect
without regard to when such matter shall have been finally determined.
10.6 Limitations on Indemnification. The indemnification provided for in
Sections 10.1 and 10.2 shall be subject to the following limitations:
(a) Sellers shall not be obligated to pay any amounts for
indemnification under Section 10.1(a) until the aggregate indemnification
payments equal $1.25 million (the "Basket Amount"), whereupon Sellers shall be
obligated to pay all amounts in excess of the Basket Amount up to the Indemnity
Escrow. Sellers shall be obligated to pay any amounts for indemnification under
Sections 10.1(b) and 10.1(c) from the first dollar of Loss in full up to the
Indemnity Escrow. Buyer shall not be obligated to pay any amounts for
indemnification under Section 10.2(a) until the aggregate indemnification
payments equal the Basket Amount, whereupon Buyer shall be obligated to pay all
amounts in excess of the Basket Amount up to $25 million. Buyer shall be
obligated to pay any amounts for indemnification under Sections 10.2(b) and
10.2(c) from the first dollar of Loss in full up to $25 million.
(b) The Indemnity Escrow (as such may be reduced from time to time by
disbursements in accordance with Section 4.2 herein) shall be the Buyer
Indemnitees' sole and exclusive recourse for the satisfaction of any
indemnification obligations of Sellers pursuant to Section 10.1 and in no event
shall Sellers' indemnification obligations in the aggregate exceed the amount of
the Indemnity Escrow. In no event shall Buyer's indemnification obligations
under this Agreement exceed $25 million.
45
(c) The indemnification provided for in this Article 10 shall be the
exclusive right and remedy with respect to any claim or cause of action based
upon, relating to or arising out of this Agreement or otherwise in respect of
the transactions contemplated hereby, whether such claim or cause of action
arises out of any contract, tort or otherwise and no such claim or cause of
action shall be enforceable unless made in accordance with the procedures, and
within the time periods, set forth in this Article 10. Notwithstanding the
foregoing sentence, either party shall be entitled to any additional remedies
that may be available under law or equity for a breach of a representation or
warranty to the extent such party can demonstrate fraud or willful or knowing
misrepresentation by the other party in a non-appealable final action before a
court of competent jurisdiction.
(d) (i) Notwithstanding any other provision of this Agreement,
Sellers shall be obligated for Losses in respect of Liabilities and obligations
arising under any Environmental Law under this Article 10 only to the extent
that:
(x) investigation and/or remediation of any Hazardous
Substance is required under an applicable Environmental Law or by
a Governmental Entity or pursuant to a claim brought by any third
party;
(y) the remediation standards selected under the
applicable Environmental Law are cost-effective and reasonable
under the circumstances; and
(z) the methods selected for conducting the investigation
and/or remediation are cost-effective and reasonable under the
circumstances.
(ii) If any claim arising under this Article 10 involves
contamination that occurred both before and after the Closing Date, the cost of
remediation shall be allocated between Buyer and Sellers in proportion to each
party's contribution to the contamination to the extent such contribution can be
determined and otherwise in proportion to the period of time each party has
owned or had an interest in the property.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses. Except as set forth in this Agreement and whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
all costs and expenses incurred or to be incurred by such party in connection
with this Agreement and the consummation of the transactions contemplated
hereby. As between Buyer and Sellers, Sellers shall bear all costs of any
Persons (other than Buyer, its agents or Affiliates), entitled to reimbursement
by the Bankruptcy Court.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Sellers without the prior written
consent of Buyer, or by Buyer without the prior written consent of Sellers,
provided, that Buyer may assign its rights hereunder to one or more wholly-owned
Subsidiaries of Buyer, which assignment shall not relieve Buyer of
46
its obligation hereunder. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
11.3 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of Seller and Buyer, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement except as expressly set forth herein. Without limiting the foregoing,
no direct or indirect holder of any equity interests or securities of either
Seller or Buyer (whether such holder is a limited or general partner, member,
stockholder or otherwise), nor any Affiliate of either Seller or Buyer, nor any
Representative, or controlling Person of each of the parties hereto and their
respective Affiliates, shall have any liability or obligation arising under this
Agreement or the transactions contemplated hereby.
11.4 Notices. All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or that are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by a nationally recognized overnight
delivery service with charges prepaid, or transmitted by hand delivery, or
facsimile, addressed as set forth below, or to such other address as such party
shall have specified most recently by written Notice. Notice shall be deemed
given on the date of service or transmission if personally served or transmitted
by facsimile with confirmation of receipt; provided, that if delivered or
transmitted on a day other than a Business Day or after normal business hours,
notice shall be deemed given on the next Business Day. Notice otherwise sent as
provided herein shall be deemed given on the next Business Day following timely
deposit of such Notice with an overnight delivery service:
If to any Seller: National Steel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
With copies to: National Steel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President,
General Counsel and Secretary
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
47
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
If to Buyer: United States Steel Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
President
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
With copies to: United States Steel Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Assistant General Counsel
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
and
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Rejection of or refusal to accept any Notice, or the inability to deliver any
Notice because of changed address of which no Notice was given, shall be deemed
to be receipt of the Notice as of the date of such rejection, refusal or
inability to deliver.
11.5 Choice of Law. This Agreement shall be construed and interpreted, and
the rights of the parties shall be determined, in accordance with the
substantive laws of the State of Delaware, without giving effect to any
provision thereof that would require the application of the substantive laws of
any other jurisdiction, except to the extent that such laws are superseded by
the Bankruptcy Code.
11.6 Entire Agreement; Amendments and Waivers. This Agreement, the
Confidentiality Agreement and all agreements entered into pursuant hereto and
all certificates and instruments delivered pursuant hereto and thereto
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties. This
Agreement may be amended, supplemented or modified, and any of the terms,
covenants, representations, warranties or conditions may be waived, only by a
written instrument executed by the Buyer and the Company, or in the case of a
waiver, by the party waiving compliance. No
48
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), and
no such waiver shall constitute a continuing waiver unless otherwise expressly
provided.
11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Counterparts to this
Agreement may be delivered via facsimile. In proving this Agreement, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
11.8 Invalidity. If any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, the parties
shall use their reasonable efforts, including the amendment of this Agreement,
to ensure that this Agreement shall reflect as closely as practicable the intent
of the parties hereto on the date hereof.
11.9 Headings. The table of contents and the headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of, or to affect the meaning or interpretation of, this
Agreement.
11.10 Exclusive Jurisdiction. Without limiting any party's right to appeal
any order of the Bankruptcy Court, (a) the Bankruptcy Court shall retain
exclusive jurisdiction to enforce the terms of this Agreement and to decide
(insofar as they relate to Sellers) any claims or disputes which may arise or
result from, or be connected with, this Agreement, any breach or default
hereunder, or the transactions contemplated hereby, and (b) any and all claims,
actions, causes of action, suits and proceedings related to the foregoing shall
be filed and maintained only in the Bankruptcy Court, and the parties hereby
consent to and submit to the jurisdiction and venue of the Bankruptcy Court and
shall receive Notices at such locations as indicated in Section 11.4.
11.11 WAIVER OF RIGHT TO TRIAL BY JURY. SELLERS AND BUYER HEREBY WAIVE TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
11.12 Beneficiaries. Nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
under or by reason of this Agreement, except as expressly provided herein.
11.13 Counting. If the due date for any action to be taken under this
Agreement (including the delivery of Notices) is not a Business Day, then such
action shall be considered timely taken if performed on or prior to the next
Business Day following such due date.
11.14 Preparation of this Agreement. Buyer and Sellers hereby acknowledge
that (i) Buyer and Sellers jointly and equally participated in the drafting of
this Agreement and all other agreements contemplated hereby, (ii) Buyer and
Sellers have been adequately represented and advised by legal counsel with
respect to this Agreement and the transactions contemplated
49
hereby, and (iii) no presumption shall be made that any provision of this
Agreement shall be construed against either party by reason of such role in the
drafting of this Agreement and any other agreement contemplated hereby.
[Remainder of Page Intentionally Left Blank]
50
IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly executed
and delivered by the duly authorized officers of Sellers and Buyer as of the
date first above written.
UNITED STATES STEEL CORPORATION
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
NATIONAL STEEL CORPORATION
By:__________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and Chief Executive
Officer
D. W. PIPELINE COMPANY
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
GRANITE INTAKE CORPORATION
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL ACQUISITION CORPORATION
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
Signature Pages to Asset Purchase Agreement
NATIONAL CASTER ACQUISITION CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL CASTER OPERATING COMPANY
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL CASTING CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL COATING LIMITED CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL COATING LINE CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
Signature Pages to Asset Purchase Agreement
NATIONAL MATERIALS PROCUREMENT CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL PICKLE LINE CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NS HOLDINGS CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
PROCOIL CORPORATION
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
Signature Pages to Asset Purchase Agreement
NATIONAL STEEL PELLET COMPANY
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
▇▇▇▇▇ ORE MINING COMPANY
By:___________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
Signature Pages to Asset Purchase Agreement
