REORGANIZATION AND EXCHANGE AGREEMENT
AMONG
TRANSTAR, INC.,
TRANSTAR HOLDINGS, L.P.,
AND
USX CORPORATION
INDEX
Page
I. The Reorganization
1.1 Recapitalization of Holdings Companies.......................3
1.2 Exchange of Holdings Stock...................................3
1.3 Exchange of Management Stock.................................3
1.4 Exchange of Management Options..............................4
II. Asset & Liability Allocations
2.1 General Rule.................................................4
2.2 B&LE Dividend in Kind........................................4
2.3 Intercompany Accounts........................................5
2.4 Release of Cross Guarantees..................................6
2.5 Bank Debt Repayment and Allocation...........................8
2.6 Post-Closing Payments for Pre-Closing Items.................11
III. Employee Matters
3.1 Continuation of Employment..................................12
3.2 Pension Plans...............................................12
3.3 Thrift Plans................................................17
3.4 Insurance and Other Welfare Benefit Plans...................19
3.5 Retirees....................................................21
3.6 Employee Transfers..........................................21
3.7 Management Plans............................................21
IV. Tax Matters
4.1 Tax Indemnity...............................................22
4.1.1 Definitions........................................22
4.1.2 Indemnification....................................26
4.1.3 Credit Enhancement Provided by Holdings............39
4.1.4 Acquisition of 50% or More of Ownership Interests
in Holdings........................................43
4.1.5 Circumstances for USX Credit Enhancements..........44
4.1.6 Duration of Indemnity Provisions/Survival of
Indemnification/Successors and Assigns.............46
4.2 Tax Matters Agreement.......................................46
V. Transportation Matters
5.1 Transportation Services Agreements..........................46
5.2 Non-Interference............................................47
VI. Amendments to 1988 Agreements
6.1 Stockholders Agreement......................................48
6.2 Asbestos Assumption and Indemnification Agreement...........48
6.3 Environmental Indemnification Agreement.....................49
6.4 USS Name License Agreement..................................49
6.5 Agreement Concerning Leases, Licenses and Easement..........50
6.6 Asset Purchase Agreement...................................50
6.7 Services and Technical Assistance Agreement.................50
VII. Inter-Company Services
7.1 Services Agreement..........................................50
7.2 B&LE Services Agreement.....................................51
7.3 Completion of Services Agreement............................51
7.4 Completion of B&LE Services Agreement.......................60
7.5 Building Lease..............................................60
VIII. Mutual Assumptions Concerning Transtar and the Transtar Companies
8.1 Mutual Assumptions..........................................60
8.1.1 Existence and Organization.........................61
8.1.2 Corporate Authority................................62
8.1.3 Conflicts and Consents.............................63
8.1.4 Transtar Disclosure Documents......................63
8.1.5 Financial Statements...............................63
8.1.6 Legal Proceedings and Violations...................64
8.1.7 Changes Since December 31, 1999....................65
8.1.8 Taxes..............................................65
8.1.9 Benefit Plans......................................66
8.1.10 Material Contracts.................................67
8.1.11 Insurance..........................................68
8.1.12 Title to Properties................................68
8.1.13 Condition and Sufficiency of Assets................69
8.1.14 Environmental Matters..............................69
8.1.15 Labor Matters......................................71
8.1.16 No Prior Discussions..............................71
IX. Representations and Warranties
9.1 Representations and Warranties of USX.......................72
9.1.1 Existence and Organization.........................72
9.1.2 Corporate Authority...............................72
9.1.3 Conflicts and Consents.............................73
9.1.4 No Prior Discussions...............................73
9.1.5 Ownership of USX Stock.............................73
9.2 Representations and Warranties of Holdings..................73
9.2.1 Existence and Organization.........................73
9.2.2 Authority..........................................74
9.2.3 Conflicts and Consents.............................74
9.2.4 No Prior Discussions...............................74
9.2.5 Ownership of Holdings Stock........................75
9.3 Representations Exclusive..................................75
X. Certain Covenants
10.1 Interim Operations..........................................75
10.2 Regulatory Approvals........................................78
10.3 Future Disposition of Units.................................78
10.4 Consents....................................................80
10.5 Due Diligence and Access....................................80
10.6 Relation to Holdings Notes..................................81
10.7 Post Closing Access.........................................81
10.8 Further Assurances..........................................81
10.9 Holdings Officer............................................82
10.10 Commercially Reasonable Efforts.............................82
XI. Conditions to Closing
11.1 Conditions Precedent to Obligations of USX..................83
11.1.1 Opinion of Counsel.................................83
11.1.2 Representations and Warranties.....................83
11.1.3 Covenants and Agreements..........................83
11.1.4 Material Adverse Change............................84
11.1.5 PBGC...............................................84
11.1.6 Good-Standing Certificates.........................84
11.1.7 Execution of Documents.............................84
11.2 Conditions Precedent to Obligations of Holdings.............85
11.2.1 Opinions of Counsel................................85
11.2.2 Representations and Warranties.....................85
11.2.3 Covenants and Agreements...........................85
11.2.4 Material Adverse Change............................86
11.2.5 Exchanged Stock....................................86
11.2.6 Financing..........................................86
11.2.7 PBGC...............................................87
11.2.8 Good-Standing Certificates.........................87
11.2.9 Execution of Documents.............................87
11.3 Mutual Conditions Precedent.................................87
11.3.1 No Injunctions.....................................87
11.3.2 STB Approval.......................................87
11.3.3 HSR Filing.........................................88
11.3.4 Tax Free Reorganization............................88
11.3.5 Execution of Accession Agreement by Trustee.......88
XII. Closing
12.1 Closing Date................................................88
12.2 The Closing.................................................88
12.3 Effective Date..............................................91
12.4 Termination.................................................91
12.5 Time Is Of The Essence......................................92
XIII. Miscellaneous
13.1 Expenses....................................................92
13.2 Notices.....................................................93
13.3 Applicable Laws; Counterparts, Consent to Jurisdiction......94
13.4 Entire Agreement............................................94
13.5 Advisors....................................................95
13.6 Publicity...................................................95
13.7 Descriptive Heading.........................................95
13.8 Severability................................................96
13.9 Survival....................................................96
13.10 Parties.....................................................96
13.11 Amendment...................................................96
13.12 Successors and Assigns......................................96
Exhibits and Schedules
Exhibit List
A ▇▇▇▇▇ Agreement
B Accession Agreement
C Tax Matters Agreement
D Substitute Fleet TSA
E Substitute TSA
F Stockholders Agreement Termination
G Asbestos Agreement
H Environmental Indemnification Agreement
I Environmental Agreement Termination
J USS Name License Agreement
K Asset Purchase Agreement Amendment
L 1988 Services Agreement Amendment
M White & Case Opinion
N USX Opinion
O Services Charging Formula
P Mediation, Arbitration and Force Majeure
Q Monroeville Building Lease Terms
Schedule List
2.4(c) ▇▇▇▇▇ Calculation
3.2(x) Non-Shared Employees
3.2(y) Shared Employees
3.6(a) Transferred Non-Union Employees
3.6(b) Transferred Union Represented Employees
8.1.1 Capitalization of Transtar Companies
8.1.9 Transtar Plans not filed as exhibits to
Transtar Disclosure Documents
8.1.13(x) Excluded Assets of Holdings Companies
8.1.13(y) Excluded Assets of USX Companies
8.1.14 Compliance with Environmental Laws
10.4 Required Consents
REORGANIZATION AND EXCHANGE AGREEMENT
This Reorganization and Exchange Agreement (this "Agreement") is
entered into as of this 4th day of October, 2000 by and among Transtar, Inc., a
Delaware corporation ("Transtar"), Transtar Holdings, L.P., a Delaware limited
partnership ("Holdings") and USX Corporation, a Delaware corporation ("USX").
WITNESSETH:
WHEREAS: The authorized capitalization of Transtar consists of 10,000
shares of Class A Voting Common Stock ("A Stock") and 10,000 shares of Class B
Non-voting Common Stock ("B Stock");
WHEREAS: Holdings owns beneficially and of record 5,100 shares of A
Stock and 5,100 shares of B Stock (collectively, the "Holdings Stock");
WHEREAS: USX owns beneficially and of record 4,900 shares of A Stock
and 3,900 shares of B Stock (collectively, the "USX Stock");
WHEREAS: PNC Bank, N.A. (formerly Pittsburgh National Bank), as trustee
under the Management Stock Trust Agreement dated December 28, 1988 (the
"Trustee"), holds of record 50 shares of B Stock (the "Management Stock") in
connection with the Transtar, Inc. Equity Participation Plan, as amended (the
"Management Stock Plan");
WHEREAS: As of the date hereof, of the 1,000 shares of management stock
originally issued to the Trustee in connection with the Management Stock Plan,
50 shares remain outstanding as Management Stock and 950 shares are now held in
treasury by Transtar, all 950 shares of which have been previously awarded to
participants who elected to retire and receive benefits in accordance with the
Management Stock Plan;
WHEREAS: Of all of the options granted to participants under the
Transtar, Inc. Stock Option Plan, as amended (the "Management Option Plan"),
options representing 400 shares of B Stock are outstanding (the "Management
Options");
WHEREAS: Transtar is a holding company that directly or indirectly owns
all of the issued and outstanding stock of Bessemer and Lake Erie Railroad
Company ("B&LE"); the Duluth, Missabe and Iron Range Railway Company ("DM&IR");
the Pittsburgh & Conneaut Dock Company ("Dock"); USS Great Lakes Fleet, Inc.
("Fleet"); Birmingham Southern Railroad Company ("B Southern"); Elgin, Joliet
and Eastern Railway Company ("EJ&E"); Fairfield Southern Company, Inc. ("F
Southern"); The Lake Terminal Railroad Company ("Lake Terminal"); McKeesport
Connecting Railroad Company ("MCC"); Mobile River Terminal Company ("MRT");
Union Railroad Company ("URR"); Warrior and Gulf Navigation Company ("W&G"), Mon
Valley Railway Company ("Mon Valley"), Tracks Traffic and Management Services,
Inc.; GLF Credit Corporation ("GLF Credit"), GLF Great Lakes Corporation ("GLF
Lakes"), and Cuyahoga Dock, Inc. ("Cuyahoga") (collectively, the "Transtar
Companies");
WHEREAS: A Stockholders Agreement, dated December 29, 1988, among USX;
Blackstone Transportation Partners LP; a Delaware limited partnership and a
predecessor in interest to Holdings; Blackstone Capital Partners LP, a Delaware
limited partnership and a predecessor in interest to Holdings and Transtar (the
"Stockholders Agreement") provides that the By-laws of Transtar (the "By-laws")
can be amended by unanimous action of all holders of A Stock, requires that
Holdings and USX will vote together to elect three individuals nominated by
Holdings and two nominated by USX, and imposes significant restrictions on the
ability of any shareholder to dispose of its shares of Transtar;
WHEREAS: The By-laws provide that most matters require unanimous
approval of directors nominated by both USX and Holdings;
WHEREAS: Holdings and USX have significant differences concerning the
future direction of Transtar and its subsidiaries: and
WHEREAS: In order to resolve these issues and to allow Transtar and its
various subsidiaries to continue to operate profitably in their ongoing
transportation businesses, the parties have concluded that it is in the best
interest of the owners, employees, customers and suppliers of Transtar and its
subsidiaries to reorganize to result in USX owning 100% of Transtar and certain
of its subsidiaries and in Holdings owning 100% of the remaining Transtar
subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the parties do hereby agree as
follows:
Article I
The Reorganization
Section 1.1 Recapitalization of Holdings Companies.
On or before the Closing Date, as hereinafter defined, Transtar will
cause each of B&LE, DM&IR, Fleet and Dock to convert all of its issued and
outstanding shares of common stock into 5,100 shares of voting common stock and
5,100 shares of non-voting common stock each (collectively, the "Exchanged
Stock").
Section 1.2 Exchange of Holdings Stock.
On the Closing Date, Transtar will exchange all of the Holdings Stock
for 5,100 shares of voting stock and 5,050 shares of non-voting stock in each of
B&LE, DM&IR, Fleet and Dock. (B&LE, DM&IR, Fleet and Dock, together with Mon
Valley, Cuyahoga, GLF Credit and GLF Lakes, to hereinafter be collectively
called the "Holdings Companies", and individually each to be called a "Holdings
Company", and Transtar and all of its other direct and indirect subsidiaries to
be collectively called the "USX Companies", and individually each to be called a
"USX Company").
Section 1.3 Exchange of Management Stock.
On the Closing Date, Transtar will exchange a number of shares of
non-voting stock in each of the B&LE, DM&IR, Fleet and Dock ("New Management
Stock") acceptable to Holdings for all of the Management Stock.
Section 1.4 Exchange of Management Options.
On the Closing Date, each of the B&LE, DM&IR, Fleet and Dock will have
created new management option plans, will reserve stock for issuance pursuant
thereto and will exchange stock options in each of the B&LE, DM&IR, Fleet and
Dock or, at Holdings option, options on limited partnership interests in
Holdings ("New Management Options") for the Management Options.
Article II
Asset & Liability Allocations
Section 2.1 General Rule.
Except as otherwise specifically provided in this Agreement and the
Exhibits and Schedules attached hereto, each of the Holdings Companies and the
USX Companies shall continue to remain liable for all of their liabilities as
they exist on the Closing Date whether known or unknown: absolute or contingent;
arising by contract, tort, statute, ordinance, regulation, judicial decree or
administrative order; recorded or unrecorded in the accounting and financial
record; or arising in the past, present or future. Except as otherwise
specifically provided in this Agreement and the Exhibits and Schedules attached
hereto, each of the Holdings Companies and the USX Companies shall continue to
own or lease all of their existing assets. All parties acknowledge that all
assets of the Holdings Companies, on the one hand, and the USX Companies, on the
other hand, will be delivered in their "AS IS WHERE IS" condition on the Closing
Date and that no party is making any representations express or implied
concerning the assets of the USX Companies and the Holdings Companies.
Section 2.2 B&LE Dividend in Kind.
Immediately prior to the Closing Date, B&LE shall declare and transfer
to Transtar as a dividend in kind (i) all of the computer equipment, software,
license agreements, furniture, fixtures and other personal property used by B&LE
exclusively in the provision of services to the Holdings Companies, USX and the
USX Companies, (ii) all books, records and printouts held by the B&LE and
related solely to USX and the USX Companies, and (iii) copies of all books,
records and printouts held by the B&LE and related to USX and the USX Companies
for which the originals are not part of the dividend in (ii) above (the "B&LE
Dividend"); provided, however, the B&LE Dividend shall not include any software,
license agreements or other personal property used solely by B&LE in connection
with the provision of services to one or more of the Holdings Companies. For
purposes of this agreement the value of all such assets shall be deemed to be
the net book value of such assets.
Section 2.3 Intercompany Accounts.
(a) On the Closing Date, Transtar shall cause all intercompany accounts
(other than those specified in Section 2.3(b) below) between it and any Holdings
Company to be settled. Transtar will, as necessary, contribute existing
intercompany indebtedness as a capital contribution to one or more of the
Holdings Companies or cause one or more of the Holdings Companies to declare and
pay dividends to Transtar in order to achieve this result. On the Closing Date,
job protection liabilities related to the B&LE employees created as a result of
the July 15, 1997 B&LE/TCIU Implementing Agreement shall be allocated to and
shall thereafter remain with the company who, immediately following the Closing
Date, employs the individual to whom the liability is attributable; provided,
however, if such employee is a Union B&LE Transferee (as defined in Section
3.2(d) hereof), such liability shall remain with the B&LE until such time as the
employee is actually transferred to a USX Company, whereupon such liability will
be transferred to, and shall thereafter remain with, such USX Company.
(b) On the Closing Date, Transtar shall cause each of the USX
Companies, on the one hand, and the Holdings Companies on the other hand to
settle all outstanding payables and receivables between them except for (i)
matters relating to ordinary course commercial transactions, including, but not
limited to, the provision of transportation services by multiple carriers, which
shall remain outstanding and be paid in the normal course of business (ii) tax
matters which are specifically addressed in the Tax Matters Agreement referred
to in Section 4.2 hereof and (iii) Cross Guarantees (as defined in Section
2.4(b) hereof) and allocations related to the Transtar Credit Agreement (as
defined in Section 2.5 hereof).
Section 2.4 Release of Cross Guarantees.
(a) Prior to the Closing Date, the parties shall identify all
guarantees, indemnities or other credit support provided between (i) any of the
USX Companies (excluding Transtar), on the one hand, and (ii) any Holdings
Company, on the other hand, (the "Internal Guaranteed Contracts") and shall
enter into good faith negotiations to terminate or modify all Internal
Guaranteed Contracts in a manner to release or otherwise relieve any obligation
contingent or otherwise on a Holdings Company, in the case of USX or Transtar,
or a USX Company (excluding Transtar), in the case of Holdings. To the extent
that any such Internal Guaranteed Contract is not so terminated or modified,
such Internal Guaranteed Contract shall remain in full force and effect and (i)
to the extent any Holdings Company is the beneficiary of any Internal Guaranteed
Contract, the relevant Holdings Company shall, in each case, severally and not
jointly with any other Holdings Company; indemnify and hold the relevant USX
Company harmless from and against any and all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses (including,
without limitation, penalties, fines and reasonable attorneys' fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding) (all hereinafter referred to collectively as "Losses") suffered,
sustained, incurred, or required to be paid by such USX Company by reason of
such Internal Guaranteed Contract and (ii) to the extent that any USX Company is
the beneficiary of any Internal Guaranteed Contract, the relevant USX Company
shall, in each case severally and not jointly with any other USX Company,
indemnify and hold the relevant Holdings Company harmless from and against any
and all Losses suffered, sustained, incurred or required to be paid by such
Holdings Company by reason of such Internal Guaranteed Contract.
(b) Prior to the Closing Date, the parties shall identify all
guarantees, indemnities or other credit support provided by Transtar (including,
without limitation, instances where Transtar and any Holdings Company are joint
obligors) on behalf of any Holdings Company (the "Third Party Guaranteed
Contracts" and, collectively with the Internal Guaranteed Contracts, the "Cross
Guarantees") and Holdings shall enter into good faith negotiations to terminate
or otherwise modify all Third Party Guaranteed Contracts in a manner to release
all obligations, contingent or otherwise, upon Transtar. To the extent that any
such Third Party Guaranteed Contract is not so terminated or modified, such
Third Party Guaranteed Contract shall remain in full force and effect and,
Holdings and the relevant Holdings Company shall jointly and severally indemnify
and hold Transtar harmless from and against any and all Losses suffered,
sustained, incurred or required to be paid by Transtar by reason of such Third
Party Guaranteed Contract: provided, however, Holdings shall not be obligated
with respect to any such Third Party Guaranteed Contract if one of the following
has occurred:
(i) A third party, with an investment grade credit rating from
▇▇▇▇▇'▇ or Standard and Poors and otherwise reasonably
acceptable to USX and Transtar (it being understood that USX
or Transtar, as the case may be, shall be considered
reasonable in rejecting any third party that (x) competes with
the U.S. Steel Group of USX in the markets in which the U.S.
Steel Group is then active or (y) competes directly with
Transtar in the provision of transportation services),
unconditionally indemnifies Transtar with respect to all
Losses suffered, sustained, incurred or required to be paid by
Transtar by reason of such Third Party Guaranteed Contract;
provided that the other terms of such indemnity must be
acceptable to Transtar in its reasonable discretion; or
(ii) Some other provision has been made to (1) release Transtar
from and against any and all liability, contingent or
otherwise, under such Third Party Guaranteed Contract or (2)
indemnify Transtar from and against any and all Losses
suffered, sustained, incurred or required to be paid by
Transtar by reason of such Third Party Guaranteed Contract;
provided that any such provision must be acceptable to
Transtar in its sole discretion.
Notwithstanding anything to the contrary set forth herein, for so long
as Transtar remains obligated in any manner in connection with respect to a
Third Party Guaranteed Contract, Holdings shall cause the relevant Holdings
Company to carry insurance providing for policy limits, and deductibles
substantially similar to those in effect on the date hereof and, subject to any
limitations imposed by such Third Party Guaranteed Contract, naming Transtar as
an additional insured under any such policy in connection with such Third Party
Guaranteed Contract.
(c) For so long as the Motor Vessel ▇▇▇▇▇ ▇. ▇▇▇▇▇ (Official Number
621104) shall be sub-chartered by Fleet from USX, Holdings agrees to cause Fleet
to pay to USX an annual fee equal to 3/4 of 1% of the average balance due (as
described in Schedule 2.4(c)) under the Charter dated September 1, 1980 between
State Street Bank and Trust Company, successor trustee to Connecticut Bank and
Trust Company, as owner trustee, and USX, as successor by merger to United
States Steel Corporation. USX and Fleet have entered into the written
sub-charter attached as Exhibit A (the "▇▇▇▇▇ Agreement").
For so long as the Motor Vessel ▇▇▇▇▇ ▇. ▇▇▇▇▇ (Official Number 621104)
(the "▇▇▇▇▇") shall be sub-chartered by Fleet from USX, Holdings shall cause the
Fleet to (i) covenant to USX to carry insurance in connection with the Fleet's
sub-charter of the ▇▇▇▇▇ which (A) for so long as USX is permitted to
self-insure under the Charter, provides for policy limits and deductibles
substantially similar to those in effect on the date hereof and (B) for so long
as USX is not permitted to self-insure under the Charter, satisfies the
insurance requirements of the Charter and, in each case, subject to any
limitations imposed by the Charter, names USX as an additional insured and (ii)
to covenant to USX to satisfy the financial requirements of the Oil Pollution
Act of 1990, as amended from time to time.
Section 2.5 Bank Debt Repayment and Allocation.
(a) On the Closing Date and immediately after the exchange contemplated
by Section 1.2 hereof shall have occurred, all debt outstanding under the Credit
Agreement dated as of December 7, 1993, as amended and restated as of August 26,
1999, among Transtar, the lenders named therein and Chase Manhattan Bank
(successor to Chemical Bank), as Agent, as amended (the "Transtar Credit
Agreement") shall be repaid. The debt repayment shall be allocated between the
Holdings Companies on the one hand and the USX Companies on the other hand in
accordance with the following formula:
Holdings Companies USX Companies
56 % of Transtar Credit Balance 44% of Transtar Credit Agreement Balance
Plus $4,080,416 Minus $4,080,416
------------------------------------ ------------------------------------
Final Holding Companies Repayment Final USX Companies Repayment Amount
Amount
For purposes of this Section 2.5, "Transtar Credit Agreement Balance" means the
outstanding amount under the Transtar Credit Agreement plus all accrued interest
as of the Closing Date.
Prior to the Closing Date, but in no event more than two business days
prior to the Closing Date, Transtar shall, in good faith, prepare and deliver to
USX and Holdings an estimate of the actual consolidated cash of Transtar and the
Transtar Companies as of the Closing Date (the "Estimated Cash Statements") and,
on the Closing Date, shall allocate the aggregate cash to provide the Holdings
Companies with 56% of such aggregate cash and the USX Companies with 44% of such
aggregate cash. To the extent possible, such allocation shall be made in a
manner that does not create or increase any excess loss account, as defined in
Treasury Regulation Section 1.1502-19, that Transtar may have in the stock of
any Transtar Company. As soon as practicable after the Closing Date, but in any
event not later than thirty (30) days after the Closing Date, (i) Holdings and
USX agree to cooperate to close the books of each of the Holdings Companies and
the USX Companies and (ii) Transtar, Holdings and USX shall, in good faith,
jointly determine and prepare statements of the amount of cash held by each of
the USX Companies and the Holdings Companies as of the time of closing on the
Closing Date (the "Actual Cash Statements"). To the extent that the amount of
cash reflected on the Actual Cash Statements of the USX Companies exceeds in the
aggregate 44% of the amount of total cash reflected on the Actual Cash
Statements of both the USX Companies and the Holdings Companies in the
aggregate, then USX shall cause to be paid to Holdings or a Holdings Company, at
the sole discretion of Holdings, within one business day after the determination
of the Actual Cash Statements by wire transfer of immediately available funds to
an account or accounts designated in writing by Holdings an amount of cash
sufficient to ensure that the Holdings Companies in the aggregate have received
56% of the total cash on the books of Transtar and its consolidated subsidiaries
as of the Closing Date. To the extent that the amount of cash reflected on the
Actual Cash Statements of the Holdings Companies exceeds in the aggregate 56% of
the amount of total cash reflected on the Actual Cash Statements of both the
Holdings Companies and the USX Companies in the aggregate, then Holdings shall
cause to be paid to USX or a USX Company, at the sole discretion of USX, within
one business day after the determination of the Actual Cash Statements by wire
transfer of immediately available funds to an account or accounts designated in
writing by USX an amount of cash sufficient to ensure that the USX Companies in
the aggregate have received 44% of the total cash on the books of Transtar and
its consolidated subsidiaries as of the Closing Date. Such adjusting payments
shall be deemed to be made immediately prior to the Closing and shall be treated
as distributions from the paying company or companies to Transtar, and as
capital contributions from Transtar to the recipient company or companies. To
the extent possible, such payments shall be made in a manner that does not
create or increase any excess loss account, as defined in Treasury Regulation
Section 1.1502-19.
(b) Holdings shall cause the Holdings Companies to pay the Final
Holdings Companies Repayment Amount specified in (a) above and USX shall cause
the USX Companies to pay the Final USX Companies Repayment Amount specified in
(a) above. Notwithstanding anything to the contrary set forth herein, Holdings
may, at its option, elect to assume, or to cause the Holdings Companies to
assume, its portion of the Transtar Credit Agreement Balance as specified in
Section 2.5(a) and not to pay such amount; provided that if Holdings elects to
assume or cause the assumption of such obligation, Holdings shall obtain a
novation, release or other assurances from the lenders under the Credit
Agreement, all to the effect (and to the reasonable satisfaction of USX and any
USX Company) that none of USX, Transtar or any USX Company shall have any
further obligation whatsoever for any such obligation so assumed.
(c) Prior to the Closing Date, Transtar shall make capital
contributions as necessary to eliminate or to reduce to the extent possible any
excess loss account, as defined in Treasury Regulation Section 1.1502-19, that
it would otherwise have in the stock of any Transtar Company as of the Closing
Date. The capital contribution to any Holdings Company will come solely from
funds dividended by one or more other Holdings Companies after the execution of
this Agreement. The capital contribution to any USX Company will come solely
from funds dividended by one or more other USX Companies after the execution of
this Agreement. Transtar will cause one or more Holdings Companies or one or
more USX Companies to declare and pay dividends to Transtar in order to make
such contributions.
Section 2.6 Post-Closing Payments for Pre-Closing Items.
(a) Holdings and the Holdings Companies shall indemnify the USX
Companies for 56% of all amounts paid by any such USX Company after the Closing
Date with respect to transaction related costs pertaining to the transactions
contemplated by this Agreement and not otherwise addressed herein.
(b) Transtar and the other USX Companies shall indemnify the Holdings
Companies for 44% of all amounts paid by any such Holdings Company after the
Closing Date with respect to transaction related costs pertaining to the
transactions contemplated by this Agreement and not otherwise addressed herein.
(c) All costs incurred by Transtar or Tracks Traffic and Management
Services, Inc. ("Tracks") relating to Closing Date or pre-Closing Date activity
which are not solely for the expense of Transtar or Tracks and which are paid
after the Closing Date shall be allocated to the Transtar Company to which such
costs relate. If such costs cannot be specifically identified with one or more
Transtar Companies, or if such costs were incurred by Transtar in its role as
holding company for the Transtar Companies, or were incurred by Tracks in its
cash management role for the Transtar Companies, then such costs shall be
allocated 56% to the Holdings Companies and 44% to the USX Companies. The
Transtar Company or Companies allocated costs under this Section 2.6(c) shall
indemnify Holdings, USX or any other Transtar Company for any such allocated
costs paid after the Closing Date by Holdings, USX or any other Transtar
Company.
Article III
Employee Matters
Section 3.1 Continuation of Employment.
(a) Except as otherwise set forth in this Article III, all non-union
employees employed by Transtar or any Transtar Company immediately prior to the
Closing Date (the "Non-Union Employees") shall continue to be employed by such
Company as employed them immediately prior to the Closing Date and shall receive
the same salary or wage as they received and be subject to the same terms and
conditions of employment as they were immediately prior to the Closing Date.
(b) Each USX Company and each Holdings Company shall continue in place
each collective bargaining and other agreements in effect between it and any
labor union and shall continue to provide all employment and other entitlements
provided to employees represented by such labor unions in accordance with the
terms of such collective bargaining agreements (the "Union Employees"), except
as modified by agreement of the parties or by an arbitrator in order to permit
the transfer of employees contemplated by Section 3.6(b) herein.
(c) For purposes of this Agreement Non-Union Employees and Union
Employees shall include all individuals on disability, leave of absence,
vacation, holiday, layoff or other status that would entitle such individual to
employment by any USX Company or Holdings Company.
Section 3.2 Pension Plans.
(a) Current Plans. Transtar will remain the sponsor of the Transtar,
Inc. Non-Contributory Pension Plan and the Transtar, Inc. Salaried Retirement
Plan (the "Transtar Pension Plans").
(b) Holdings Plans. As soon as possible after the Closing Date and
effective as of the Closing Date, Holdings shall establish, or shall cause one
of the Holdings Companies to establish, one or more defined benefit pension plan
or plans (the "Spinoff Plans") providing pension benefits to the employees of
the Holdings Companies (i) that, in the case of represented employees, meet the
obligations of all collective bargaining agreements applicable to such employees
and (ii) that are generally comparable to those currently provided to such
employees.
(c) Plan Asset Transfers. As soon as practicable, Transtar shall cause
to be transferred: (i) from the respective Transtar Pension Plans to the Spinoff
Plans, the Accrued Liability (as defined below) for all participants identified
as transferring to the respective Holdings Companies and (ii) from the trusts
relating to the Transtar Pension Plans to the trust or trusts created under the
Spinoff Plans (the "Holdings Trusts"), an amount of allocated assets determined
in the manner below (the "Asset Transfer Amount"). Participants transferring to
the Holdings Companies (the "Holdings Participants") include active employees
transferring to the employment of the Holdings Companies as identified in
Section 3.6 and retired employees transferring to the Holdings Companies as
identified in Section 3.5, including associated dependents for both. As soon as
practicable following the Closing Date, Transtar will cause Retirement Benefits
Services, Inc. (the "Current Actuary") to calculate the Accrued Liability as of
the Closing Date (the "Valuation Date") of all participants in the Transtar
Pension Plans and then to compare, on a plan-by-plan basis, the Accrued
Liability of all the participants in each Transtar Pension Plan to the fair
market value of the assets in the respective Transtar Pension Plans as of the
Valuation Date. If the Accrued Liability as of the Valuation Date of all
participants in a Transtar Pension Plan is less than the fair market value of
the assets as of the Valuation Date in such Transtar Pension Plan, then Transtar
will cause assets (determined as of the Valuation Date) to be transferred from
such Transtar Pension Plan to the Holdings Trusts to the corresponding Spinoff
Plan equal to the product of (x) such fair market value of the assets in such
Pension Plan multiplied by (y) a fraction, the numerator of which is the
projected benefit obligation ("PBO") of the Holdings Participants for such
Transtar Pension Plan as of the Valuation Date, and the denominator of which is
the PBO of all participants in such Transtar Pension Plan as of the Valuation
Date. For purposes of the preceding sentence, the PBO shall be determined on the
basis of each employee's age, service and compensation, and the terms of the
respective Transtar Pension Plans in effect on the Valuation Date, using: (i)
the 30-year Treasury rate in effect on the Valuation Date plus 100 basis points
rounded to the nearest one-half (1/2) percent for the discount rate; (ii) a lump
sum rate that is 200 basis points less than the discount rate used; (iii) salary
scales for determining the accrued benefits liability at an average annual rate
of 4% for salaried employees and 3.5% for wage employees; and (iv) all other
actuarial assumptions and methods identical to those used by Transtar for SFAS
No. 87 disclosures for the year ended December 31, 1999. If the Accrued
Liability as of the Valuation Date of all participants in a Transtar Pension
Plan is equal to or greater than the fair market value as of the Valuation Date
of the assets in such Transtar Pension Plan, then the Current Actuary will
determine the amount of assets allocable to the Accrued Liabilities attributable
to Holdings Participants based on Section 4044 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (the "Section 4044 Amount"), and
Transtar will cause assets equal in value to the Section 4044 Amount applicable
to Holdings Participants under such Transtar Pension Plan to be transferred from
such Transtar Pension Plan to the Holdings Trust for the corresponding Spinoff
Plan. The Asset Transfer Amount for the respective Plans shall be the dollar
amount of allocated assets determined in accordance with the above, increased or
decreased by the actual return on the market value of assets, and decreased by
the amount of actual benefit payments for the Holdings Participants subsequent
to the Valuation Date and prior to the date of transfer; provided, however, that
in no event shall the Asset Transfer Amount be less than the amount necessary to
satisfy Section 414 (l) of the Code (as defined in Section 4.1.1 hereof). Upon
the transfer of the Asset Transfer Amount the Spinoff Plan will assume all
benefit liabilities and obligations of the corresponding Transtar Pension Plan,
solely with respect to Holdings Participants under such Transtar Pension Plan
from which that transfer was made and will become with respect to such Holdings
Participants responsible for all acts, omissions and transactions under or in
connection with such Transtar Pension Plan, whether arising before or after the
Closing, other than to the extent resulting from acts or omissions of Transtar
or its affiliates after the Closing. With respect to each Spinoff Plan, Transtar
will continue to administer benefit claims for Holdings Participants until the
first of the month following the transfer date of the Asset Transfer Amounts to
the Holdings Trusts. As used in this Agreement, "Accrued Liability" shall mean
the termination liabilities of the applicable participants under the respective
Transtar Plans calculated in accordance with Sections 401(a)(12) and 414(l) of
the Code, including the use of the Pension Benefit Guarantee Corporation
("PBGC") interest rate applicable to immediate and deferred annuities for the
termination of single employer plans in effect on the first day of the month
containing the Valuation Date. These are the same liabilities used in the
allocation of assets for the Section 4044 Amount, if required.
(d) If the authorized representatives of the Union B&LE Transferees
(defined below) have not signed a TCIU Implementation Agreement indicating TCIU
approval of transfer of the employment of the Union B&LE Transferees to a USX
Company (the "TCIU Approval") as of the Closing Date, all pension liabilities
and any assets held in trust for the satisfaction of liabilities associated with
such Union B&LE Transferees at the Closing Date will be transferred from the
Transtar, Inc. Non-Contributory Pension Plan to the Spinoff Plan and the
Holdings Trust covering union employees as part of the transfers contemplated in
Sections 3.2(b) and 3.2(c). "Union B&LE Transferees" shall mean the union
administrative employees to be transferred from the B&LE to a USX Company (the
number of such employees to be up to 60 non-shared union administrative
employees and up to 25 shared union administrative employees) and so identified
in Schedules 3.2(x) and 3.2(y). For purposes of this Section 3.2, it is agreed
that the employees of the USX Companies and the Holdings Companies listed in
Schedule 3.2(x) are non-shared employees and that the employees of the USX
Companies listed in Schedule 3.2(y) are shared employees. At the end of the
month in which the actual payroll responsibility for the Union B&LE Transferees
is transferred to a USX Company (the "Holdings Transfer Return Date), a spin-off
of pension liabilities and corresponding assets ("Holdings Transfer Return
Amount') will be made from the Spinoff Plan to the Transtar, Inc.
Non-Contributory Pension Plan, or a successor USX pension plan, (the "Holdings
Transfer Return") consistent with the allocation methodology identified in
Sections 3.2(c) and 3.2(h) as it pertains to the Union B&LE Transferees, without
regard to the de minimis test of Section 414(l) of the Code. If the assets
allocated respecting the Union B&LE Transferees' liabilities consistent with the
methodology identified in Section 3.2(c) had been reduced by an amendment or
early termination program adopted by the Spinoff Plan in which Union B&LE
Transferees participate after the Closing Date but prior to the Holdings
Transfer Return Date and a comparable amendment or early termination program is
not adopted by the Transtar, Inc. Non-Contributory Pension Plan, or a successor
USX pension plan, the excess, if any, of (a) the Holdings Transfer Return Amount
computed as if such amendment or program were not adopted over (b) the Holdings
Transfer Return Amount shall be paid, together with interest up to the date of
transfer using the rate paid on 30-day U.S. Treasury Bills and an additional
gross-up amount to reflect USX's effective federal and state income tax rates,
to Transtar in cash by Holdings at the same time the Holdings Transfer Return
Amount is transferred to the trust associated with the Transtar, Inc.
Non-Contributory Pension Plan, or a successor USX pension plan.
(e) Multi-Employer Plans. After the Closing Date, Holdings shall or
shall cause Fleet to contribute to multi-employer pension plans in respect of
Union Employees employed by Fleet pursuant to any collective bargaining
agreements to which Fleet may be a party. Holdings Companies shall be
responsible for all contributions with respect to their own employees for all
multi-employer plans.
(f) As soon as practical Holdings shall take or shall cause the
Holdings Companies to take all steps reasonably necessary to qualify the Spinoff
Plans under the Code.
(g) Non-qualified Plans. The USX Companies shall continue to maintain
the Transtar non-qualified plans and the Holdings Companies shall establish
non-qualified plans designed to provide benefits in excess of the limits imposed
by Sections 415 and 401(a)(17) of the Code for defined benefit plans as
appropriate for the participants respectively assigned to each party (as defined
under Section 3.6 and Section 3.5, including dependents of such participants);
and to the extent that any plan is funded the USX Companies shall transfer or
assign to Holdings or a Holdings Company any assets held for the satisfaction of
benefit obligations to participants assigned to Holdings or a Holdings Company
under Section 3.5 or Section 3.6 of this Agreement. Further, liabilities
recorded on Transtar's books with respect to participants of such plans prior to
the Closing Date shall be transferred on the Closing Date to the company which
will employ such participant immediately following the Closing Date.
(h) In the event that either USX or Holdings disagrees with any
calculations made by the Current Actuary they may, at their sole expense, have
the calculations reviewed by another actuary of their choice. If USX and
Holdings mutually determine that they are unable to resolve such disagreement
then each shall select an actuary (who may be the actuary chosen pursuant to the
preceding sentence) and these two such actuaries shall select a third actuary
whose determination shall be final and binding upon all parties. Each party
shall pay the cost of the actuary it selects and each shall pay one half of the
cost of the third actuary. The Current Actuary, Holdings and Transtar will each
cause to be provided to any actuary designated by Holdings, Transtar or USX all
information in its possession or under its control that is reasonably necessary
to review the determination and the calculation of the Accrued Liability,
Section 4044 Amount and other determinations or calculations related to
pensions, in all respects, and to verify that such determinations and
calculations have been performed in a manner consistent with the terms of this
Agreement.
Section 3.3 Thrift Plans.
(a) Transtar shall remain the sponsor of the Transtar, Inc. Savings
Plan for Salaried Employees and the Transtar, Inc. Savings Plan for Represented
Employees ("Transtar Thrift Plans").
(b) As soon as practical after the Closing Date, Holdings shall
establish a thrift plan, or plans, (the "Holdings Thrift Plan") substantially
similar to the Transtar Thrift Plans.) As of the Closing Date, Holdings
Companies' employees will cease to be eligible to actively participate in the
Transtar Thrift Plans. Upon the establishment of the Holdings Thrift Plan
Transtar shall cause the Transtar Thrift Plans to transfer to the Holdings
Thrift Plan the accounts of all participants in the Transtar Thrift Plans who
are employed by the Holdings Companies, including those transferred to the
Holdings Companies pursuant to Section 3.6 hereof, or who retired from a
Holdings Company (the "Holdings Thrift Plan Participants"). Transtar shall cause
the trust maintained under the Transtar Thrift Plans to transfer to the trust
established under the Holdings Thrift Plan the assets attributable to the
Holdings Thrift Plan Participants under the Transtar Thrift Plans; provided that
amounts invested in loans to such participants shall be transferred in kind.
Contingent upon the transfer of assets attributed to the Holdings Thrift Plan
Participants, Holdings will assume all benefit obligations of the Transtar
Thrift Plans relating to the Holdings Thrift Plan Participants. The amount of
assets transferred will be equal to the sum of (x) the excess of (A) the
Holdings Thrift Plan Participants accounts under the Transtar Thrift Plans
determined as of the last date of the month preceding the transfer date over (B)
any benefit payments made to Holdings Thrift Plan Participants under the
Transtar Thrift Plans during the period from the preceding month end to the
transfer date and (y) interest on such excess amount from the preceding month
end to the transfer date using the rate paid on 30 day Treasury Bills on the
transfer date.
(c) The USX Companies shall continue to maintain the Transtar
non-qualified plans and the Holdings Companies shall establish non-qualified
plans designed to provide benefits in excess of the limits imposed by Sections
415 and 401(a)(17) of the Code for thrift plans as appropriate for the
participants respectively assigned to each party pursuant to Section 3.5 and
Section 3.6; and, to the extent that any plan is funded, the USX Companies shall
transfer or assign to Holdings or a Holdings Company any assets held for the
satisfaction of benefit obligations to participants assigned under Section 3.5
or Section 3.6 of this Agreement. Further, liabilities recorded on Transtar's
books with respect to participants of such plans prior to the Closing Date shall
be transferred on the Closing Date to the company which will employ such
participant immediately following the Closing Date.
(d) If the TCIU Approval has not been obtained as of the Closing Date,
all Transtar Thrift Plan assets attributable to the accounts of the Union B&LE
Transferees at the Closing Date will be transferred to the trust associated with
the Holdings Thrift Plan as part of the transfers contemplated in Section
3.3(b). At the end of the month in which actual payroll responsibility for the
Union B&LE Transferees is transferred to a USX Company, all Holdings Thrift Plan
assets attributable to the Union B&LE Transferees will be transferred back to
the Transtar Thrift Plan consistent with the methodology described in Section
3.3(b).
Section 3.4 Insurance and Other Welfare Benefit Plans.
(a) Continuation of Current Plans. Transtar shall or shall cause each
of the other USX Companies to maintain the medical, life and other insurance
programs currently provided to employees and retirees of the USX Companies.
(b) Establishment of Holdings Plans. Holdings shall or shall cause each
of the Holdings Companies to establish medical, life and other insurance
programs providing benefits comparable to those currently provided to employees
and retirees of the Holdings Companies.
(c) Interim Provisions of Benefits. Transtar shall continue to
administer claims and shall cause payments to be made to employees of the
Holdings Companies who were participants in Transtar medical, life, vision,
dental, supplemental sickness and other insurance programs for up to 180 days
following the Closing Date to allow Holdings to establish its own plans.
Transtar shall continue to administer runout claims until they are completed.
Holdings shall reimburse Transtar weekly for all amounts paid and costs incurred
in connection with such services upon receipt of appropriate documentation
thereof.
(d) Other Programs. Transtar shall cause the USX Companies and Holdings
shall cause the Holdings Companies to continue to provide vacation, leave and
other employee policies substantially similar to those currently provided.
(e) Service Recognition. All benefit programs referred to in this
Section 3.4 of USX, Holdings, the USX Companies or the Holdings Companies shall
recognize service of any employees of the Transtar Companies employed by USX,
Holdings, any such USX Company or any such Holdings Company, respectively, after
the Closing Date with any of USX, the USX Companies or the Transtar Companies
for all purposes and shall recognize all co-payments and deductibles incurred in
the calendar year of the Closing Date under corresponding programs of the
Transtar Companies prior to the Closing Date.
(f) If TCIU Approval has been obtained as of the Closing Date, all
medical, life, other insurance liabilities and other employee benefit
liabilities currently provided to such employees and any assets held in trust
for the satisfaction of such liabilities associated with such employees at the
Closing Date will not be transferred from the Transtar plans or trusts covering
union employees to the Holdings Companies' newly created medical, life, and
other welfare plans and associated trusts as part of the transfers contemplated
under other subsections of this Section 3.4. If TCIU Approval has not been
obtained as of the Closing Date, all medical, life, other insurance liabilities
and other employee benefit liabilities currently provided to such employees and
any assets held in trust for the satisfaction of such liabilities associated
with such employees at the Closing Date will be transferred from the Transtar
plans or trusts covering union employees to the Holdings Companies' newly
created medical, life, and other welfare plans and associated trusts as part of
the transfers contemplated under other subsections of this Section 3.4. Again,
if TCIU Approval has not been obtained as of the Closing Date, at the end of the
month in which actual payroll responsibility for the Union B&LE Transferees is
transferred to a USX Company, all medical, life and other insurance liabilities
attributable to the Union B&LE Transferees will be transferred back to Transtar
along with all assets held for the satisfaction of such liabilities.
(g) General. Unless specifically provided otherwise in this Agreement,
responsibility for employee benefit liabilities, including without limitation
compensation, workers' compensation, incentive, employment, split dollar life
insurance policies, VEBA, supplemental unemployment benefits or other payroll or
benefit liabilities, for employees of the Transtar Companies shall be the sole
responsibility of the USX Company or Holdings Company which employed such
employee as of the Closing Date. Any assets held for the satisfaction of benefit
obligations to such employees so employed by a Holdings Company on the Closing
Date, whether held in trust or otherwise, shall be transferred to such Holdings
Company or a trust designated by it and, in the case of split dollar life
deposits, such transfer shall occur on the Closing Date.
Section 3.5 Retirees.
For all purposes under this Article III, responsibility for benefits
payable to persons who retired from any of the Transtar Companies in the past
and are receiving or entitled to receive any retirement benefits now or in the
future shall be the sole responsibility of the last Transtar Company to have
employed such person. This liability allocation shall include legal liability,
accounting treatment such as OPEB and administrative responsibility.
Section 3.6 Employee Transfers.
(a) Non-Union Employees. Effective immediately prior to the Closing
Date, certain non-union employees of the Transtar Companies shall be transferred
as set forth in the Schedule attached hereto as Schedule 3.6(a) or as shall
otherwise be agreed upon by USX and Holdings.
(b) Union Employees. Effective immediately prior to the Closing Date,
or as soon thereafter as possible under amendments to applicable collective
bargaining agreements or arbitration decisions, certain union employees of the
Transtar Companies shall be transferred as set forth in the Schedule attached
hereto as Schedule 3.6(b).
Section 3.7 Management Plans.
On the Closing Date and effective as of the Closing Date, Holdings
shall assume all of the obligations of Transtar under the Management Stock Plan
and the Management Stock Option Plan (the "Management Plans") and shall enter
into amendments to the Management Plans reasonably acceptable to Holdings and
the Trustee which shall preserve for the participants under the Management Plans
the economic benefits of such plans immediately prior to the Closing Date.
Article IV
Tax Matters
Section 4.1 Tax Indemnity.
Section 4.1.1 Definitions.
For purposes of this Section 4.1 the following definitions shall apply:
"Applicable Credit Amount" means the sum of (i) the B&LE Credit Amount,
if B&LE is a Holdings Company described in Section 4.1.3(a) below; and (ii) the
DMIR Credit Amount, if DM&IR is a Holdings Company described in Section 4.1.3(a)
below; and (iii) the Fleet Credit Amount, if Fleet is a Holdings Company
described in Section 4.1.3(a) below; and (iv) the Dock Credit Amount, if Dock is
a Holdings Company described in Section 4.1.3 (a) below. For purposes of the
definition of Applicable Credit Amount and Applicable Taxes, a Holdings Company
is described in Section 4.1.3(a) below if (a) in a transaction other than a
Permitted Transfer, (i) Holdings sells, transfers, assigns or otherwise disposes
of such Holdings Company's stock (or if such Holdings Company disposes of
substantially all of its assets) during the Credit Period, or (ii) one or more
persons are treated as acquiring directly or indirectly the stock of such
Holdings Company and each condition set forth in Section 4.1.4(a) is met or (b)
Holdings elects to provide credit enhancement pursuant to Section 4.1.3(a)3,
Section 4.1.3(a)4 or Section 4.1.3(a)5 with respect to Taxes arising from or
based on the Split-off of such Holdings Company; provided, however, a Holdings
Company is not described in Section 4.1.3(a) to the extent that it previously
has been described in Section 4.1.3(a) and one of the forms of credit
enhancement set forth in 4.1.3(b)1 has been obtained with respect thereto.
"Applicable Taxes" means the sum of (i) B&LE Taxes, if B&LE is a
Holdings Company described in Section 4.1.3(a) below; and (ii) DMIR Taxes, if
DM&IR is a Holdings Company described in Section 4.1.3(a) below; and (iii) Dock
Taxes, if Dock is a Holdings Company described in Section 4.1.3(a) below; and
(iv) Fleet Taxes, if Fleet is a Holdings Company described in Section 4.1.3(a)
below.
"B&LE Credit Amount" means $15,810,000.
"B&LE Taxes" means all Taxes resulting from the Split-off of B&LE that
(i) are caused by a Holdings Triggering Event, or (ii) result from any breach by
Holdings of either the representation in Section 9.2.4 or covenant in Section
10.3(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Credit Period" means the period from the date of the Split-off through
the earlier of: (i) the expiration of the statute of limitations for Taxes
imposed on Transtar that are triggered by the Split-off and (ii) the fourth
anniversary of the Split-Off.
"DMIR Credit Amount" means $48,200,000.
"DMIR Taxes" means all Taxes resulting from the Split-off of DM&IR that
are caused by (i) a Holdings Triggering Event, or (ii) result from any breach by
Holdings of either the representation in Section 9.2.4 or covenant in Section
10.3 (a).
"Dock Credit Amount" means $3,860,000.
"Dock Taxes" means all Taxes resulting from the Split-off of Dock that
are caused by (i) a Holdings Triggering Event, or (ii) result from any breach by
Holdings of either the representation in Section 9.2.4 or covenant in Section
10.3 (a).
"Finally Determined" means that one of the following has occurred: (1)
a decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final
(e.g., when all allowable appeals thereof have been exhausted by either party to
the action or the time for filing such appeal has expired) or the acceptance of
the terms of an administrative determination if Transtar consents in writing to
such acceptance, (2) the exhaustion of all administrative remedies if a contest
cannot be currently brought in a court of competent jurisdiction, (3) a closing
agreement entered into under Section 7121 of the Code or any other settlement
agreement entered into in connection with an administrative or judicial
proceeding, or (4) the expiration of the time for instituting a claim for
refund, or if such a claim was filed, the expiration of the time for instituting
suit with respect thereto.
"Fleet Credit Amount" means $32,130,000.
"Fleet Taxes" means all Taxes resulting from the Split-off of Fleet
that are caused by (i) a Holdings Triggering Event, or (ii) result from any
breach by Holdings of either the representation in Section 9.2.4 or covenant in
Section 10.3 (a).
"Holdings Taxes" means all Taxes resulting from the Split-off that are
caused by (i) a Transtar Triggering Event, or (ii) result from any breach by USX
of either the representation in Section 9.1.4 or covenant in Section 10.3 (b).
"Holdings Triggering Event" means, (A) any acquisition (including a
redemption), directly or indirectly (excluding all indirect acquisitions which
in the aggregate do not exceed 10% of the outstanding stock of such Holdings
Company), of the stock (or substantially all of the assets) of a Holdings
Company during the Triggering Period; (B) any acquisition (including a
redemption), directly or indirectly, of the stock of a Holdings Company after
the Triggering Period that, together with the Split-off, is determined to be
part of a plan (or series of related transactions), within the meaning of
Section 355(e) of the Code, pursuant to which 1 or more persons acquire directly
or indirectly stock representing a 50% or greater interest in a Holdings Company
and that causes Section 355(e) of the Code to apply to the Split-off (whereby
stock of one or more of the Holdings Companies is not treated as qualified
property for purposes of Section 355(c) of the Code); or (C) the sale,
termination or substantial change of a business of a Holdings Company within the
Triggering Period if, due to such sale, termination or substantial change, a
Holdings Company is not engaged in the active conduct of a trade or business
immediately after the Split-off (within the meaning of Section 355(b) of the
Code).
"No-Fault Taxes" means all Taxes described in Section 4.1.2 (c).
"Permitted Transfer" means (1) an issuance of employee stock options or
(2) a sale or other transfer of primary or secondary equity securities or (3)
any other direct or indirect transfer of the stock of one or more Holdings
Companies or one or more USX Companies; provided that (a) after all such
issuance of options or such sale or other transfers described in (1), (2) or
(3), the percentage of stock owned directly or indirectly in the Holdings
Company or USX Company whose stock is involved, by all persons owning stock in
such corporation immediately after the Split-off, has not decreased in the
aggregate by 50% or more (by vote or value) (after applying the aggregation and
attribution rules set forth in Code Section 355(e)(4)(C)) or (b) such issuance,
sale or transfer involves the acquisition by a person of stock or securities in
any successor corporation of a Holdings Company or USX Company by reason of
holding stock or securities in such Holdings Company or USX Company (for
purposes of this Section 4.1, such stock or securities in such successor
corporation shall be treated as stock or securities in such Holdings Company or
such USX Company, as the case may be). In addition, a Permitted Transfer shall
include any transfer proposed by (i) Holdings and consented to by Transtar or
(ii) proposed by Transtar and consented to by Holdings, such consent not to be
unreasonably withheld or delayed. Whether such consent is unreasonably withheld
or delayed shall be determined based solely on whether such issuance, sale or
transfer might reasonably result in Taxes subject to indemnity under this
Section 4.1. If a party requests the consent of the other to make a transfer,
such other party shall be deemed to have consented in writing to such transfer
unless such other party otherwise sends a written response within 45 days after
a written request to make such a transfer is sent.
"Split-off" means the distribution of the stock of the Holdings
Companies in exchange for all of the Holdings Stock and the Management Stock.
"Taxes" means (1) all taxes, assessments or other governmental charges,
including, without limitation, all federal, state, local or foreign taxes,
charges, fees, duties, levies or other assessments including, without
limitation, net or gross income, gross receipts, net or gross proceeds, ad
valorem, real and personal property (tangible and intangible), sales, use,
franchise, user, transfer, value-added, fuel, excess profits, occupational,
employees' income withholding, unemployment, Social Security, Railroad
Retirement, Railroad Unemployment Insurance, alternative or add-on minimum,
estimated, environmental and franchise taxes, including interest, penalties or
additions to tax attributable to or imposed on or with respect to such taxes,
which are imposed by any governmental body whether disputed or not, and shall
include any liability for such amounts as a result of either being a member of a
combined, consolidated, unitary or affiliated group or of a contractual
obligation to indemnify any person or other entity and (2) related costs and
attorneys fees.
"Transtar Triggering Event" means, (A) any acquisition (including a
redemption), directly or indirectly (excluding all indirect acquisitions which
in the aggregate do not exceed 10% of the outstanding stock of Transtar), of the
stock (or substantially all of the assets) of Transtar during the Triggering
Period; (B) any acquisition (including a redemption), directly or indirectly, of
the stock of Transtar after the Triggering Period that, together with the
Split-off, is determined to be part of a plan (or series of related
transactions), within the meaning of Section 355(e) of the Code, pursuant to
which 1 or more persons acquire directly or indirectly stock representing a 50%
or greater interest in Transtar and that causes Section 355(e) of the Code to
apply to the Split-off (whereby stock of one or more of the Holdings Companies
is not treated as qualified property for purposes of Section 355(c) of the
Code); or (C) the sale or termination of, or substantial change in, an active
business of Transtar within the Triggering Period if, due to such sale,
termination or substantial change, Transtar is not engaged in the active conduct
of a trade or business immediately after the Split-off (within the meaning of
Section 355(b) of the Code).
"Triggering Period" means the period from the date of the Split-off
through the date of the second anniversary of the Split-off.
Section 4.1.2 Indemnification.
(a) Holdings Companies' Indemnification
1. B&LE shall indemnify and hold harmless Transtar and
each USX Company against any B&LE Taxes.
2. DM&IR shall indemnify and hold harmless Transtar and
each USX Company against any DMIR Taxes.
3. Fleet shall indemnify and hold harmless Transtar and
each USX Company against any Fleet Taxes.
4. Dock shall indemnify and hold harmless Transtar and
each USX Company against any Dock Taxes.
(b) USX's and Transtar's Indemnification. USX and Transtar shall
jointly and severally indemnify and hold harmless Holdings,
any direct or indirect owner of an interest in Holdings, and
each Holdings Company against any Holdings Taxes.
(c) Sharing of No-Fault Taxes.
1. Notwithstanding Section 4.1.2(a) and Section
4.1.2(b), the sole remedy for No-Fault Taxes are
pursuant to this Section 4.1.2(c). In the event
Transtar or Holdings (or any direct or indirect owner
of an interest in Holdings) incurs any Taxes
resulting from the Split-off that result solely from
the Split-off failing to meet the requirements of
Section 355 of the Code and that are not caused by a
Holdings Triggering Event or a Transtar Triggering
Event or a breach of a representation or covenant by
USX or Holdings in Sections 9.1.4, 9.2.4, 10.1(n),
10.3(a) or 10.3(b) (referred to herein as "No-Fault
Taxes"), such No-Fault Taxes shall be shared between
the Holdings Companies and Transtar in the ratio of
56%/44%.
2. The Holdings Companies' share of No-Fault Taxes shall
be allocated to each Holdings Company based upon the
Ratio of the Credit Amount for such Holdings Company
to the total Credit Amounts for all Holdings
Companies.
3. Transtar's share of No-Fault Taxes shall be allocated
among the USX Companies as follows: B Southern -
17.50%; EJ&E - 51.65%; F Southern - .59%; Lake
Terminal - 3.14%; MCC - 1.19%; MRT - 7.56%; and URR -
18.37%. Transtar and each of the USX Companies shall
jointly and severally indemnify Holdings (or any
direct or indirect owner of an interest in Holdings)
against Transtar's share of No-Fault Taxes allocated
to such USX Company.
(d) Taxes Saved.
1. In the case of Holdings Taxes indemnified under
Section 4.1.2(b) or No-Fault Taxes incurred by
Holdings (or any direct or indirect owner of an
interest in Holdings) and indemnified by Transtar or
another USX Company under Section 4.1.2(c), "Taxes
Saved" in the future shall be repaid to USX, Transtar
or such other USX Company, as the case may be, when
such Taxes Saved are "Realized."
2. "Taxes Saved" shall equal: (i) the actual reduction
in Taxes for a particular taxable period that
otherwise would have been due and payable for such
taxable period, which reduction is solely due to (x)
Holding's tax basis in the Holdings Companies or (y)
the tax basis of a direct or indirect owner in
Holdings in the entity through which such direct or
indirect owner of Holdings owns its direct or
indirect interest in Holdings (such ownership
interest referred to as a "Holdings Interest"), being
higher than it would have been if the Split-off were
tax-free pursuant to Section 355 of the Code,
multiplied by (ii) the Allocation Rate. The
"Allocation Rate" shall be (A) 100% if the
indemnified party recovered Holdings Taxes pursuant
to 4.1.2(b) and (B) 44% if the indemnified party
recovered No-Fault Taxes pursuant to Section
4.1.2(c).
3. Taxes Saved are "Realized" at the time the Taxes
Saved for such taxable period otherwise would have
been due and payable to a taxing authority.
4. For the avoidance of doubt, the following examples
clarify when Taxes Saved have been Realized (in the
amount of the actual reduction in Taxes for a
particular taxable period as determined under Section
4.1.2(d)2 above) and when Taxes Saved have not been
Realized:
(i) If, in a taxable transaction, a direct or
indirect owner of Holdings transfers or
exchanges its Holdings Interest, or Holdings
transfers its interest in a Holdings
Company, such transfers might cause Taxes
Saved to be Realized (as determined pursuant
to Section 4.1.2(d)2 above). If, however,
such transfer is pursuant to a tax-free
transaction, there would be no Taxes Saved
Realized at the time of the transfer. Such
property received in a tax-free transaction
("Substituted Property") by a direct or
indirect owner of Holdings or by Holdings,
as the case may be, shall be (for purposes
of this Section 4.1.2(d)) treated as the
Holdings Interest transferred (in the case
of a transfer by a direct or indirect owner
of Holdings) or the stock of the Holdings
Company transferred (in the case of a
transfer by Holdings of a Holdings Company).
If such Substituted Property is subsequently
transferred in a taxable transaction, such
transfer might cause Taxes Saved to be
Realized (as determined pursuant to Section
4.1.2(d)2 above). If, however, such
Substituted Property is exchanged for
different property in a tax-free exchange,
there would be no Taxes Saved Realized and
such different property received would be
the new Substituted Property (that would be
treated like the original Holdings Interest
transferred (in the case of a transfer of
the Substituted Property by a direct or
indirect owner of Holdings) or the stock of
the Holdings Company transferred (in the
case of a transfer of the Substituted
Property by Holdings)).
(ii) To the extent that (x) Holdings' increased
tax basis in a Holdings Company or (y) a
direct or indirect owner's increased tax
basis in its Holdings Interest, causes (or
increases) a loss that is not used by a
person to offset Taxes in a taxable period
or an earlier taxable period, Taxes Saved
have not been Realized. Such person
generally would have Taxes Saved Realized in
a subsequent taxable period to the extent
such loss were used to offset Taxes
otherwise due and payable in such subsequent
taxable period.
(iii) If a partner that is required to pay any
remaining Taxes Saved when Realized dies and
the tax basis in such partner's Holdings
Interest is stepped up to fair market value
pursuant to Code Section 1014, any Taxes
Saved that have not been Realized prior to
such partner's death will never be Realized
(and thus will never have to be repaid).
(iv) If a partner disposes of its Holdings
Interest or Substituted Property in a
taxable transaction, or in a tax-free
transaction not described in Section
4.1.2(d)4(v) or (vi), and all Taxes Saved
are not Realized by such Partner at the time
of the disposition, a subsequent disposition
by Holdings of the stock of a Holdings
Company will not cause any Taxes Saved to be
Realized by such partner.
(v) If a direct or indirect owner of Holdings
transfers its Holdings Interest in a
tax-free transaction, other than a transfer
at death, to either (i) a Conduit Entity (as
defined below) owned more than 50% by such
owner (at the time Holdings sells or
disposes of a Holdings Company) or (ii) to
an entity that is not a Conduit Entity and
that is owned more than 80% by such owner
(at the time Holdings sells or disposes of a
Holdings Company), and such transfer does
not result in Taxes Saved at the time of the
transfer, then at the time Holdings sells or
otherwise disposes of a Holdings Company,
such direct or indirect owner of Holdings
shall be treated as having Taxes Saved
Realized equal to (x) the amount of Taxes
Saved such owner would have Realized as a
result of the sale or other disposition by
Holdings of such Holdings Company if such
owner had not transferred its Holdings
Interest to such entity multiplied by (y)
the percentage of beneficial ownership such
owner has in the Holdings Interest at the
time Holdings sells or otherwise disposes of
such Holdings Company. A Conduit Entity
means an entity which is not treated for
federal income tax purposes as a corporation
or an association taxable as a corporation.
For purposes of this Section 4.1.2(d)4(v),
an interest in an entity (whether or not it
is a Conduit Entity) owned by a member of
the family (as defined in Code Section
267(c)(4)) of a direct or indirect owner of
Holdings shall be treated as owned by such
direct or indirect owner.
(vi) If a direct or indirect owner of Holdings
transfers its Holdings Interest to a member
of such owner's family (as defined in Code
Section 267(c)(4)), Taxes Saved Realized by
such family member shall be treated as Taxes
Saved Realized by such direct or indirect
owner of Holdings.
5. Notwithstanding anything to the contrary, the total
Taxes Saved for the current taxable period and all
prior taxable periods with respect to a particular
party shall not exceed the total amounts paid to such
party by USX, Transtar or another USX Company
pursuant to Section 4.1.2(b) and 4.1.2(c).
6. USX's and Transtar's indemnity obligation with
respect to a particular person under Section 4.1.2(b)
and Transtar's (and the other USX Companies')
indemnity obligation under Section 4.1.2(c) with
respect to a particular person shall be reduced by
any Taxes Saved that are Realized by that person at
or prior to the time the claim for indemnification is
made. Such person shall have no obligation to pay
back to USX, Transtar or any other USX Company any
such Taxes Saved that are Realized that reduce USX's,
Transtar's or such other USX Company's indemnity
obligation under Section 4.1.2(b) or 4.1.2(c).
7. Only the party that received payment from USX,
Transtar or a USX Company shall be liable to pay
Taxes Saved when Realized and nothing in this
Agreement shall require any transferee of a direct or
indirect interest in Holdings to pay any Taxes Saved
with respect to such direct or indirect interest in
Holdings (whether or not such transferor owes Taxes
saved at the time of the transfer to such
transferee).
(e) Procedure for Direct and Indirect Owners of Holdings. This
Section 4.1.2(e) provides (1) the procedure pursuant to which
direct and/or indirect owners of Holdings must make a claim
against (i) Transtar and/or USX for indemnification for
Holdings Taxes (as provided in Section 4.1.2(b)) and (ii)
Transtar and the other USX Companies for indemnification for
No-Fault Taxes (as provided in Section 4.1.2(c)) (USX,
Transtar and any other USX Company referred to in this Section
4.1.2(e) as an "Indemnitor") and (2) the procedure pursuant to
which such direct and/or indirect owners of Holdings are
required to return any Taxes Saved to an Indemnitor.
1. Claims against Transtar and/or USX.
(i) The parties to this Agreement intend to make
all direct and/or indirect owners of
Holdings third-party beneficiaries to
Section 4.1 of this Agreement. Accordingly,
each direct and/or indirect owner of
Holdings has a direct claim against (A)
Transtar and/or USX for indemnification for
Holdings Taxes (as provided in Section
4.1.2(b)) and (B) Transtar and the other USX
Companies for indemnification of Transtar's
44% share of No-Fault Taxes (as provided in
Section 4.1.2(c)).
(ii) Holdings agrees to use commercially
reasonable efforts to (a) act as agent for
the direct and/or indirect owners of
Holdings that have a direct claim against an
Indemnitor and (b) cause such direct and /or
indirect owners of Holdings to use Holdings
as such an agent. Holdings' sole
responsibilities as agent will be to collect
indemnity claims (and other information set
forth in Section 4.1.2(e)1(iii) below) from
such direct and/or indirect owners of
Holdings, forward such claims (and any other
information set forth in Section
4.1.2(e)1(iii) below) to the Indemnitor and
to forward payments made by the Indemnitor
pursuant to such claims to such owner. If
Holdings fails to act as agent, or a direct
and/or indirect owner of Holdings chooses
not to use Holdings as an agent for its
claims against an Indemnitor, claims by such
direct or indirect owner of Holdings shall
not be prejudiced in any way. In addition,
except as set forth in Section 4.1.2(e)1(v)
below, no act or omission of Holdings (while
acting as or not acting as agent of an
owner) shall prejudice, in any way, such
owner's ability to make a direct claim
against such Indemnitor or the amount to
which the owner is entitle to collect
directly from the Indemnitor.
(iii) To make a claim against an Indemnitor, each
direct or indirect owner of Holdings may
either present to Holdings or directly to
the Indemnitor its claim for indemnity
against an Indemnitor, together with the
signed agreement described in Section
4.1.2(e)2(ii) and such documentation as the
Indemnitor may reasonably request to support
such owner's indemnity claim. If a direct or
indirect owner submits a certificate from a
nationally recognized firm of certified
public accountants, such as a so-called "Big
Five" public accounting firm, that sets
forth the amount of Taxes incurred by such
owner as a result of Holdings Taxes or
No-Fault Taxes (and, for purposes of the tax
gross-up, the amount of Taxes that would be
owed as a result of payments by an
Indemnitor to such owner) (an "Accountant's
Certificate"), it will be deemed
unreasonable for the Indemnitor to request
any further documentation to support such
owner's indemnity claim. If an owner
provides (x) an Accountant's Certificate or
(y) a certificate from an independent
certified public accountant that sets forth
such owner's marginal federal and state
income tax rates for the taxable year at
issue, then under no circumstances shall the
owner be required to disclose any other Tax
return information to the Indemnitor in
order to receive payment for an indemnity
claim. Holdings, if the direct or indirect
owner uses Holdings as its agent, shall
forward such claim, agreement and supporting
documentation to the Indemnitor for payment.
(iv) Within 30 days after the Indemnitor has
received the claim for indemnification, the
signed agreement described in Section
4.1.2(e)2(ii), and the supporting
documentation referenced in Section
4.1.2(e)1(iii) for the claim from Holdings
(if the direct or indirect owner uses
Holdings as its agent) or from the direct or
indirect owner of Holdings, it shall pay
such claim to Holdings (if the direct or
indirect owner uses Holdings as its agent)
or directly to such direct or indirect owner
of Holdings, unless it reasonably disputes
such claim, in which case it will attempt to
resolve the dispute with Holdings or with
such direct or indirect owner as soon as
practicable.
(v) An Indemnitor's liability for an indemnity
claim made by a direct or indirect owner of
Holdings through Holdings is relieved to the
extent the Indemnitor makes payment to
Holdings under this Section 4.1.2(e) with
respect to such claim.
(vi) It is the parties' intention that Holdings
will act solely as an agent of its direct
and indirect owners that submit claims
through Holdings with respect to the
indemnity obligations of the Indemnitors
under this Section 4.1.2, and Holdings has
no direct obligation to such owners or to
the Indemnitors with respect to the
indemnity obligations of the Indemnitors.
Holdings shall have no liability to the
direct and indirect owners of Holdings or to
USX, Transtar or a USX Company for any acts
or omissions with respect to its role as
agent under this Agreement.
2. Return of Taxes Saved.
(i) If a direct and/or indirect owner of
Holdings makes a claim pursuant to section
4.1.2(e)1, such direct and/or indirect owner
(or a successor to such direct and/or
indirect owner's interest) will agree to
become directly liable to the Indemnitor for
any Taxes Saved when such Taxes Saved are
Realized.
(ii) Prior to indemnifying a direct or indirect
owner of Holdings pursuant to Section
4.1.2(b) or Section 4.1.2(c), the Indemnitor
may reasonably require such direct or
indirect owner of Holdings to enter into a
written agreement to be directly liable for
Taxes Saved when Taxes Saved are Realized.
(iii) Holdings does not agree to act as agent with
respect to Taxes Saved.
(f) Delay of Indemnity Payments if the Other Party is Delinquent.
1. USX, Transtar or another USX Company may delay all or
a portion (as described further below) of a payment
of an indemnity claim made by a direct or indirect
owner of Holdings if each of the following conditions
are met at the time payment would otherwise be due to
Holdings or a direct or indirect owner of Holdings
under Section 4.1.2(e)1(iv).
(i) Transtar has incurred No-Fault Taxes that
are Finally Determined.
(ii) Transtar has made an indemnity claim against
a Holdings Company for reimbursement of such
Holdings Company's allocable portion of the
Holdings Companies' 56% share of such
No-Fault Taxes.
(iii) At the time Transtar presents its claim
described in (ii) above, such Holdings
Company is owned at least 50%, directly or
indirectly, by Holdings.
(iv) Within 90 days after Transtar presents its
claim described in (ii) above, such Holdings
Company has not paid such claim in its
entirety or has not provided a reasonable
basis for failure to pay such claim in its
entirety.
If each of conditions (i) through (iv) above
are met, then USX, Transtar or such USX
Company, as the case may be, may delay
payment of an indemnity claim made by a
direct or indirect owner of Holdings, up to
a pro-rated portion (as described below) of
the amount such Holdings Company has not
paid (and for which a reasonable basis for
the failure to pay such amount has not been
provided) within 90 days after Transtar
presents its claim described in (ii) above,
until 30 days after (x) the delinquent
Holdings Company has paid such amount due on
Transtar's indemnity claim or (y) Transtar
and such Holdings Company have resolved any
dispute over the unpaid portion of
Transtar's indemnity claim (Transtar to use
such reasonable efforts so as to obtain a
resolution as quickly as practicable). The
pro-rated portion shall be based on such
direct or indirect owner's indemnity claim
over the total of all such claims for which
USX, Transtar or a USX Company is seeking to
delay payment under this Section 4.1.2(f)1.
In no event shall the total payments delayed
under this Section 4.1.2(f)1 exceed the
unpaid portion of Transtar's indemnity
claim. No interest shall accrue on an
indemnity claim of a direct or indirect
owner of Holdings during the period USX,
Transtar, or such USX Company is allowed to
defer payment of such claim under this
Section 4.1.2(f)1.
2. A Holdings Company may delay payment of all or a
portion (as described further below) of an indemnity
claim made by Transtar for No-Fault Taxes if each of
the following conditions are met at the time the
indemnify claim is presented by Transtar.
(i) A direct or indirect owner of Holdings has
incurred No-Fault Taxes that are Finally
Determined.
(ii) Holdings, on behalf of such direct or
indirect owner, or a direct or indirect
owner of Holdings, has made an indemnity
claim against Transtar or another USX
Company for reimbursement of such USX
Company's allocable portion of Transtar's
44% share of such No-Fault Taxes.
(iii) Within 90 days after Holdings or such direct
or indirect owner presents the claim
described in (ii) above, Transtar or such
USX Company has not paid such claim in its
entirety or has not provided a reasonable
basis for failure to pay such claim in its
entirety.
If each of conditions (i) through (iii)
above are met, then a Holdings Company may
delay making an indemnity payment to
Transtar, up to an amount that Transtar or
such USX Company has not paid (and for which
a reasonable basis for the failure to pay
such amount has not been provided) within 90
days after Holdings or such direct or
indirect owner of Holdings presents its
claim described in (ii) above, until 30 days
after (x) Transtar or such USX Company has
paid such amounts due on the indemnity claim
described in (ii) above or (y) Holdings and
Transtar or such USX Company have resolved
any dispute over the unpaid portion of such
indemnity claim (Holdings to use such
reasonable efforts so as to obtain a
resolution as quickly as practicable). No
interest shall accrue on Transtar's
indemnity claim during the period that the
Holdings Company is allowed to defer payment
of such claim under this Section 4.1.2(f)2.
(g) Gross-up for Taxes. All payments required by Section 4.1.2
shall be made on an after-tax basis, so that the net amount
retained by the payee (after payment by the payor and payee of
all Taxes imposed on such payment and all payments made
pursuant to this gross-up provision) equals the amount owed
pursuant to Section 4.1.2. For example, if the partners of
Holdings incur $100 of No-Fault Taxes and thus Transtar is
obligated to pay 44% of this amount to such partners pursuant
to Section 4.1.2(c), if such partners would be subject to
income tax (and all other Taxes) equal to 40% on payments by
Transtar (or a USX Company) to such partners, Transtar (or a
USX Company) must gross-up such payment pursuant to this
paragraph by $29.33 for a total payment to the partners of
$73.33 ($44 + 29.33).
Section 4.1.3 Credit Enhancement Provided by Holdings.
(a) Holdings shall provide credit enhancement in an amount not to
exceed $100,000,000 to protect against Applicable Taxes for
the Applicable Credit Amount in each of the following cases.
1. Except with respect to a Permitted Transfer or a
transaction that does not occur during the Credit
Period, at or prior to the time Holdings sells,
transfers, assigns or otherwise disposes of the stock
of a Holdings Company (or if a Holdings Company
disposes of substantially all of its assets).
2. Within 30 days after USX notifies Holdings that the
conditions in Section 4.1.4(a) have been met.
3. At the option of Holdings, within 30 days after USX
notifies Holdings that USX or Transtar has received
from the Internal Revenue Service or any other taxing
authority any written notice of deficiency, claim or
adjustment of Taxes that arises from or is based in
whole or in part on the breach of a representation in
Section 9.2.4 or a covenant in Section 10.3(a).
4. At the option of Holdings, within 30 days after USX
notifies Holdings that USX or Transtar has received
from the Internal Revenue Service or any other taxing
authority any written notice of deficiency, claim or
adjustment of Taxes that includes in whole or in part
No-Fault Taxes.
5. At the option of Holdings, within 30 days after USX
notifies Holdings that the conditions in Section
4.1.4(b) have been met.
(b) Operating Principles of Credit Enhancement
1. Holdings shall determine the form of credit
enhancement, which shall, at the option of Holdings,
consist of one or more of the following:
(i) One or more of the following provided by an
entity with an investment grade rating from
▇▇▇▇▇'▇ or Standard & Poors.
a. Insurance for the Applicable Credit
Amount
b. Letter of credit for the Applicable
Credit Amount
c. Surety bond for the Applicable
Credit Amount
d. Cash for the Applicable Credit
Amount
e. Any other form of credit enhancement
for the Applicable Credit Amount
reasonably acceptable to USX and
Transtar.
(ii) An undertaking by each partner of Holdings
to severally (but not jointly) indemnify USX
and Transtar against Applicable Taxes in the
aggregate not in excess of the Applicable
Credit Amount. If, at the time the credit
enhancement is provided, more than 25% of
the partnership interests in Holdings are
held by persons or entities that were not
partners at the time of the Split-off, USX
has the right to review the new partners for
credit quality. If any new partner is below
investment-grade credit quality or, in the
case of an individual, is not of credit
quality reasonably acceptable to USX, then
USX may object to having such partner's
indemnity qualify as credit enhancement, in
which case Holdings shall either substitute
another of the permissible credit
enhancements or require that such partner's
indemnity obligation be transferred to the
person or entity that held such partnership
interest at the time of the Split-off.
(iii) Holdings may choose a combination of credit
enhancements set forth herein as long as the
total dollar value of the credit enhancement
is equal to the Applicable Credit Amount.
2. In the case of (a) a Holdings Triggering Event that
is not a Permitted Transfer that occurs during the
Triggering Period, (b) a situation described in
Section 4.1.4(a) and (c) any breach of either the
representation in Section 9.2.4 or covenant in
Section 10.3 (a), the credit enhancement procured
shall be the primary recourse of Transtar, USX and
the USX Companies in seeking to enforce an indemnity
under this Section 4.1 (in which case the relevant
Holdings Company shall be secondarily liable for any
indemnity payments owed pursuant to this Section
4.1). For purposes of this subsection, an acquisition
of the stock (or substantially all of the assets) of
a Holdings Company, either directly or indirectly
(including the acquisition of a partnership or other
interest in Holdings), shall be deemed to occur no
later than such time as a binding agreement of sale
or a letter of intent is entered into, or a
regulatory filing with respect to such acquisition is
made.
3. If Credit Enhancement is provided with respect to a
Holdings Company pursuant to this Section 4.1.3 and
such Credit Enhancement remains in full force and
effect, but the situation giving rise to such credit
enhancement is not covered by Section 4.1.3(b)2 above
(which situations include, but are not limited to (i)
a Permitted Transfer that occurs at any time, (ii)
the election by Holdings to procure credit
enhancement for No-Fault Taxes pursuant to Section
4.1.3(a)4 and (iii) the election by Holdings to
procure credit enhancement pursuant to Section
4.1.3(a)5), the credit enhancement procured shall be
the sole recourse of Transtar, USX and the USX
Companies in seeking to enforce an indemnity (in
which case the relevant Holdings Company shall not be
liable for any indemnity payments owed pursuant to
this Section 4.1).
4. If Holdings does not procure credit enhancement to
protect against No-Fault Taxes, then each Holdings
Company shall be primarily liable, on a several but
not joint basis, for any indemnity payments with
respect to such No-Fault Taxes owed pursuant to this
Agreement.
5. If the amount of credit enhancement procured with
respect to a Holdings Company exceeds the amount of
Applicable Taxes Finally Determined with respect to
such Holdings Company, the amount of credit
enhancement procured or to be procured with respect
to any other Holdings Company chosen by USX for which
Taxes have not been Finally Determined, shall be
increased by a pro-rata share of such excess, with
such share based on a ratio of the Credit Amount of
such Holdings Company to the sum of the Credit
Amounts for all such Holdings Companies. If the
credit enhancement amount for a Holdings Company is
increased pursuant to this subsection, such increased
amount shall be taken into account in applying this
subsection when the Taxes of such Holdings Company
are Finally Determined.
6. The credit enhancement provided pursuant to Section
4.1.3(a)1 and Section 4.1.3(a)2 shall remain in full
force and effect for as long as the indemnifications
secured by such enhancement survive pursuant to this
Agreement.
Section 4.1.4 Acquisition of 50% or More of Ownership Interests in
Holdings.
(a) Holdings shall provide credit enhancement pursuant to Section
4.1.3(a)2 if each of the following conditions has been met.
1. During the Triggering Period there is an acquisition
of a partnership interest (or other interest) in
Holdings, provided that after such acquisition, with
respect to each Holdings Company owned by Holdings at
the time, the percentage of stock owned directly or
indirectly in such Holdings Company, by all persons
owning stock in such corporation immediately after
the Split-off, has decreased in the aggregate by 50%
or more (by vote or value) (after applying the
aggregation and attribution rules in Section
355(e)(4)(C)), and
2. Within 5 years from the date of the Split-off, USX or
Transtar has received from the Internal Revenue
Service or any other taxing authority any written
notice of deficiency, claim or adjustment (including
Internal Revenue Service Form 5701, "Notice of
Proposed Adjustment") involving Taxes that arise from
or are in significant part due to an acquisition of a
partnership or other interest in Holdings described
in Section 4.1.4(a)1 above. Neither USX or Transtar
shall voluntarily notify or otherwise advise the
Internal Revenue Service as to any acquisition of a
partnership or other interest in Holdings; provided,
however, that USX or Transtar may provide any
information requested by the Internal Revenue Service
in the course of an audit concerning Transtar,
including information concerning acquisitions of
partnership or other interests in Holdings.
(b) If the condition in Section 4.1.4(a)1 above is met and the
written notice of deficiency, claim or adjustment described in
Section 4.1.4(a)2 is received more than 5 years from the date
of the Split-off, then each Holdings Company (i) owned 50% or
more by Holdings at the time an indemnity payment is owed
pursuant to Section 4.1.2(a) and (ii) for which Holdings has
not made the election under Section 4.1.3(a)5 to provide
credit enhancement, shall have joint and several liability
with every other such Holdings Company satisfying (i) and (ii)
of this Section 4.1.4(b) for the Taxes described in Section
4.1.4(a)2 with respect to all such Holdings Companies
satisfying (i) and (ii) of this Section 4.1.4(b).
Section 4.1.5 Circumstances for USX Credit Enhancements.
(a) In the event that all or substantially all of the assets or
the stock of the U.S. Steel Group of USX are sold,
transferred, assigned or otherwise disposed of, including
(without limitation) a spin off to all or a portion of the
shareholders of USX, in one or a series of related
transactions during the Credit Period, then USX shall either
(1) provide credit enhancement as provided in Section
4.1.5(b), or (2) require any purchaser, transferee, assignee
or other recipient of the U.S. Steel Group assets to assume
joint and several liability for the obligations of USX and
Transtar under this Section 4.1.
(b) USX shall determine the form of credit enhancement, which
shall be in an amount specified in Section 4.1.5(c) and which
shall, at the option of USX, consist of one or more of the
following.
1. One or more of the following provided by an entity
with investment grade rating from ▇▇▇▇▇'▇ or Standard
& Poors.
(i) Insurance
(ii) Letter of credit
(iii) Surety bond
2. Cash
3. Any other form of credit enhancement reasonably
acceptable to Holdings.
(c) The amount of the credit enhancement shall be $80,000,000 in
the case of a sale, transfer, assignment or other disposition
of all or substantially all of the assets or the stock of the
U.S. Steel Group during the Triggering Period; in all other
instances the amount of the credit enhancement shall be
$40,000,000.
(d) USX may choose a combination of credit enhancements as set
forth in Section 4.1.5(b) as long the total dollar amount of
the credit enhancement is equal to the amount specified in
Section 4.1.5(c).
Section 4.1.6 Duration of Indemnity Provisions / Survival of
Indemnification/Successors and Assigns.
This Section 4.1 shall become effective as of the date of the Split-off
and, except as otherwise provided herein, shall continue in full force and
effect indefinitely.
(a) The indemnifications provided herein shall survive until 30
days after the expiration of the applicable statute of
limitations (including any applicable extensions thereto).
(b) Any reference in this Section 4.1 to a person, party or entity
shall include any successor or assign to such person, party or
entity whether by merger, consolidation, asset transfer or
otherwise.
Section 4.2 Tax Matters Agreement.
Effective as of the Closing Date, USX, Holdings, the USX Companies and
the Holdings Companies shall enter into a Tax Matters Agreement in substantially
the form of Exhibit C attached hereto.
Article V
Transportation Matters
Section 5.1 Transportation Services Agreements.
(a) Effective as of the Closing Date, USX and Fleet shall agree to an
extension of the termination date from March 15, 2005 until March 15, 2009 of
the Transportation Services Agreement dated December 21, 1998, but effective
July 1, 1998 by and among USX; USS/Kobe Steel Company, an Ohio general
partnership, and Fleet, such agreement to be substantially in the form of
Exhibit D (the "Substitute Fleet TSA"). Holdings shall use all commercially
reasonable efforts to negotiate the same extension with Republic Technologies
International, LLC ("RTI").
(b) Effective as of the Closing Date, USX, DM&IR and B&LE shall enter
into a Transportation Services Agreement identical in substance to the
Transportation Services Agreement dated December 21, 1998 but effective July 1,
1998 by and between USX and Transtar except that the "Initial Term" as defined
in Section 2 thereof shall be through June 30, 2008 instead of December 31,
2004, such agreement to be in substantially the form of Exhibit E (the
"Substitute TSA").
Section 5.2 Non-Interference.
Each party hereby agrees that unless required to do so by law or
compelled to act by subpoena or other judicial or regulatory process, for a
period of five (5) years after the Closing Date, it will not, and shall not
permit any of its directors and agents (but only in such individual's capacity
as a director or agent), officers, representatives, counsel, subsidiaries or
affiliates to (and shall not encourage or assist its employees to) (i) comment
in an adverse manner or in any manner express an adverse opinion on behalf of
any person including, without limitation, by submitting any adverse written,
oral or other comments or testimony before any federal, state or local
legislative body, court or other tribunal, governmental agency, commission or
other instrumentality (each a "Governmental Entity") in respect of any proposed
sale or other transaction involving the disposition by the other party of any of
Holdings Companies or the USX Companies (a "Unit Sale"); (ii) in any way on
behalf of such party or any other person to assist, encourage or provide
information to any other person, entity or group seeking to comment in an
adverse manner and/or in any manner express an opinion which in any way opposes
any proposed Unit Sale; (iii) respond on behalf of such party or any other
person in an adverse manner to any investigation, inquiry, or request for
comment or information by or from any Governmental Entity or any other person,
group or entity in respect of any proposed Unit Sale; or (iv) take any action on
behalf of such party to oppose a proposed Unit Sale. Nothing in this Section 5.2
shall be construed or interpreted to prevent or preclude either party from
providing exclusively factual information and/or data in response to any request
from a Governmental Entity. The restrictions set forth in this paragraph shall
not apply to (i) a sale of the DM&IR to the Burlington Northern Santa Fe Railway
("BNSF") or to any successor to the BNSF rail assets utilized for the
transportation and/or transloading of taconite pellets in Minnesota; or (ii) a
sale of Fleet, to a competitor, if the effect of such sale is to leave less than
two major competitors providing transportation of bulk commodities on the Great
Lakes. The parties agree that there currently are four major competitors
providing such service on the Great Lakes: Fleet; American Steamship Company;
The Interlake Steamship Company; and Oglebay Norton.
Article VI
Amendments to 1988 Agreements
Section 6.1 Stockholders Agreement.
(a) Effective as of the Closing Date, USX and Holdings shall terminate
the Stockholders Agreement in substantially the form set forth as Exhibit F (the
"Stockholders Agreement Termination").
(b) Transtar shall pay each of USX and Holdings a pro rata portion of
the monitoring fee pursuant to Section 8.3 of the Stockholders Agreement payable
for the one month period in which the Closing Date occurs, such pro rata portion
to be based on the number of days elapsed in such period.
(c) On the Closing Date, Holdings shall cause ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ or any replacements (collectively, the
"Blackstone Directors") to resign as directors of Transtar.
Section 6.2 Asbestos Assumption and Indemnification Agreement.
Effective as of the Closing Date, the Assumption and Indemnification
Agreement dated as of December 28, 1988 by and among USX, Transtar and Fleet
(the "Assumption Agreement") shall be amended and restated to provide that (i)
USX shall continue its indemnification obligation set forth in Section 1
thereof; (ii) Section 2 thereof shall be modified such that (a) for claims filed
pursuant to Section 2 thereof and filed prior to the Closing Date, (x) Fleet
shall indemnify USX for 56% of all liability incurred by USX and arising with
respect to such claims and (y) Transtar shall indemnify Fleet for 44% of all
liability incurred by Fleet and arising with respect to such claims, and (b) for
claims filed pursuant to Section 2 thereof and filed on or after the Closing
Date, Fleet shall indemnify USX for 100% of all liability arising with respect
to such claims; (iii) other than as set forth in clause (ii)(a)(y) above,
Transtar shall be released from its indemnification obligation set forth in
Section 2 thereof; and (iv) claims subject to the Assumption Agreement which
have been filed prior to the Closing Date and which have been "administratively
dismissed" by a court of competent jurisdiction and which are subsequently
re-filed or otherwise revived by the plaintiff shall, for purposes of the
Assumption Agreement and the amendments contemplated hereby, be deemed to have
been filed on the date on which the original claim to which such re-filed or
revived claim relates was filed, all such amendments to be memorialized in an
agreement to be entered into by and among USX, Transtar and Fleet, to be called
the Amended and Restated Assumption and Indemnification Agreement, and to be
substantially in the form of Exhibit G (the "Asbestos Agreement").
Section 6.3 Environmental Indemnification Agreement.
(a) Effective as of the Closing Date, USX, Holdings and the Holdings
Companies shall enter into a new Environmental Indemnification Agreement
identical in substance to the Environmental Indemnification Agreement dated as
of December 28, 1988 (the "1988 Environmental Agreement") except that (i) the
only beneficiaries of such new agreement shall be Holdings and (ii) the Holdings
Companies and the USX Deductible Amount (as defined in such agreement) shall be
$1,158,826, such agreement to be in substantially the form of Exhibit H (the
"Environmental Indemnification Agreement").
(b) Effective as of the Closing Date, USX and Holdings shall cause
Transtar and the Transtar Companies to terminate the 1988 Environmental
Agreement, such termination to be substantially in the form of Exhibit I (the
"Environmental Agreement Termination").
Section 6.4 USS Name License Agreement.
Effective as of the Closing Date, USX shall and Holdings shall cause
Fleet to enter into an amendment of the License Agreement dated as of December
28, 1988 among USX and Fleet in substantially the form of Exhibit J (the "USS
Name License Agreement") to provide that the term specified in Section 9 thereof
shall terminate on the second anniversary of the Closing Date and that Fleet
shall take the steps specified upon termination within one year thereafter.
Section 6.5 Agreement Concerning Leases, Licenses and Easement.
The Agreement Concerning Leases, Licenses and Easements dated as of
December 28, 1988 by and among USX, Transtar and the Transtar Companies shall
remain in full force and effect so far as they apply to any of the Holdings
Companies.
Section 6.6 Asset Purchase Agreement.
USX, Holdings, Transtar and each Transtar Company shall enter into an
amendment of the Asset Purchase Agreement dated as of December 15, 1988 (the
"1988 Asset Purchase Agreement") to amend Section 10.11 thereof, such amendment
to be substantially in the form of Exhibit K (the "Asset Purchase Agreement
Amendment").
Section 6.7 Services and Technical Assistance Agreement.
Effective as of the Closing Date, USX and Transtar shall enter into an
amendment of the Services and Technical Assistance Agreement dated as of
December 28, 1988 (the "1988 Services Agreement") to delete all references to,
and any obligations implied with respect thereto, the Corresponding Companies
(Direct and Indirect), their respective agents, successors and assigns, such
amendment to be substantially in the form of Exhibit L (the "1988 Services
Agreement Amendment").
Article VII
Inter-Company Services
Section 7.1 Services Agreement.
Effective as of the Closing Date, Transtar will, or will cause a
subsidiary of Transtar reasonably acceptable to Holdings, to, enter into a
services agreement (the "Services Agreement") with Holdings and the Holdings
Companies to provide services to the Holdings Companies (the "Services") on
terms and conditions consistent with Section 7.3 hereof and otherwise reasonably
acceptable to each of Transtar, USX and Holdings, such services agreement to
become effective on the Closing Date. Upon execution of this Agreement,
Transtar, Holdings and the Holdings Companies shall negotiate in good faith to
enter into a mutually acceptable agreement.
Section 7.2 B&LE Services Agreement.
Unless the TCIU Approval has occurred and the Union B&LE Transferees
have been transferred as of the Closing Date, Holdings will cause B&LE to enter
into a services agreement (the "B&LE Services Agreement") with USX and the USX
Companies to provide services (the "B&LE Services") on terms and conditions
consistent with Section 7.4 hereof and otherwise reasonably acceptable to each
of Transtar, USX and Holdings, such services agreement to become effective on
the Closing Date. Upon execution of this Agreement, Holdings, B&LE, USX and the
USX Companies shall negotiate in good faith to enter into a mutually acceptable
agreement.
Section 7.3 Completion of Services Agreement.
USX and Holdings shall complete negotiation of the final terms of the
Services Agreement and the B&LE Services Agreement adhering to the following
principles:
(a) General Terms of Services.
(i) Services should be provided to both the USX Companies
and the Holdings Companies on a non-discriminatory
basis and, unless otherwise mutually agreed, based on
the same priorities as those on which Services were
provided immediately prior to the date of this
Agreement; provided, that nothing set forth herein
shall prohibit Transtar from making changes to such
service priorities which are, individually and in the
aggregate, immaterial.
(ii) Services should be charged based upon costs, without
any ▇▇▇▇-up reflecting profits or a return on
investment. Costs of services purchased from USX by
Transtar for the account of the Holdings Companies
shall be based upon the prices paid for such services
under the 1988 Services Agreement, as in effect on
the date hereof, with no material adjustments to the
costs of such services.
(iii) Costs for services will be charged based on the
principles set forth in Exhibit O attached hereto.
Holdings may once every six months, in conjunction
with the review specified in clause (iv) reduce its
service requirements by written notice delivered to
Transtar; provided that no more than one such notice
may be delivered in any six month period. If Holdings
makes such a reduction, the parties will, in
conjunction with the next succeeding scheduled
Service review, provide for an appropriate reduction
in rates to reflect the effects of reduced
utilization resulting from such reduced Service
requirements.
(iv) The parties to the Services Agreement shall meet
every six months, or more frequently if they so
agree, to perform the reviews specified in Exhibit O
attached hereto and to discuss and attempt to resolve
any requested adjustments to, or disputes or
disagreements regarding, the Services as may exist at
the time of such meeting and will attempt to resolve
any errors or misunderstandings with respect thereto.
(v) To the extent that Transtar finds it necessary or
reasonably desirable to use any software, books,
records or printouts currently used by the B&LE in
providing services to USX, the USX Companies or the
Holdings Companies, which are retained by B&LE and
not transferred to Transtar as a part of the B&LE
Dividend (the "Non-Transferred B&LE Assets") in
connection with the provision of Services, B&LE
shall, and Holdings shall cause B&LE to, upon the
written request of Transtar, license or otherwise
make available to Transtar such Non-Transferred B&LE
Assets in order to allow Transtar to fulfill its
obligations under the Services Agreement. To the
extent that Transtar requests access to any
Non-Transferred B&LE Assets in accordance with the
immediately preceding sentence and B&LE fails to make
available such assets in violation of the
requirements of such sentence, then Transtar shall
not be obligated to provide any Services with respect
to which the use of such unavailable Non-Transferred
B&LE Assets is necessary or reasonably desirable
until such time as such Non-Transferred B&LE Assets
are licensed or otherwise made available to Transtar,
to Transtar's reasonable satisfaction, by B&LE.
(b) Intellectual Property Rights. The Services Agreement should
make clear that each of the USX Companies and the Holdings
Companies will have, other than with respect to third-party
licenses, trade marks, trade names or service marks, either
title to or a perpetual, freely transferable, non-exclusive,
royalty-free license to use all of the intellectual property
currently used in their respective businesses, including
without limitation, all computer software (including all
customizations thereof through closing, all source code and
all object code related thereto). In the event of the
discontinuance of any MIS Services elected by Transtar, the
USX Companies shall assist the Holdings Companies in migrating
from the discontinued MIS Services to the replacement
stand-alone MIS system, including assistance with related
interfaces.
(c) Legal Services. The parties shall discuss and mutually agree
upon allocation of the Transtar legal department services,
including the assignment of at least one Transtar lawyer to
the Holdings Companies, and a mutually acceptable contingency
plan in the event that conflicts of interest arise.
(d) Quality Standards.
(i) The Services provider shall be responsible for
maintaining consistent quality levels for all
Services. Services will be provided on the basis of
(including, without limitation, frequency, schedule,
level of detail and other matters), and at least at,
the quality at which they are currently provided;
provided, that nothing set forth herein shall
prohibit the Service provider from making changes to
the basis on which Services are provided (including,
without limitation, frequency, schedules, level of
detail and other matters) which are, individually and
in the aggregate, immaterial. The quality and level
of services which are currently purchased from USX
pursuant to the 1988 Services Agreement shall be
provided by Transtar to Holdings and the Holdings
Companies based upon the quality and level of such
services currently received under the 1988 Services
Agreement, as in effect on the date hereof, with no
material adjustments to the quality or level of such
services.
(ii) Additional Services or changes to Services may be
requested by the Services recipient and, if provided,
will be provided based upon terms to be negotiated at
the time.
(iii) The Services provider will ensure that the management
information systems relevant to the Services provided
under the Services Agreement are maintained
consistent with customary Transtar service levels.
Upgrades may be requested and, if provided, will be
provided based upon terms to be negotiated at the
time.
(iv) In order to assure Services quality, the parties will
establish mutually agreeable quality benchmarks,
based on current Transtar performance standards. All
costs to develop such benchmarks, and any systems
relating thereto, shall be shared equally by Holdings
and Transtar.
(v) Following notice and reasonable opportunity to cure,
the material and recurring failure on the part of the
Services provider to maintain Services consistent
with the quality of service currently being provided
will provide the Services recipient with the right to
give notice that a "Service Alarm" has occurred. Upon
the declaration of a Service Alarm, the parties shall
immediately consult regarding the best way to resolve
such Service Alarm in a mutually satisfactory manner.
If within 7 calendar days of the declaration of a
Service Alarm there remains a good faith dispute as
to whether or not the conditions necessary to cause a
Service Alarm have occurred, either party may request
mediation or arbitration of the dispute in accordance
with the provisions of Exhibit P, attached hereto. If
either party requests arbitration, the parties shall
proceed directly to arbitrate the dispute in
accordance with Exhibit P, unless the parties
mutually agree to mediation, in which case the
arbitration shall be stayed pending the outcome of
such mediation. Once the parties have entered such
arbitration, the Service recipient shall pay into
escrow all sums due in respect of any Services being
so disputed; provided, however, upon final
determination of such arbitration process, all such
escrowed payments, including any interest in respect
of such escrowed funds, shall be delivered as
promptly as practicable to the party whom the
arbitrators determined is entitled to such sums.
(e) Termination; Renewal Option.
(i) Subject to the following renewal and discontinuance
options, the Services Agreement shall have a term of
four years; provided that, subject in all cases to
the applicable renewal option, the Services Agreement
shall terminate as to any Holdings Company on the
date which is six months after the date of the sale
of all or substantially all of the outstanding
capital stock of such Holdings Company by Holdings
(or, if all or substantially all of the general
partnership interest owned by Blackstone
Transportation Company, Inc., or any of its
affiliates, is sold), the Services Agreement will
terminate in its entirety six months after such sale.
Such six month period will be extended up to an
additional six months in the event that a Holdings
Company (or Holdings) is purchased by a buyer who
elects to so extend the six month period. Upon
termination of the Services Agreement, in whole or in
part, the Services provider will cooperate in good
faith with the Services recipient to assist in a
reasonable transition of the relevant Services and,
if not otherwise being used by the Services provider,
the related infrastructure to the Services recipient,
Holdings or the purchaser of the applicable Holdings
Company, as the case may be. Other than to assist and
cooperate with the migration to a new service
provider, the Services provided pursuant to this
agreement do not include transition and installation
services.
(ii) Any Services with respect to any Holdings Company
(including any portion of the Services) under the
Services Agreement may be discontinued by the
recipient in accordance with Section 7.3(a)(iii) of
this Agreement.
(iii) The Services Agreement will provide that, upon the
sale of any Holdings Company (or the sale of all or
substantially all of the general partnership interest
owned by Blackstone Transportation Company, Inc., or
any of its affiliates), USX will negotiate in good
faith with the purchaser of such Holdings Company
regarding the renewal of the Services Agreement for
period of up to two years from the termination date
(including any extension period available to such
purchaser) set forth in clause (i) above. Any party
wishing to renew the Services Agreement will agree to
negotiate in good faith regarding the fees to be paid
for such services which shall be charged on an
arm's-length basis.
(iv) Upon termination of the Services Agreement, USX, at
Holdings' request, will provide Holdings or the
relevant Holdings Company with the opportunity to
hire any redundant or excess Transtar personnel
involved in providing Services to the Holdings
Companies and shall take reasonable steps to
cooperate with Holdings in making known to such
employees the option to be employed by Holdings. To
the extent that Transtar personnel elect to become
employed by Holdings or any Holdings Company (or such
personnel decline employment with Holdings or any
Holdings Company and are thereafter terminated by
Transtar or any other USX Company), Transtar shall
make available to the Holdings Companies the computer
workstations and related physical assets of such
personnel at no additional cost to the Holdings
Companies or Holdings; provided, however, such
workstations and assets will not be so provided
unless such workstations and assets are owned by the
USX Companies and are not otherwise being used by the
USX Companies.
(f) Miscellaneous.
(i) If a USX Company, other than Transtar, is sold,
Transtar will retain all personnel necessary to
perform all functions required under the Services
Agreement or, alternately, transfer such function to
USX or another USX Company without diminution or
disruption in service levels or quality.
(ii) If Transtar is sold, USX will assume or cause the
purchaser to assume the obligations under the
Services Agreement without diminution or disruption
in service levels or quality.
(iii) All Services provided pursuant to the Services
Agreement will be subject to a force majeure
provision substantially in the form of Section 3 of
Exhibit P.
(iv) No warranty, implied or otherwise, is provided with
any Service or transition assistance. USX and the USX
Companies disclaim all liability, including that
arising from the negligence of USX and the USX
Companies or any of their directors, officers,
employees, agents, contractors or suppliers for any
Service provided or any failure to perform under the
Services Agreement, except for that which arises out
of the bad faith, gross negligence or intentional
misconduct of USX or the USX Companies. Holdings and
the Holdings Companies' sole remedy for breaches of
the Services Agreement shall lie under the
arbitration provisions of Exhibit P. No officer,
director, employee or consultant of USX or any USX
Company shall have any personal liability for a
breach of this Agreement other than liability based
on such person's gross negligence or intentional
misconduct.
(v) Holdings and the Holdings Companies ("Indemnitors")
shall defend, indemnify and save harmless USX and the
USX Companies and their directors, officers,
employees, agents, contractors or suppliers
(collectively, "Indemnitees") from and against any
and all obligations, liabilities, claims suits,
demands, losses and expenses, including reasonable
attorneys' fees, (collectively "Damages") arising out
of the work to be performed under the Services
Agreement, and asserted against the Indemnitees by
any persons or entity (including employees of the
Indemnitors) provided that any such Damages are
attributable to bodily injury, sickness, disease or
death, or to injury to or destruction of tangible
property (other than the work itself) including loss
of use resulting therefrom. The Indemnitors agree to
defend, indemnify and save harmless the Indemnitees
hereunder regardless of whether or not said Damages
are caused or are alleged to be caused in part by the
negligent acts or omissions of the Indemnitees. The
parties specifically understand and agree that this
indemnity and hold harmless shall not apply to
Damages caused by the sole negligence of the
Indemnitees.
(vi) Transtar may decline to provide any Service herein if
such Service would conflict with any applicable law,
regulation or ordinance, would, with respect to legal
Services, result in a conflict of interest (such
conflict of interest to be determined according to
the applicable professional disciplinary code) or
would be inconsistent with any provision of the
Services Agreement. In any such event, Transtar shall
provide prompt written notice to Holdings and/or the
relevant Holdings Company, specifying the basis
therefor, and Transtar agrees to assist such company
in obtaining substitute services. Notwithstanding the
foregoing, Transtar agrees to use reasonable efforts
to resolve any such conflict of law, regulation or
ordinance or conflict of interest.
(vii) The Services Agreement is to be governed by the laws
of the Commonwealth of Pennsylvania, except for the
conflicts provisions thereof.
(viii) The Services Agreement is to provide that there shall
be no assignment of rights and obligations by any
party (except that Transtar may (i) assign to or
subcontract with USX or (ii) assign to any wholly
owned, direct or indirect, subsidiary of USX or
subcontract with a third-party as long as Transtar
remains obligated) and there shall be no third-party
beneficiary rights; provided that nothing in this
clause (viii) shall be construed to deny any
purchaser of Holdings or any Holdings Company the
benefits of Section 7.3(e)(i) of this Agreement.
(ix) Holdings and the Holdings Companies agree to
indemnify and save harmless USX and the USX Companies
for any sales or use taxes of similar-type taxes
imposed on services performed under the Services
Agreement.
(x) Once executed and delivered, the Services Agreement
shall supersede this Section 7.3.
Section 7.4 Completion of B&LE Services Agreement.
Simultaneously with the negotiation of the Services Agreement, the
parties shall negotiate the terms of the B&LE Services Agreement based upon the
applicable principles set forth in Section 7.3 of this Agreement, applied
mutatis mutandis, in light of the changes in the parties, roles and the services
to be delivered.
Section 7.5 Building Lease.
B&LE and Transtar shall enter into a lease (the "Monroeville Building
Lease") on the terms set forth in Exhibit Q hereto, and otherwise on terms
mutually acceptable to the parties in their reasonable discretion.
Article VIII
Mutual Assumptions Concerning
Transtar and the Transtar Companies
Section 8.1 Mutual Assumptions.
In deciding to enter into the transactions contemplated herein, USX and
Holdings have made the following assumptions about Transtar and each of the
Transtar Companies:
8.1.1 Existence and Organization.
(a) Each of Transtar and the Transtar Companies is a
corporation duly incorporated, validly existing and
in good standing under the law of the state of its
incorporation and is duly qualified and in good
standing as a foreign corporation in each
jurisdiction where such qualification is required to
carry out its obligations hereunder or where the
failure to be so qualified would result in a material
adverse effect on the business, properties, financial
condition or results of operations (a "Material
Adverse Effect") of the Transtar Companies, taken as
a whole. For purposes of this Agreement, "Material
Adverse Effect" shall not include effects resulting
from (i) changes in laws and regulations impacting
the transportation industry generally, or (ii) except
with respect to Section 11.1.4(b) and 11.2.4(b), the
impact on Transtar or any of the Transtar Companies
business of the loss or reduction of any customer or
supplier relationship, other than USX or an affiliate
(as such term is defined pursuant to Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) or
the resignation of any employee resulting from the
transactions contemplated by this Agreement.
(b) No amendments or modifications thereto have been
adopted or are contemplated to the Certificate of
Incorporation, By-laws or other constituent document
(the "Constituent Documents") of each of Transtar and
the Transtar Companies and each remains in full force
and effect on the date hereof.
(c) None of Transtar or the Transtar Companies is the
subject of any voluntary or involuntary bankruptcy,
liquidation, reorganization, or dissolution and none
is contemplated.
(d) The authorized capital stock of Transtar and each of
the Transtar Companies is as set forth in its
Constituent Documents; the number of shares
outstanding for Transtar as of the date hereof is set
forth in the recitals of this Agreement and the
number of shares outstanding for each of the Transtar
Companies is as set forth in Schedule 8.1.1. There
are no options, warrants, or other rights outstanding
obligating any of Transtar or the Transtar Companies
to issue any shares of its capital stock.
(e) Each share of Transtar Company stock (a) has been
duly and validly authorized and issued, is fully paid
and non assessable and is not the subject of any
preemptive or other right; and (b) is legally and
beneficially owned by Transtar on the date hereof
free and clear of any lien, encumbrance or other
claim.
8.1.2 Corporate Authority.
(a) Each of Transtar and the Transtar Companies has full
power and authority to own its properties and to
conduct its business and operations as currently
conducted.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein
have been approved by the Board of Directors of
Transtar and by USX and Holdings as the sole holders
of A Stock and no other shareholder or other
corporate approval or action is required on the part
of Transtar or any of the Transtar Companies. This
Agreement constitutes a legal, valid and binding
obligation of Transtar enforceable against it in
accordance with its terms, except to the extent that
its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles.
8.1.3 Conflicts and Consents. The execution and delivery by Transtar of
this Agreement and the consummation of the transactions contemplated herein does
not conflict with, violate, constitute an event of default, require the consent
of any government entity or other third party or result in the creation of a
lien or encumbrance under (a) the Constituent Documents of Transtar or any of
the Transtar Companies; (b) any law, regulation, ordinance, judicial decree or
administrative order binding upon Transtar, the Transtar Companies or their
respective properties except for approvals required from (i) the Surface
Transportation Board ("STB") under the Interstate Commerce Commission
Termination Act of 1995 and (ii) the Department of Justice or the Federal Trade
Commission under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended ("HSR"), and (c) any mortgage, indenture, lease, contract or other
agreement binding upon Transtar, any Transtar Company or their respective
properties, except with respect to clause (c) for such violations or defaults
which would not have a material adverse effect on the business, properties,
financial condition or results of operation of Transtar and the Transtar
Companies, taken as a whole.
8.1.4 Transtar Disclosure Documents. USX and Holdings have true and
complete copies of the Annual Report on Form 10-K for the year ended December
31, 1999; Quarterly Reports on Form 10-Q for the Quarters ended March 31 and
June 30, 2000 and the Current Report on Form 8-K dated July 17, 2000 of Holdings
(the "Transtar Disclosure Documents").
8.1.5 Financial Statements.
(a) The consolidated financial statements of Transtar and the
Transtar Companies contained in the Transtar Disclosure
Documents were prepared in accordance with generally accepted
accounting principles consistently applied (except for changes
noted therein, if applicable) and fairly present in all
material respects the financial position of Transtar and the
Transtar Companies on a consolidated basis as of the dates
thereof and the results of operations and statement of cash
flows of Transtar and the Transtar Companies on a consolidated
basis. The periods ended on such dates are subject in the case
of unaudited interim financial statements to normal year-end
adjustments. PricewaterhouseCoopers, LLP, whose report on the
annual financial statements contained therein, are independent
public accountants as defined by regulations of the Securities
and Exchange Commission.
(b) In contemplation of this transaction, Transtar has previously
delivered to USX and Holdings monthly income statements for
each month of 1999 and 2000 (through June in the case of 2000)
and balance sheets as of the end of each month of 1999 and
2000 (through June in the case of 2000) for each Transtar
Company (the "Unit Financial Statements"). The Unit Financial
Statements fairly present in all material respects the
financial position of each Transtar Company as of the dates
thereof and the results of operations, subject in each case to
normal year-end and consolidating adjustments.
8.1.6 Legal Proceedings and Violations. Except as disclosed in the
Transtar Disclosure Documents and a letter from Transtar dated the date hereof
(the "Transtar Disclosure Letter"), (a) there are no legal proceedings pending
or threatened against Transtar or any of the Transtar Companies which,
individually or in the aggregate, if adversely decided, would have a Material
Adverse Effect on the USX Companies, taken as a whole; or the Holdings
Companies, taken as a whole, (b) none of the Transtar Companies is in violation
of any law, regulation, ordinance, judicial decree or administrative order
(including, but not limited to, any environmental or employee benefit law) which
violation, individually or in the aggregate, would have a Material Adverse
Effect on the USX Companies, taken as a whole; or the Holdings Companies, taken
as a whole, and (c) each of the Transtar Companies has all licenses, permits and
other governmental grants of authority ("Permits") necessary to own its
respective assets and conduct its business as currently conducted except for the
absence of Permits which, individually or in the aggregate, would not have a
Material Adverse Effect on the USX Companies, taken as a whole; or the Holdings
Companies, taken as a whole.
8.1.7 Changes Since December 31, 1999. Since December 31, 1999, a) the
business of Transtar and the Transtar Companies has been conducted in the
ordinary course, consistent with past practice; (b) none of Transtar or the
Transtar Companies or their respective properties has suffered any fire, loss or
other casualty that has resulted in or is likely to result in the future in a
Material Adverse Effect on the USX Companies, taken as a whole; or the Holdings
Companies, taken as a whole, and (c) there has not occurred any condition that
has had, or with the passage of time, the giving of notice or both, will have a
Material Adverse Effect on the USX Companies taken as a whole; or the Holdings
Companies, taken as a whole.
8.1.8 Taxes.
(a) As used herein "Taxes and Code" shall have the
meanings given in Section 4.1.
(b) Each of Transtar and each Transtar Company has filed
or caused to be filed on a timely basis all material
tax returns, statements, schedules or other written
notice required to be filed with the Internal Revenue
Service ("IRS") or any state or local taxing
authority relating to Taxes ("Tax Returns"). Each
such Tax Return was complete and accurate in all
respects except for deficiencies which will not have
a Material Adverse Effect on the USX Companies, taken
as a whole; or the Holdings Companies, taken as a
whole.
(c) All Taxes to be paid pursuant to any Tax Return have
been paid, or fully reserved in the Interim Financial
Statements, and no other Taxes are due and payable by
Transtar or any Transtar Company except for
deficiencies which will not have a Material Adverse
Effect on the USX Companies taken as a whole, or the
Holdings Companies, taken as a whole.
(d) All Taxes under the Code have been resolved except
for all fiscal years following 1995.
(e) No legal proceeding, audit or review is pending or
threatened against Transtar or any Transtar Company
regarding any Taxes except for matters that,
individually and in the aggregate, will not have a
Material Adverse Effect on the USX Companies, taken
as a whole, or the Holdings Companies, taken as a
whole.
(f) Except as contemplated by Section 4.2 hereof, neither
Transtar or any Transtar Company is party to or bound
by any material tax sharing, indemnity, allocation or
similar agreement.
8.1.9 Benefit Plans.
(a) All pension, retirement, profit sharing, Section
401(k), thrift-savings, individual retirement
account, excess benefit plan, deferred compensation,
incentive compensation, stock bonus, stock option,
restricted stock, cash bonus, employee stock
ownership (including, without limitation, payroll
related employee stock ownership), severance pay,
cafeteria, flexible compensation, life insurance,
medical, dental, disability, or vacation plans or
arrangements of any kind and any other Employee
Pension Benefit Plan or Employee Welfare Benefit Plan
(as defined in Section 3 of ERISA), incentive
compensation plan or fringe benefit or any
combination of the foregoing established, maintained,
sponsored, contributed to or otherwise participated
in by any of Transtar or the Transtar Companies for
any of its current or past employees have been filed
by Transtar as exhibits to the Transtar Disclosure
Documents or are set forth in Schedule 8.1.9 (the
"Transtar Plans").
(b) Each Transtar Plan has been administered in
compliance with the terms of such plan and all
applicable laws, regulations and rules except for
such failures that individually or in the aggregate
would not have a Material Adverse Effect on the USX
Companies, taken as a whole; or the Holdings
Companies, taken as a whole.
(c) No "Reportable Event" as such term is defined in
Section 4043 of ERISA has occurred with respect to
any Transtar Plan (other than as a result of or with
respect to the transactions contemplated by this
Agreement) and no accumulated funding deficiency as
such term is defined in Section 412 of the Code has
occurred in relation to any Transtar Plan.
(d) Each Employee Pension Benefit Plan (as defined in
Section 3 of ERISA) is the subject of a favorable
determination letter issued by the IRS under Section
401(a) of the Code, no challenge to such
determination is pending or threatened and no facts
or circumstances exist that would be grounds for
revocation of such determination letter.
(e) An Annual Report on Form 5500 for each Transtar Plan
as of December 31, 1999 has been filed and the
financial statements and other information contained
therein are complete and accurate in all material
respects.
8.1.10 Material Contracts.
(a) "Material Contracts" shall mean any contract,
indenture, purchase order or other agreement to which
Transtar or any Transtar Company is a party and which
(i) is outside of the ordinary course of business;
(ii) one of the ten largest in terms of year 2000
transaction dollars for each of the purchase, sale or
lease of any goods and services, other than those
with USX, USS/Kobe Steel Company, U.S. Steel Mining
LLC, or Republic Technologies International LLC as
successor by merger to USS/Kobe Steel Company; (iii)
one of the ten largest in terms of 2000 transaction
dollars for transportation services other than those
with USX, USS/Kobe Steel Company, U.S. Steel Mining
LLC, or Republic Technologies International LLC as
successor by merger to USS/Kobe Steel Company; (iv)
involves expenditures or receipts by Transtar or the
Transtar Companies of more than $1,000,000 other than
those detailed in (ii) and (iii); and (v) any
agreement with any governmental body.
(b) Except as disclosed in the Transtar Disclosure
Letter, all Material Contracts are in full force and
effect and neither Transtar nor the Transtar
Companies has given or received written notice of any
event of force majeure, breach, default or condition
which, with the passage of time, the giving of notice
or both would constitute a breach or default.
8.1.11 Insurance. All insurance in effect covering Transtar and the
Transtar Companies at any time since January 1, 2000 remains in full force and
effect and there have been no claims made, or facts and circumstances existing,
that would be grounds for a claim except for matters that, individually and in
the aggregate, will not have a Material Adverse Effect on the USX Companies
taken as a whole, or the Holdings Companies, taken as a whole.
8.1.12 Title to Properties. The Transtar Companies own or lease all of
their assets, including rights of way, free and clear of any and all security
interests, mortgages or other monetary lien, except for (a) precautionary
security interest filings in connection with leases, (b) liens granted under the
Transtar Credit Agreement, or (c) other matters which, individually or in the
aggregate, would not have a Material Adverse Effect on the USX Companies, taken
as a whole, or the Holdings Companies, taken as a whole.
8.1.13 Condition and Sufficiency of Assets. The physical condition of
the assets owned or leased by the Transtar Companies (a) are adequate for the
uses to which they are being put; (b) are in good operating condition consistent
with their age and ordinary wear and tear; and (c) have been maintained
consistent with standard practice in the transportation industry except in each
case for such defects which, individually or in the aggregate, would not have a
Material Adverse Effect on the USX Companies, taken as a whole, or the Holdings
Companies, taken as a whole. Except as set forth on Schedule 8.1.13 (x), the
assets owned, leased or licensed by the Holdings Companies after the Closing
Date are all of the material assets currently used in the conduct of the
business of the Holdings Companies and are sufficient to allow Holdings and the
Holdings Companies to conduct the business of the Holdings Companies as
currently conducted. Except as set forth on Schedule 8.1.13 (y), the assets
owned, leased or licensed by the USX Companies after the Closing Date are all of
the material assets currently used in the conduct of the business of the USX
Companies and are sufficient to allow USX and the USX Companies to conduct the
business of the USX Companies as currently conducted. Immediately following the
Closing Date, the Holdings Companies and the USX Companies, as the case may be,
shall own the assets reflected on the balance sheet of each such company
provided in the June 30, 2000, Unit Financial Statements, together with any
assets thereafter acquired by such company, less (i) all assets disposed of in
transactions expressly permitted or required hereunder and (ii) all assets sold,
transferred or otherwise disposed of to persons who are not affiliates of
Transtar in the ordinary course of business consistent with past practice.
8.1.14 Environmental Matters.
(a) As used herein, "Environmental Law" shall mean federal, state
and local laws, implementing regulations and applicable
regulatory permits relating to pollution or protection of the
environment, including laws concerning hazardous and toxic
substances, emissions, releases and discharges of pollutants,
wastes and other substances into ambient air, surface water,
ground water or land including, but not limited to, the
Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act, the Hazardous Material Transportation Act,
and the Emergency Planning and Community Right to Know Act.
(b) As used herein, "Hazardous Materials" means petroleum or any
byproducts or fractions thereof; asbestos in any form;
polychlorinated biphenyl; urea formaldehyde and any other
chemical, material or substance (whether in solid, liquid or
gaseous form) defined in, or included in, the definition of
"hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted
hazardous waste," "toxic substances" or "toxic pollutants" or
words of similar import under any applicable Environmental Law
and any other chemical, material or substance (whether in
solid, liquid or gaseous form), exposure to which is
prohibited, limited or regulated by any governmental authority
under, or which may otherwise form the basis of liability
(whether for cleanup or otherwise), under any Environmental
Law.
(c) Except as set forth in the Transtar Disclosure Documents and
the Transtar Disclosure Letter, Transtar and the Transtar
Companies are in full and complete compliance with
Environmental Laws except for violations that, individually or
in the aggregate, would not have a Material Adverse Effect on
the USX Companies, taken as a whole, or the Holdings
Companies, taken as a whole.
(d) No Hazardous Materials have been disposed of on the properties
of any of the Transtar Companies except for amounts that the
cleanup of which in accordance with Environmental Laws
individually or in the aggregate would not have a Material
Adverse Effect on the USX Companies, taken as a whole, or the
Holdings Companies, taken as a whole.
(e) Except for the environmental reports commissioned by USX and
Holdings in connection with the 1988 Asset Purchase Agreement
there are no reports, studies, audits or other analysis of
compliance, non-compliance or possible liability of Transtar
or any of the Transtar Companies under any Environmental Laws.
(f) There are no proceedings or investigations pending or
threatened by any governmental entity against Transtar or any
Transtar Company concerning compliance, non-compliance or
possible liability under any Environmental Laws.
(g) There are no consent or other judicial decrees, administrative
orders or findings or agreements with any governmental
authority relating to Environmental Laws binding upon
Transtar, any Transtar Company or any of their properties.
8.1.15 Labor Matters.
(a) There is no labor strike, lockout or other work stoppage in
effect or threatened against Transtar or any of the Transtar
Companies.
(b) There are no labor arbitration, grievance or complaint pending
against Transtar or any of the Transtar Companies except for
those where an adverse determination, individually or in the
aggregate, would not result in a Material Adverse Effect on
the USX Companies, taken as a whole; or the Holdings
Companies, taken as a whole.
(c) There is no union organizing campaign or vote pending
involving Transtar or any of the Transtar Companies.
(d) Transtar and the Transtar Companies have complied in all
material respects with the provisions of all collective
bargaining agreements except for matters that, individually or
in the aggregate, would not result in a Material Adverse
Effect on the USX Companies, taken as a whole; or the Holdings
Companies, taken as a whole.
8.1.16 No Prior Discussions. As of the date this Agreement is executed,
neither Transtar or any Transtar Company is party to any agreement,
understanding, arrangement or substantial negotiations concerning the sale,
transfer or other disposition, either directly or indirectly, of the stock of
Transtar or any Transtar Company or substantially all of the assets of Transtar
or a Transtar Company and there have been no substantial negotiations concerning
such a sale, transfer or other disposition by any officer, employee or advisor
or agent (if such advisor or agent is acting pursuant to the direction of such
officer or employee) of Transtar.
Article IX
Representations and Warranties
9.1 Representations and Warranties of USX.
USX represents and warrants to Holdings the following:
9.1.1 Existence and Organization. USX is a corporation duly
incorporated, validly existing and in good standing under the law of the State
of Delaware and is duly qualified and in good standing as a foreign corporation
in each jurisdiction where such qualification is required to carry out its
obligations hereunder.
9.1.2 Corporate Authority.
(a) USX has full power and authority to own its properties and to
conduct its business and operations as currently conducted.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been
approved by the Board of Directors of USX and no shareholder
or other corporate approval or action is required on the part
of USX. This Agreement constitutes a legal, valid and binding
obligation of USX enforceable against it in accordance with
its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles.
9.1.3 Conflicts and Consents. The execution and delivery by USX of this
Agreement and the consummation of the transactions contemplated herein does not
conflict with, violate, constitute an event of default, require the consent of
any government entity or other third party or result in the creation of a lien
or encumbrance under (a) the Constituent Documents of USX; (b) any law,
regulation, ordinance, judicial decree or administrative order binding upon USX
or its properties except for approvals required from the STB and under HSR and
(c) any material mortgage, indenture, lease, contract or other agreement binding
upon USX or its properties except with respect to clause (c) for violations or
defaults which will not have a Material Adverse Effect on the Holdings Companies
taken as a whole, and will not affect the ability of USX, Transtar and The
Transtar Companies to consummate the transactions contemplated hereby.
9.1.4 No Prior Discussions. As of the date this Agreement is executed,
neither USX or any affiliate of USX is party to any agreement, understanding,
arrangement or substantial negotiations concerning the sale, transfer or other
disposition (other than a Permitted Transfer), either directly or indirectly, of
the stock of Transtar or any USX Company or substantially all of the assets of
Transtar or a USX Company and there have been no substantial negotiations
concerning such a sale, transfer or other disposition by any director, officer,
employee or advisor or agent (if such advisor or agent is acting pursuant to the
direction of such director, officer or employee) of USX or any affiliate of USX.
9.1.5 Ownership of USX Stock. USX owns beneficially and of record all
of the USX Stock free and clear of any lien claim or encumbrance.
9.2 Representations and Warranties of Holdings.
Holdings represents and warrants to USX the following:
9.2.1 Existence and Organization. Holdings is a limited partnership
duly formed, validly existing under the law of the State of Delaware and is duly
qualified and in good standing as a foreign limited partnership in each
jurisdiction where such qualification is required to carry out its obligations
hereunder.
9.2.2 Authority.
(a) Holdings has full power and authority to own its properties
and to conduct its businesses and operations as currently
conducted.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been
approved by the appropriate governing body of Holdings and no
partner or other similar approval or action is required on the
part of Holdings. This Agreement constitutes a legal, valid
and binding obligation of Holdings enforceable against it in
accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles.
9.2.3 Conflicts and Consents. The execution and delivery by Holdings of
this Agreement and the consummation of the transactions contemplated herein do
not conflict with, violate, constitute an event of default, require the consent
of any government entity or other third party or result in the creation of a
lien or encumbrance under (a) the Constituent Documents of Holdings; (b) any
law, regulation, ordinance, judicial decree or administrative order binding upon
Holdings or its properties except for approvals required from the STB and under
HSR, and (c) any material mortgage, indenture, lease, contract or other
agreement binding upon Holdings or its properties other than the 13 3/8% Series
B Senior Discount Notes due December 15, 2003 issued by Holdings and Transtar
Capital Corporation (the "Holdings Notes") except with respect to clause (c) for
violations or defaults which will not have a Material Adverse Effect on the
financial position or results of operation of the USX Companies, taken as a
whole and will not affect the ability of Holdings, Transtar and the Transtar
Companies to consummate the transactions contemplated hereby.
9.2.4 No Prior Discussions. As of the date this Agreement is executed,
neither Holdings or any affiliate of Holdings is party to any agreement,
understanding, arrangement or substantial negotiations concerning the sale,
transfer or other disposition (other than a Permitted Transfer), either directly
or indirectly, of the stock of Transtar or any Holdings Company or substantially
all of the assets of a Holdings Company and there have been no substantial
negotiations concerning such a sale, transfer or other disposition by any
partner, officer, employee or advisor or agent (if such advisor or agent is
acting pursuant to the direction of such partner, officer or employee) of
Holdings or any affiliate of Holdings.
9.2.5 Ownership of Holdings Stock. Holdings owns beneficially and of
record all of the Holdings Stock free and clear of any lien, claim or
encumbrance, and on the Closing Date, upon the consummation of the closing of
the redemption contemplated herein, will deliver to Transtar good and marketable
title to the Holdings Stock free and clear of any lien, claim or encumbrance.
9.3 Representations Exclusive.
The parties acknowledge that the representations set forth in this
Article IX are the sole and exclusive representations of the parties. Without
limiting the foregoing the parties acknowledge that none of the matters set
forth in Article VIII constitutes a representation by any of the parties hereto
or any of the Transtar companies.
Article X
Certain Covenants
Section 10.1 Interim Operations.
From the date hereof and until the Closing Date, (i) USX and Holdings
agree that they will cause Transtar and each of the Transtar Companies to and
(ii) Transtar will and will cause each of the Transtar Companies to:
(a) Except as expressly contemplated by, or as required to
implement this Agreement, conduct their business and maintain
their assets only in the ordinary course and consistent with
past practice;
(b) Duly and punctually pay and perform all of its contractual
obligations in accordance with the terms thereof;
(c) Not sell, pledge or assign any capital stock of any Transtar
Company nor issue or agree to issue any share of its capital
stock;
(d) Except as expressly contemplated by, or as required to
implement this Agreement, not amend any of the Constituent
Documents of Transtar or any of the Transtar Companies;
(e) Not acquire any assets or the securities of any person other
than in the ordinary course of business consistent with past
practice;
(f) Not dispose of any assets other than (i) the sale of obsolete
equipment and supplies in the ordinary course of business
consistent with past practice or (ii) the sale or lease of
real property in the ordinary course of business consistent
with past practice;
(g) Not make any capital authorizations or expenditures, or enter
into any agreements in connection therewith, other than for
amounts and items in the form of and contemplated in the 2000
Capital Plan (including the amendment in respect of the
Bessemer Car Fleet specified in the Letter dated May 30, 2000
from ▇▇▇▇▇▇ ▇▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) and
which do not exceed $31,434,000 in the aggregate with respect
to USX Companies and $16,526,000 in the aggregate with respect
to Holdings Companies;
(h) Except as contemplated in the 2000 Business Plan, not enter
into any contract or agreement that would (i) constitute a
Material Contract or (ii) any contract for a term longer than
six months (assuming that all cancellation rights are promptly
exercised on the Closing Date or as soon thereafter as
possible);
(i) Not establish nor amend any employee benefit plan except as
contemplated in Article III hereof;
(j) Not grant any salary or wage increase or pay any bonus except
for increases granted to employees other than elected officers
in accordance with the existing program or except as
explicitly agreed to in writing by USX and Holdings;
(k) Not incur, guarantee or become liable for any indebtedness for
money borrowed, except for guarantees (i) made by one of the
Holdings Companies for the benefit of another Holdings
Company; or (ii) made by one of the USX Companies for the
benefit of another USX Company.
(l) Not declare, set aside, pay or make any distribution in
respect of any of its capital stock or purchase, redeem,
otherwise acquire any of its capital stock or make any capital
contributions (except as authorized by Sections 2.2, 2.3 and
2.5 hereof);
(m) Not grant any stock or options under the Management Plans;
(n) Not allow any substantial negotiations by the officers,
employees, or agents (if such agents are acting pursuant to
the direction of such officers or employees) of Transtar or
the Transtar Companies concerning any agreement,
understanding, or arrangement concerning the sale, transfer or
other disposition, either directly or indirectly, of the stock
of Transtar or any Transtar Company or substantially all of
the assets of Transtar or a Transtar Company.
(o) Not enter into, modify, amend, supplement or terminate any
binding agreement or contract with any affiliate of Holdings
or USX (other than the Transtar Companies), except in the
ordinary course of business, consistent with past practice.
(p) Not agree to any material change in any insurance policy,
including, but not limited to, any change which would impair
Transtar's, or any of the Transtar Companies', rights to
extend the discovery period for claims made against any claims
made insurance policies.
(q) Not authorize or agree with any person nor make any commitment
to do any of (c) through (p) above.
Section 10.2 Regulatory Approvals
(a) Promptly upon the execution of this Agreement Transtar, Holdings
and USX shall apply to the STB for approval under and for an exemption from the
requirements of the ICC Termination Act of 1995 (49 USC 11323).
(b) Promptly upon the execution of this Agreement, Transtar, Holdings
and USX shall make all filings necessary with the Federal Trade Commission and
the Department of Justice under HSR.
Section 10.3 Future Disposition of Units.
(a) Holdings agrees that until the six-month anniversary of the Closing
Date, it will not (i) sell, transfer, or assign (or enter into a definitive
agreement to sell) the stock of any Holdings Company (except for a Permitted
Transfer); (ii) actively solicit its partners to sell, transfer or assign a
partnership or other interest in Holdings to another person (other than a
Permitted Transfer) or actively initiate or promote such a sale, transfer or
assignment (but Holdings shall not be prevented from taking any action required
to be taken by it under the Holdings Limited Partnership Agreement in respect to
the sale or transfer of a limited partnership interest in Holdings), (iii) allow
the sale, transfer or assignment of all or substantially all of the assets of
any Holdings Company; (iv) enter into substantial negotiations to do (i), (ii)
or (iii) above; or (v) allow any Holdings Company to fail to continue to conduct
its current business such that such Holdings Company is not engaged in the
active conduct of a trade or business within the meaning of Section 355(b) of
the Code.
(b) USX agrees that until the six month anniversary of the Closing
Date, it will not (i) sell, transfer, or assign (or enter into a definitive
agreement to sell) the stock of any USX Company (except for a Permitted
Transfer); (ii) allow the sale, transfer or assignment of all or substantially
all of the assets of any USX Company; (iii) enter into substantial negotiations
to do (i) or (ii) above; or (iv) allow any USX Company to fail to continue to
conduct its current business such that such USX Company is not engaged in the
active conduct of a trade or business within the meaning of Section 355(b) of
the Code.
(c) USX agrees that if at any time prior to the fourth anniversary of
the Closing Date, it directly or indirectly sells, transfers, assigns or
otherwise disposes of all of the capital stock of EJ&E or allows EJ&E to sell
all or substantially all of its assets in a transaction or series of related
transactions for a purchase price in excess of the Base EJ&E Price (defined
below), it will pay to Holdings 56% of the proceeds (including without
limitation, (i) the proceeds of any dividend to USX, or its affiliates, by EJ&E
financed through the issuance of any indebtedness to the extent EJ&E, or the
purchaser, remains liable for any such indebtedness at the time of such sale,
transfer, assignment or other disposition and (ii) the amount of any
indebtedness of USX or its subsidiaries (other than EJ&E) which is assumed by
the acquirer in such transaction) received above the Base EJ&E Price. The "Base
EJ&E Price" shall mean $205 million, increased by the fair market value of any
indebtedness for borrowed money retained by USX or an affiliate of USX (or, in
the case of the last proviso of this section, such purchaser) in a transaction
or series of related transactions contemplated by this Section 10.3(c). In the
event that the capital stock or assets of EJ&E are sold, transferred, assigned
or otherwise disposed of as part of a transaction or series of related
transactions including additional stock or assets, then (x) the provisions of
this Section 10.3(c) shall have no effect upon such sale, transfer, assignment
or other disposition (whether by merger, consolidation, sale, contribution or
otherwise) in one or a series of related transactions if (i) all or
substantially all of the properties of the U. S. Steel Group of USX are sold,
transferred, assigned or otherwise disposed of in such transaction; or (ii) the
revenues of EJ&E during the last calendar year prior to such transaction were
25% or less of the total revenue of all the legal entities or businesses sold,
transferred, assigned or otherwise disposed of in such transaction; provided
however, that, notwithstanding anything to the contrary in this Section 10.3(c),
that in the case of a transaction contemplated by clause (i) or (ii) above, USX
and Transtar shall require any such purchaser to assume the remaining
obligations of USX and Transtar under the provisions of this Section 10.3(c) and
(y) if the revenues of EJ&E during the last calendar year prior to such
transaction were in excess of 25%, but less than 100% of the total revenues of
all legal entities or businesses sold, transferred, assigned or otherwise
disposed of, then the proceeds received in such sale which are attributable to
EJ&E and to which this Section 10.3(c) shall apply, shall be determined by
taking the total proceeds realized from such sale, transfer, assignment or other
disposition, and multiplying them by a fraction, the numerator of which shall be
the revenues of EJ&E during the last calendar year and the denominator of which
shall be the revenues during the last calendar year of all of the legal entities
or businesses sold, transferred, assigned or otherwise disposed of to generate
such proceeds. In the event that all or a portion of the proceeds are in a form
other than cash, the fair market value of such non-cash proceeds as of the
closing of the transaction shall be used for purposes of this Section 10.3(c).
Section 10.4 Consents.
Schedule 10.4 sets forth a list of all Material Contracts that require
the consent of the other parties thereto for the consummation of the
transactions contemplated herein ("Required Consents") or where the other
parties thereto have indicated that they intend to change the nature or level of
their business relationship with Transtar or a Transtar Company as a consequence
of the consummation of the transactions contemplated herein. Holdings shall use
all commercially reasonable efforts to assist in obtaining Required Consents
that relate to the Holdings Companies and USX shall use all commercially
reasonable efforts to assist in obtaining Required Consents that relate to the
USX Companies.
Section 10.5 Due Diligence and Access.
Promptly after the execution and delivery of this Agreement, USX and
Holdings will cause Transtar and the Transtar Companies to grant to USX,
Holdings, institutions or other persons potentially providing financing to
Holdings and their respective partners, directors, officers, employees and
agents full and complete access to the property and records of Transtar and the
Transtar Companies and to provide any information reasonably requested of them.
Section 10.6 Relation to Holdings Notes.
Holdings acknowledges that none of USX, Transtar or any USX Company has
any responsibility or any obligation under the Holdings Notes.
Section 10.7 Post Closing Access.
From and after the Closing Date, USX shall cause the USX Companies to
supply or make available to Holdings, and Holdings shall cause the Holdings
Companies to supply or make available to USX, all information, records and other
matters as such party may reasonably request in connection with all matters
occurring prior to the Closing Date or as may be reasonably necessary to defend
any litigation or investigate any related claim, prepare financial statements,
public disclosure documents, Tax Returns or other governmental filings.
Section 10.8 Further Assurances.
From and after the Closing Date, USX shall take and shall cause the USX
Companies to take any and all actions that are reasonably requested by Holdings
to vest in Holdings directly or indirectly good and marketable title and
ownership to the capital stock of the Holdings Companies. From and after the
Closing Date, Holdings shall take and shall cause the Holdings Companies to take
any and all actions that are reasonably requested by USX to vest in USX directly
or indirectly good and marketable title and ownership to the capital stock of
the USX Companies. In the event that there is any title defect or lien upon the
stock of the Holdings Companies resulting from actions by USX, USX shall be
solely responsible for the cost of removing such lien or curing such defect. In
the event that there is any title defect or lien upon the stock of the USX
Companies resulting from actions by Holdings, Holdings shall be solely
responsible for the cost of removing such lien or curing such defect. In the
event that there is any title defect or lien upon the stock of either a USX
Company or a Holding Company that arose after December 28, 1988 and prior to the
Closing Date other than through an action by USX or Holdings, then Holdings
shall be responsible for 56% of the cost of removing such lien or curing such
defect and USX shall be responsible for 44% of such cost.
Section 10.9 Holdings Officer.
If Holdings designates, after the date hereof and prior to the Closing
Date, a person to serve as chief executive officer of Holdings after the Closing
Date (the "Holdings Designee"), Transtar agrees to provide the Holdings Designee
with the necessary access to information, and to take all such other action as
may be reasonably necessary, to allow the Holdings Designee to familiarize
himself with the business of the Holdings Companies in a manner sufficient to
allow the Holdings Designee to manage the business of the Holdings Companies
after the Closing Date.
10.10 Commercially Reasonable Efforts.
Each of USX and Holdings agrees to use all commercially reasonable
efforts to take, or cause to be taken, and to cooperate with all other parties
in taking or causing to be taken, all actions which are necessary and proper to
cause the satisfaction of the conditions to closing set forth herein, including,
without limitation, in the case of Holdings, using its commercially reasonable
efforts and acting in good faith to obtain the financing contemplated by Section
11.2.6; it being understood that no party hereto shall be required to pay or
increase any fees (except for customary commitment fees, agency fees and other
similar fees to be paid by Holdings in connection with the financing
contemplated by Section 11.2.6) or assume or create any additional liability or
offer or grant any material accommodation to any third party or agree to do any
of the foregoing; provided that no person shall be obligated to commence any
litigation in order to comply with this covenant. This covenant shall not limit
any rights of any party set forth herein and, in particular and without
limitation, shall not limit the right of Holdings to approve, in its sole
discretion, the terms of the financing contemplated by Section 11.2.6 of this
Agreement.
Article XI
Conditions to Closing
11.1 Conditions Precedent to Obligations of USX.
All obligations of USX arising pursuant to this Agreement are subject
to the satisfaction of each of the following conditions, unless expressly waived
in writing by USX.
11.1.1 Opinion of Counsel. USX shall be furnished with the opinion of
White & Case LLP in substantially the form of Exhibit M attached hereto.
11.1.2 Representations and Warranties. The representations and
warranties made by Holdings in Section 9.2 herein and Trustee in the agreement
signed by Trustee and the parties hereto in substantially the form of Exhibit B
attached herewith (the "Accession Agreement") shall be true and correct in all
material respects (except to the extent such representations and warranties
contain a materiality qualification in which case they shall be true and correct
in all respects) on and as of the Closing Date with the same force and effect as
though all representations and warranties had been made on and as of such date,
and the General Partner shall have so certified on behalf of Holdings.
11.1.3 Covenants and Agreements. Holdings, Transtar and the Transtar
Companies shall have performed or complied in all material respects with all
obligations, covenants and agreements required by this Agreement to be performed
or complied with by them by the time of Closing Date, and the General Partner of
Holdings shall have certified on behalf of Holdings and the President and Chief
Executive Officer, Vice President Finance and Chief Financial Officer, Vice
President Marketing, Vice President Law, Vice President Operations, Vice
President Administration, Treasurer, and Comptroller (collectively the "Transtar
Officers") shall have so certified on behalf of Transtar.
11.1.4 Material Adverse Change.
(a) The assumptions set forth in Article VIII shall be true and
correct as of the Closing Date except for such matters as
individually or in the aggregate would not constitute a
Material Adverse Effect on the USX Companies, taken as a
whole, and the Transtar Officers shall have so certified.
(b) All Required Consents relating to the USX Companies shall have
been received except for those that, individually or in the
aggregate, would not constitute a Material Adverse Effect on
the USX Companies, taken as a whole, and the Transtar Officers
shall have so certified.
(c) There shall have occurred no event nor shall there exist any
condition which has had or would reasonably be expected to
have a Material Adverse Effect on the USX Companies.
11.1.5 PBGC. No action shall have been taken or threatened by the PBGC
to terminate any of the Transtar Pension Plans, to impose any additional
liability on USX or the USX Companies or to require any accelerated
contributions to the Transtar Pension Plans.
11.1.6 Good-Standing Certificates. Transtar shall have delivered to USX
a Certificate of Good Standing for each of the USX Companies from the Secretary
of State of such state in which such USX Company is duly qualified evidencing
such USX Company's good standing therein.
11.1.7 Execution of Documents. Each of Holdings, Transtar, the Holdings
Companies and the Trustee shall have executed and delivered the following
documents (the "Ancillary Agreements") to which it is a party: the ▇▇▇▇▇
Agreement, the Tax Matters Agreement, the Substitute Fleet TSA, the Substitute
TSA, the Stockholders Agreement Termination, the Asbestos Agreement, the
Environmental Indemnification Agreement, the Environmental Agreement
Termination, the USS Name License Agreement, the Asset Purchase Agreement
Amendment, the 1988 Services Agreement Amendment, the Services Agreement, the
B&LE Services Agreement (if required, pursuant to Section 7.2), and the
Monroeville Building Lease.
11.2 Conditions Precedent to Obligations of Holdings.
All obligations of Holdings arising under this Agreement are subject to
the satisfaction of each of the following conditions, unless expressly waived in
writing by Holdings.
11.2.1 Opinions of Counsel.
(a) Holdings shall be furnished with the opinion of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Assistant General Counsel or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior
General Attorney-Corporate in substantially the form attached
hereto as Exhibit N.
(b) Holdings shall be furnished with the opinion of Reed, Smith,
▇▇▇▇ & ▇▇▇▇▇▇ LLP that the shares of Exchanged Stock delivered
to Holdings on the Closing Date have been duly authorized and
issued and are fully paid and non-assessable, which opinion to
be reasonably satisfactory to counsel for Holdings.
11.2.2 Representations and Warranties. The representations and
warranties made by USX in Section 9.1 herein and Trustee in the Accession
Agreement shall be true and correct in all material respects (except to the
extent such representations and warranties contain a materiality qualification,
in which case they shall be true and correct in all respects) on and as of the
Closing Date with the same force and effect as though all such representations
and warranties have been made on and as of such date and USX's Chairman of the
Board of Directors, Vice Chairman & Chief Financial Officer, or Vice President &
Treasurer shall have so certified on behalf of USX.
11.2.3 Covenants and Agreements. USX, Transtar and the Transtar
Companies shall have performed or complied in all material respects with all
obligations, covenants and agreements required by this Agreement to be performed
or complied with by them by the Closing Date and USX's Chairman of the Board of
Directors, Vice Chairman & Chief Financial Officer or Vice President & Treasurer
shall have so certified on behalf of USX and the Transtar Officers shall have
certified on behalf of Transtar.
11.2.4 Material Adverse Change.
(a) The assumptions set forth in Article VIII shall be true and
correct as of the Closing Date except for such matters as
individually or in the aggregate would not constitute a
Material Adverse Effect on the Holdings Companies, taken as a
whole, and the Transtar Officers shall have so certified.
(b) All Required Consents relating to the Holdings Companies shall
have been received except for those that individually or in
the aggregate would not constitute a Material Adverse Effect
on the Holdings Companies, taken as a whole, and the Transtar
Officers shall have so certified.
(c) There shall have occurred no event nor shall there exist any
condition which has had or would reasonably be expected to
have a Material Adverse Effect on the Holdings Companies.
11.2.5 Exchanged Stock. The Exchanged Stock shall have been duly
authorized, validly issued to Holdings, non-accessible and free of any
preemptory or other rights.
11.2.6 Financing. Holdings (i) shall have received, on terms
satisfactory to Holdings in its sole discretion, at least $255.0 million
(reduced by the amount of any indebtedness of Transtar which is assumed and not
refinanced) of proceeds from one or more bank financings or offering of debt
securities, and (ii) shall have entered into a revolving credit facility with
available commitments of not less than $20.0 million, which such amount and
commitment (together with any assumption of indebtedness) shall in the aggregate
be sufficient to (a) refinance the outstanding obligations under the Holdings
Notes (including, without limitation, any principal, interest or premium owed
with respect thereto), (b) refinance, to the extent it is refinanced and not
assumed, the outstanding share of the Holdings Companies debt under the Transtar
Credit Agreement (including any make-whole premium incurred), (c) sufficiently
finance working capital of the Holdings Companies and (d) pay the fees and
expenses of Holdings, the Holdings Companies, Blackstone Capital Partners LP and
Blackstone Transportation Partners LP related to (a), (b) and (c)).
11.2.7 PBGC. No action shall have been taken or threatened by the PBGC
to terminate any of the Transtar Pension Plans, to impose any additional
liability on Holdings or the Holdings Companies or to require any accelerated
contributions to the Transtar Pension Plans.
11.2.8 Good-Standing Certificates. Transtar shall have delivered to
Holdings a Certificate of Good Standing for each of the Holdings Companies from
the Secretary of State of such state in which such Holdings Company is duly
qualified evidencing such Holdings Company's good standing therein.
11.2.9 Execution of Documents. Each of USX, Transtar and the USX
Companies shall have executed and delivered each of the Ancillary Agreements to
which it is a party and RTI will have executed the Substitute Fleet TSA.
11.3 Mutual Conditions Precedent.
The obligations of both USX and Holdings shall be subject to the
satisfaction on or prior to the Closing Date of each of the following, unless
expressly waived in writing by both parties.
11.3.1 No Injunctions. No temporary or permanent restraining order,
preliminary or permanent injunction or other legal restraint or prohibition
against the consummation of the transactions contemplated herein shall be in
effect; no action seeking such an order, injunction or prohibition is pending
and no governmental authority, including without limitation, the STB, the
Federal Trade Commission, the Department of Justice or any state attorney
general is threatening such an action (collectively an "Injunctive Action").
11.3.2 STB Approval. The STB has granted an approval or exemption for
the transactions contemplated herein; such approval or exemption remains in full
force and effect ("STB Approval") and no action or proceeding is pending or
threatened challenging such approval or exemption (an "STB Challenge").
11.3.3 HSR Filing. All waiting periods under HSR have expired or the
Federal Trade Commission and the Department of Justice have granted early
termination to such waiting periods.
11.3.4 Tax Free Reorganization. Each of USX and Holdings shall have
received assurances reasonably satisfactory to it that the transaction
contemplated herein qualifies as a tax free under Section 355 of the Code.
11.3.5 Execution of Accession Agreement by Trustee. The Trustee shall
have agreed to become a party to this Agreement through the execution and
delivery of the Accession Agreement.
Article XII
Closing
12.1 Closing Date.
The closing of this transaction shall occur on the second Business Day
following the satisfaction of the conditions set forth in Article XI hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or day on which
commercial banks are permitted to be closed in New York, NY, or Pittsburgh, PA
(the "Closing Date").
12.2 The Closing.
(a) The Closing shall be held at the offices of USX at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇, or such other place as the parties
shall agree, at 11:00 A.M. on the Closing Date.
(b) A pre-closing shall be held on the Business Day immediately
prior to the Closing Date and, to the extent possible, all
documents delivered by either party shall be examined at the
pre-closing.
(c) At the Closing, USX shall deliver:
(i) The opinion of counsel specified in Section
11.2.1(a);
(ii) The certificates on behalf of USX specified in
Sections 11.2.2 and 11.2.3;
(iii) Evidence of due authorization of this Agreement; and
(iv) Such other documents and certificates as Holdings or
its counsel may reasonably request.
(d) At the Closing, Holdings shall deliver:
(i) To Transtar, certificates representing the Holdings
Stock;
(ii) The resignations of the Blackstone Directors;
(iii) The opinion of counsel specified in Section 11.1.1;
(iv) The officer's certificate specified in Section 11.1.2
and 11.1.3;
(v) Evidence satisfactory to USX of the cancellation of
all Management Options;
(vi) Evidence of due authorization of this Agreement; and
(vii) Such other documents and certificates as USX or its
counsel may reasonably request.
(e) At the Closing, Trustee shall deliver (pursuant to the
Accession Agreement):
(i) To Transtar, certificates representing the Management
Stock.
(f) At the Closing, Transtar shall deliver:
(i) To Holdings, certificates representing the Exchanged
Stock;
(ii) To Trustee, certificates representing the New
Management Stock;
(iii) The officers certificates on behalf of Transtar
specified in Sections 11.1.3, 11.1.4, 11.2.3 and
11.2.4;
(iv) The opinion specified in Section 11.2.1(b);
(v) Evidence of repayment of the Transtar Credit
Agreement and release of all liens granted
thereunder;
(vi) Evidence of release of the Cross Guarantees, to the
extent such releases have been obtained prior to the
Closing Date;
(vii) Such other agreements and certificates as USX and
Holdings shall agree to be delivered; and
(viii) Certificates of Good Standing for Transtar and each
Transtar Company.
(g) At the Closing, the following parties shall execute and
deliver:
(i) USX, Holdings, Transtar and each Transtar
company--the Tax Matters Agreement;
(ii) USX and Fleet-- the Substitute Fleet TSA;
(iii) USX, Holdings, DM&IR and B&LE--the Substitute TSA;
(iv) USX, Holdings and Transtar-- the Stockholders
Agreement Termination;
(v) USX, Transtar, Holdings and Fleet --the Asbestos
Agreement;
(vi) USX, Holdings, Transtar and each Transtar
Company--the Environmental Agreement;
(vii) USX and Fleet--the USS Name License Agreement;
(viii) USX, Holdings and the Holdings Companies, Transtar
and each Transtar Company--the Asset Purchase
Agreement Amendment;
(ix) USX and Transtar--the 1988 Services Agreement
Amendment;
(x) Holdings, the Holdings Companies, Transtar and each
Transtar Company--the Services Agreement;
(xi) USX, Transtar (the USX Companies), B&LE and
Holdings--the B&LE Services Agreement; and
(xii) USX, Transtar and each Transtar Company -- the
Environmental Agreement Termination.
12.3 Effective Date.
The transaction shall be effective as of the close of business on the
Closing Date.
12.4 Termination.
(a) This Agreement may be terminated by either USX or Holdings by
written notice to the other if:
(i) The Closing does not occur by March 31, 2001; or
(ii) A permanent non-appealable order, decree or judgment
has been issued by a court of competent jurisdiction
which prevents the consummation of the transactions
contemplated herein.
(b) This Agreement may be terminated by USX by written notice to
Holdings if:
(i) There is a material breach by Holdings of this
Agreement which is not remedied within 30 days of
written notice thereof; or
(ii) The USX Companies taken as a whole suffer a Material
Adverse Effect;
(c) This Agreement may be terminated by Holdings by written notice
to USX if:
(i) There is a material breach by USX of this Agreement
which is not remedied within 30 days of written
notice thereof; or
(ii) The Holdings Companies, taken as a whole, suffer a
Material Adverse Effect;
(d) Except in the case of a material breach of this Agreement, in
the event of such termination, no party shall be liable to the
other party for any damages, costs or expenses incurred in
connection with the negotiation and execution of this
Agreement and no party shall have any further obligation under
this Agreement.
12.5 Time Is Of The Essence.
The parties agree that time is of the essence in this Agreement.
Article XIII
Miscellaneous
13.1 Expenses.
Except as expressly provided in this Agreement, whether or not the
transactions contemplated hereunder shall be consummated, each party shall pay
its own expenses incident to the preparation of this Agreement and for
consummating the transaction, including all outside counsel and accountant fees
incurred by it. Each party shall also pay all filing fees and other expenses
required to be paid by it under applicable laws, regulations or contracts to
perform the covenants and obligations hereunder. Notwithstanding anything
contrary contained herein, if the transactions contemplated hereunder are not
consummated, Transtar shall reimburse each of Holdings and USX for their
reasonable expenses incurred in connection herewith. For purposes of determining
USX's expenses (other than filing fees) for reimbursement above, USX's expenses
(other than filing fees) shall be deemed to be the same as Holdings'
reimbursable expenses (excluding filing fees).
13.2 Notices.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been given if actually delivered by
any reasonable means or if mailed by registered or certified mail, return
receipt requested, to the following addresses or to such other address as any
party may subsequently designate in writing:
(a) If to USX, then to:
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: E. F. Guna
Vice President & Treasurer
With copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Assistant General Counsel
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to Holdings, then to:
Transtar Holdings, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esquire
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(c) If to Transtar then to:
Transtar, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
With copies to:
Transtar Holdings Company LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: E. F. Guna
Vice President & Treasurer
13.3 Applicable Laws; Counterparts, Consent to Jurisdiction.
(a) This Agreement shall be construed and enforced in accordance with
the laws of the State of Delaware. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute but one and the same instrument.
(b) Each party hereby consents to the jurisdiction of the United States
District Court for Delaware, the Chancery Court of the State of Delaware or the
Court of Common Pleas of New Castle County Delaware for the resolution of any
matter under this Agreement. Each party also waives any right it may have to
challenge the venue or to argue the non-convenience of any such court.
13.4. Entire Agreement.
This Agreement, including the Exhibits hereto and any document
incorporated by reference therein and herein or executed simultaneously
herewith, contains the full agreement between the parties hereto, supersedes any
and all agreements and amendments thereto, which may have been heretofore
negotiated or entered into between them. There are no further understandings
written or oral between the parties.
13.5. Advisors.
USX acknowledges that it has consulted with ▇▇▇▇▇▇▇ ▇▇▇▇▇ in connection
with this matter and that any fees or compensation due ▇▇▇▇▇▇▇ Sachs shall be
paid solely by USX. Except for the foregoing, neither party has retained any
advisor or broker and each party shall indemnify the other against any claim
arising for an action taken by such party concerning any commission or other
fees.
13.6. Publicity.
Each Party agrees to issue a joint press release promptly upon the
execution and delivery of this Agreement and USX and Holdings may file a Current
Report on Form 8-K with the Securities and Exchange Commission within ten (10)
days of the date hereof. Except for such disclosure or as otherwise required by
law or pursuant to request of any governmental agency, each party agrees that
neither it nor its attorneys, advisors, accountants and agents shall make any
press release or other disclosure concerning the transactions contemplated
herein without the consent of the other party, which consent shall not be
unreasonably withheld or delayed. Each party agrees that prior to making any
press release or other disclosure concerning the transactions, it will make
available a copy of the proposed press release or other disclosure for the other
party's comments. Notwithstanding anything to the contrary contained herein,
Holdings may make any disclosure concerning the transactions contemplated herein
to any limited partner of Holdings or to any financing source for purposes
related to the transactions contemplated herein.
13.7. Descriptive Heading.
The descriptive headings of this Agreement are inserted for convenience
only and are not intended to indicate all of the matter following them.
Accordingly, they shall not control or affect the meaning or construction of any
of the provisions hereof.
13.8. Severability.
If any provisions of this Agreement shall be determined to be invalid
or unenforceable, the remainder of this Agreement shall not be affected thereby
and shall remain enforceable to the maximum extent permitted by law.
13.9. Survival.
All representations, warranties and covenants of the parties shall
terminate on the Closing Date except for those covenants specified in Articles
III, IV, and Sections 2.4, 2.5, 2.6, 5.2, 10.3, 10.6, 10.7 and 10.8. All such
covenants (other than the covenants specified in Article IV, which shall survive
for the periods specified therein) shall survive until the earliest of (a) the
termination date specified within the section related to such covenant, (b) the
expiration of the statute of limitations applicable thereto or (c) the date that
is ten years from the Closing Date.
13.10 Parties.
This Agreement is intended solely for the benefit of the parties and no
rights are created or intended to be created in favor of any third parties. This
Agreement cannot be assigned by either party hereto without the written consent
of the other party.
13.11 Amendment.
This Agreement may not be amended or modified other than by written
agreement executed by the parties hereto expressly stating that it is a
modification of this Agreement.
13.12 Successors and Assigns.
This agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors administrators,
successors and assigns.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement as of the date first set above.
TRANSTAR, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
USX CORPORATION
By:/s/ E. F. Guna
------------------------------------
Name: E. F. Guna
Title: Vice President & Treasurer
TRANSTAR HOLDINGS, L.P.
By: BLACKSTONE TRANSPORTATION COMPANY,
INC., its General Partner
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SCHEDULE 2.4(C) CALCULATION OF ANNUAL FEE PAYABLE FROM FLEET TO USX
75 bp mtc fee
(Lease on avg oustdng
Charter (Principal) Payment) (Interest) (Total)
Hire Payment Applicable Applicable Applicable Applicable
Date Amount A Amount B Amount C Amount D
------------ ------------- ---------- ---------- -----------
3/19/00 1,302,893.75 1.54 1,621,005.90 2,923,901.19
9/19/00 1,381,067.37 1.02 1,524,917.49 2,905,985.88
3/19/01 1,463,931.42 1.23 1,423,063.77 2,886,996.42 403,196
9/19/01 1,551,767.30 1.16 1,315,098.83 2,866,867.29
3/19/02 1,644,873.34 1.12 1,200,655.99 2,845,530.45 378,502
3/19/02 1,743,565.74 1.13 1,079,346.58 2,822,913.45
3/19/03 1,848,179.69 1.14 950,758.60 2,798,939.43 350,756
9/19/03 1,959,070.47 1.30 814,455.35 2,773,527.12
3/19/04 2,076,614.70 0.97 669,973.91 2,746,589.58 319,580
3/19/04 2,201,211.58 1.57 516,823.57 2,718,036.72
3/19/05 2,333,284.27 1.14 354,484.22 2,687,769.63 284,551
9/19/05 2,473,281.39 0.99 182,404.50 2,655,686.88
3/19/06 0.00 2,621,678.22 2,621,678.22 245,782
9/19/06 0.00 2,621,678.22 2,621,678.22
3/19/07 0.00 2,621,678.22 2,621,678.22 206,457
9/19/07 0.00 2,621,678.22 2,621,678.22
3/19/08 0.00 2,621,678.22 2,621,678.22 88,482
9/19/08 0.00 2,621,678.22 2,621,678.22
3/19/09 0.00 2,621,678.22 2,621,678.22 68,819
9/19/09 0.00 2,621,678.22 2,621,678.22
3/19/10 0.00 2,621,678.22 2,621,678.22 49,156
9/19/10 0.00 2,621,678.22 2,621,678.22
3/19/11 0.00 2,621,678.22 2,621,678.22 29,494
9/19/11 0.00 2,621,678.22 2,621,678.22
3/19/12 0.00 2,621,678.22 2,621,678.22 9,831
9/19/12 0.00 2,621,678.22 2,621,678.22
---- ------------ ------------
Total 21,979,741.02 36,703,495.08 11,652,988.71 70,336,239.12
SCHEDULE 2.4(C) CALCULATION OF ANNUAL FEE PAYABLE FROM FLEET TO USX
Outstanding
Lease
Verification Obligation
Charter Beginning Ending
Hire Payment Principal Principal Interest
Date Amount Amount Payment
------------ ------------- ------------- ------------
3/19/00 21,979,741.02 20,676,847.27 1,621,005.90
9/19/00 20,676,847.27 19,295,779.90 1,524,917.49
3/19/01 19,295,779.90 17,831,848.48 1,423,063.77
9/19/01 17,831,848.48 16,280,081.18 1,315,098.83
3/19/02 16,280,081.18 14,635,207.84 1,200,655.99
3/19/02 14,635,207.84 12,891,642.10 1,079,346.58
3/19/03 12,891,642.10 11,043,462.41 950,758.60
9/19/03 11,043,462.41 9,084,391.94 814,455.35
3/19/04 9,084,391.94 7,007,777.24 669,973.91
3/19/04 7,007,777.24 4,806,565.66 516,823.57
3/19/05 4,806,565.66 2,473,281.39 354,484.22
9/19/05 2,473,281.39 -0.00 182,404.50 36,703,495
3/19/06 -0.00 -0.00 -0.00 34,081,817
9/19/06 -0.00 -0.00 -0.00 31,460,139
3/19/07 -0.00 -0.00 -0.00 28,838,460
9/19/07 -0.00 -0.00 -0.00 26,216,782
3/19/08 -0.00 -0.00 -0.00 23,595,104
9/19/08 -0.00 -0.00 -0.00 20,973,426
3/19/09 -0.00 -0.00 -0.00 18,351,748
9/19/09 -0.00 -0.00 -0.00 15,730,069
3/19/10 -0.00 -0.00 -0.00 13,108,391
9/19/10 -0.00 -0.00 -0.00 10,486,713
3/19/11 -0.00 -0.00 -0.00 7,865,035
9/19/11 -0.00 -0.00 -0.00 5,243,356
3/19/12 -0.00 -0.00 -0.00 2,621,678
9/19/12 -0.00 -0.00 -0.00 0
----- ----- -----
Total 11,652,988.70
Schedule 3.2(x) Listing of Non-Shared Union B&LE Transferees
------------------------------------------------------------
Union employees identified at time of sale as non-shared employees:
Active
Employee
CC DEPT Count
-- ---- -----
Assumed to be assigned to a USX Transtar Company (a.)
815 Asset 2
873 ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇ 22
875 FSERV 1
878 TAX 1
Subtotal of Above 60
(a.) Union employees are assumed to be assigned from cost centers as shown,
however the ultimate assignment will not be known until TCIU Approval is
reached with the Union. All Union counts identified above are B&LE
administrative employees.
Schedule 3.2(y) Listing of Shared Union B&LE Transferees
--------------------------------------------------------
Union employees identified at time of sale as shared employees:
Active
Employee
CC DEPT Count
-- ---- -----
Assumed to be assigned to a USX Transtar Company (a.)
819 Asset 3
828 ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇ 13
886 FSERV 2
Subtotal of Above 25
(a.) Union employees are assumed to be assigned from cost centers as shown;
however the ultimate assignment will not be known until TCIU Approval is
reached with the Union. All Union counts identified above are B&LE
administrative employees.
Schedule 3.6(a)
---------------
Non-Union Employees Identified to Holdings and USX Transtar
-----------------------------------------------------------
All non-union active employees of the following companies as of the Closing Date
will become employees of Holdings with the exception of individuals identified
below by count by cost center. Also listed below by count and cost center are
non-union employees identified to Transtar's headquarters location who will
transfer to Holdings as of the Closing Date. Employees not identified as
Holdings' on this listing either by way of their direct employment in a company
being transferred to Holdings or by way of their inclusion as part of the
headcount identified below as subject to transfer to Holdings are deemed to be
USX Transtar employees.
BI/B2
Location Name of Company Transferred to Holdings
-------- ---------------------------------------
QD 216 Duluth, Missabe & Iron Range Railway Company
QG 213 LISS Great Lakes Fleet
QG 280 LISS Great Lakes Fleet - Sault Ste. ▇▇▇▇▇ Warehouse
None GLF Great Lakes Corporation
QL 211 Bessemer and Lake Erie Railroad Company ("B&LE Company")
QP 222 Pittsburgh & Conneaut Dock Company
The following individuals will transfer from Holdings' B&LE Company to a
USX-Transtar Company as of the Closing Date:
Active
Employee
CC DEPT Count
-- ---- -----
400 MECH 1
607 TRANS 2
815 ASSET 4
827 MIS 17
828 MIS 7
829 MIS 6
830 MIS 8
836 LABOR 4
844 CLAIM 3
858 MKTG 4
872 ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇ 7
875 FSERV 10
878 TAX 3
884 GENLS 3
886 ENGRG 11
886 OSYST 2
890 POLIC 2
--- ---
Subtotal Above 103
Additionally, the following employees from Transtar's headquarters location will
transfer to a Holdings Company as of the Closing Date:
Active
Employee
CC DEPT Count
-- ---- -----
400 CAR 1
807 VPO 3
819 PERS 2
871 VPF 2
871 TREAS 3
871 CONSL 1
--- --
Subtotal Above 12
Schedule 3.6(b)
---------------
Union Employees Identified to Holdings and USX Transtar
-------------------------------------------------------
All union active employees of the following companies as of the Closing Date
will become employees of Holdings with the exception of individuals identified
from the B&LE to be assigned to USX Transtar and listed below by headcount only.
Employees not identified as Holdings' employees either by way of their direct
employment in a company being transferred to Holdings or by way of their
assignment as a B&LE administrative employee to be transferred to USX Transtar
shown by headcount below are deemed to be USX Transtar employees.
B1/B2 Location Name of Company Transferred to Holdings
-------------- ---------------------------------------
QD 216 Duluth, Missabe & Iron Range Railway Company
QG 213 LISS Great Lakes Fleet
QG 280 LISS Great Lakes Fleet - Sault Ste. ▇▇▇▇▇ Warehouse
None GLF Great Lakes Corporation
QL 211 Bessemer and Lake Erie Railroad Company ("B&LE Company)
QP 222 Pittsburgh & Conneaut Dock Company
The following employee counts will transfer from Holdings' B&LE Company to a
USX-Transtar Company as of the Closing Date or later depending upon when TCIU
Approval takes place.
Active
Employee
CC DEPT Count
-- ---- -----
815 ASSET 2
819 BENEF 3
828 MIS 7
872 ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ FSERV 1
878 TAX 1
886 ENGRG 2
--- --
Total Union Employee Count 85
SCHEDULE 8.1.1
COMPANY STOCKHOLDER NO. OF SHARES
-----------------------------------------------------------------------------------------------------------
Bessemer and Lake Erie Railroad Company Transtar, Inc. ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Company Transtar, Inc. 100
Cuyahoga Dock, Inc. The Pittsburgh & Conneaut Dock Company 100
Duluth, Missabe and Iron Range Railway Company Transtar, Inc. 100
Elgin, Joliet and Eastern Railway Company Transtar, Inc. 100
Fairfield Southern Company, Inc. Birmingham Southern Railroad Company 100
GLF Credit Corp. USS Great Lakes Fleet, Inc. 250
GLF Great Lakes Corp. USS Great Lakes Fleet, Inc. ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Company Transtar, Inc. 100
McKeesport Connecting Railroad Company Transtar, Inc. 100
Mobile River Terminal Company, Inc. Warrior & Gulf Navigation Company 100
Mon Valley Railway Company The Pittsburgh & Conneaut Dock Company 100
The Pittsburgh & Conneaut Dock Company Transtar, Inc. 100
Tracks Traffic and Management Services, Inc. Transtar, Inc. ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Company Transtar, Inc. 100
USS Great Lakes Fleet, Inc. Transtar, Inc. 100
Warrior & Gulf Navigation Company Transtar, Inc. 100
shares
7/27/00
Schedule 8.1.9
TRANSTAR, INC.
BENEFIT PLANS NOT FILED BY TRANSTAR AS EXHIBITS
TO THE TRANSTAR DISCLOSURE DOCUMENTS
Sponsored by Transtar, Inc.
1. Transtar, Inc Non-Contributory Pension Plan, effective 1/1/89
2. Transtar, Inc. Savings Plan for Represented Employees, effective 7/1/91
3. Transtar, Inc. Plan for Employee Insurance Benefits, effective 1/1/89
4. Transtar, Inc Supplemental Unemployment Benefits Plan, effective1/1/89
5. Transtar, Inc. Welfare Benefit Plan, effective 1/1/89
6. Transtar, Inc. VEBA Trust #1, effective 8/29/94
7. Transtar, Inc.Severance Pay Plan for Represented Employees, Effective 1/1/89
8. Supplemental Sickness Benefit Plan, effective 7/1/92
9. Off Track Vehicle Accident Welfare Benefit Plan
Multi-Employer Plans in which Transtar participates
----------------------------------------------------
10. The Railroad Employees National Early Retirement Major Medical Benefit Plan
11. The Railroad Employees National Vision Plan
12. The Railroad Employees National Health and Welfare Plan
13. The Railroad Employees National Dental Plan
14. The National Health & Welfare Plan, GA-23000
15. American Marine Officers 401(k) Plan
16. American Marine Officers Medical Plan
17. American Marine Officers Pension Plan and Subsidiary
18. American Marine Officers Vacation Plan
19. American Marine Officers Joint Employment Committee
20. American Marine Officers Safety & Education Plan
21. Great Lakes Training & Assignment Fund
22. Seafarers' Welfare, Pension & Vacation Plans
SCHEDULE 8.1.13(X)
EXCLUDED ASSETS OF HOLDINGS COMPANIES
NONE
SCHEDULE 8.1.13(Y)
EXCLUDED ASSETS OF USX COMPANIES
NONE
SCHEDULE 10.4
REQUIRED CONSENTS
TRANSTAR, INC.
Credit Agreement dated as of June 29, 1999 among Transtar, Inc., The Lenders
Named Therein and The Chase Manhattan Bank, as Administrative Agent.
BESSEMER AND LAKE ERIE RAILROAD COMPANY
EXPIRATION LESSOR UNITS LEASED DATE
▇▇▇▇▇▇ Financial 4 Locomotives 10/31/01
BancOne Leasing 4 Locomotives 12/31/07
BancOne Leasing 2 Locomotives 6/30/08
-
DULUTH MISSABE AND IRON RANGE RAILWAY COMPANY
EXPIRATION LESSOR UNITS LEASED DATE
▇▇▇▇▇▇ Financial 5 Locomotives 12/31/05
▇▇▇▇▇▇ Financial 5 Locomotives 08/01/06
▇▇▇▇▇▇ Financial 5 Locomotives 12/31/05
PNC Leasing 5 Locomotives 01/15/04
LaSalle National Leasing 60 Side Dump Cars 10/31/08
LaSalle National Leasing 63 Side Dump Cars 07/31/09
EXHIBIT A
SUBCHARTER
THIS SUBCHARTER, effective as of the close of business on June 30,
1981, between USX CORPORATION, a Delaware corporation ("USX") and USS GREAT
LAKES FLEET, INC., a Delaware corporation ("Fleet").
W I T N E S S E T H
WHEREAS, USX is the original charterer of the M/V ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Vessel") pursuant to a Charter, dated as of September 1, 1980 between State
Street Bank and Trust Company of Connecticut, National Association, the
successor to The Connecticut Bank and Trust Company, as Owner Trustee and USX
(the "Charter"), as amended by a Charter Amendment dated as of May 26, 1983 (the
"Charter Amendment") with The Connecticut Bank and Trust Company, National
Association; and
WHEREAS, the parties intend that Fleet subcharter and operate the
Vessel.
NOW, THEREFORE, the parties hereto, in consideration of the premises,
the covenants herein set forth, and intending to be legally bound, agree as
follows:
1. USX hereby subcharters the Vessel to Fleet on the same terms and
conditions set forth in the Charter, as amended. In particular, but not by way
of limitation, the Subcharter shall be for the same term as that of the Charter.
Fleet shall have, with respect to USX, all the rights, duties and obligations of
the Charterer under the Charter, as amended, and USX shall have, with respect to
Fleet, all the rights, duties and obligations of Owner Trustee under the
Charter, as amended. USX and Fleet hereby further agree and stipulate that, for
maritime law purposes, USX shall be considered the owner pro hac vice during the
term of the Charter, as amended. Furthermore, the Charterer, as owner pro hac
vice of the Vessel, has delegated certain rights and powers to the Subcharterer
and, in operating the Vessel pursuant to this Subcharter, the Subcharterer is
authorized and empowered to act as the owner pro hac vice.
2. This Subcharter is not intended to be an assignment and shall not
release USX from any responsibility under the Charter, as amended. This
Subcharter is and shall in all respects be subject and subordinate in priority
to the Charter and to all renewals, modifications, consolidations, replacements
and extensions of the Charter.
3. USX and Fleet hereby declare that the Charter, as amended by the
Charter Amendment and the Subcharter, is ratified, confirmed and carried forward
in all respects and it shall be and remain in full force and effect.
4. This Subcharter may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and such
counterparts, together, shall constitute and be one and the same instrument.
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Subcharter as of September 1, 2000.
USX CORPORATION
By: /s/ E. F. Guna
-----------------------------------
Title: Vice President & Treasurer
USS GREAT LAKES FLEET, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: V P FINANCE & CFO
Exhibit B
ACCESSION AGREEMENT
ACCESSION AGREEMENT (this "Agreement"), dated as of the ___ day of October,
2000, by and among PNC Bank, N.A., a national bank acting solely as trustee of
the Transtar Management Stock Trust Agreement and, except as specifically set
forth herein, not in its individual capacity (the "Trustee"), Transtar, Inc., a
Delaware corporation, USX Corporation, a Delaware corporation ("USX"), Transtar
Holdings, L.P., a Delaware limited partnership ("Holdings"). This Agreement is
entered into pursuant to Section 11.3.5 of the Reorganization and Exchange
Agreement (the "Reorganization Agreement") dated as of October ___, 2000 by and
among Transtar, Inc., USX and Holdings. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Reorganization Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated in the Reorganization Agreement that the Trustee execute this
Agreement; and
WHEREAS, the Trustee believes that it is in the best interest of the
beneficiaries of the Trust for the Trustee to become party to the Reorganization
Agreement and effect the transactions contemplated thereby;
NOW, THEREFORE, it is agreed:
SECTION 1. Accession. The Trustee hereby agrees to become a party to, to be
bound by, and to perform all actions required of the Trustee pursuant to, the
Reorganization Agreement, as if the Trustee had been an original signatory
thereto. This Agreement shall take effect and shall become a part of the
Reorganization Agreement immediately upon execution.
SECTION 2. Representations and Warranties of the Trustee. The Trustee
represents and warrants to USX and Holdings that:
(a) Existence and Organization. Trustee is a national bank, duly chartered
and existing under the laws of the United States.
(b) Trust Powers and Status as Trustee. Trustee has the power and authority
necessary to act as a trustee of the Trust. Trustee was duly appointed as
trustee of the Trust on December 28, 1988.
(c) Authorization.
(i) The execution and delivery of this Agreement by the Trustee has been
approved by the appropriate governing bodies of the Trustee and no other
corporate approval or action is required.
(ii) Solely as trustee and not in its individual capacity, the Trustee
represents that the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been authorized and
approved as required under the Trust, and no beneficiary or other similar
approval or action is required on the part of the Trustee. This Agreement
constitutes a legal, valid and binding obligation of the Trustee enforceable
against it in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(d) Conflicts and Consents. Solely as trustee, and not in its individual
capacity, the Trustee represents that the execution and delivery by the Trustee
of this Agreement and the consummation of the transactions contemplated herein
does not conflict with, violate, constitute an event of default, require the
consent of any government entity or other third party or result in the creation
of a lien or encumbrance under (a) the Trust Agreement and the Management Plans;
(b) any law, regulation, ordinance, judicial decree or administrative order
binding upon the Trust or its properties except for approvals required from the
STB and under HSR .
(e) No Prior Discussions. As of the date this Agreement is executed, the
Trustee is not party to any agreement, understanding, arrangement or substantial
negotiations concerning the sale, transfer or other disposition, either directly
or indirectly, of the stock of Transtar or any Transtar Company or substantially
all of the assets of Transtar or a Transtar Company and there have been no
substantial negotiations concerning such a sale, transfer or other disposition
by any partner, officer, employee or advisor or agent (if such advisor or agent
is acting pursuant to the direction of such partner, officer or employee) of the
Trustee.
(f) Ownership of Management Stock. The Trustee owns beneficially and of
record all of the Management Stock free and clear of any lien claim or
encumbrance arising by, through or under any actions taken by the Trustee.
SECTION 3. Agreement to Deliver Shares.
The Trustee hereby agrees to deliver certificates representing the
Management Stock to Transtar on the Closing Date.
SECTION 4. Non-Interference. The Trustee hereby agrees that unless required
to do so by law or compelled to act by subpoena or other judicial or regulatory
process, for a period of five (5) years after the Closing Date, it will not, and
shall not permit any of its directors and agents (but only in such individual's
capacity as a director or agent), officers, representatives, counsel,
subsidiaries or affiliates to (i) comment in an adverse manner or in any manner
express an adverse opinion on behalf of any person including, without
limitation, by submitting any adverse written, oral or other comments or
testimony before any federal, state or local legislative body, court or other
tribunal, governmental agency, commission or other instrumentality (each a
"Governmental Entity") in respect of any proposed sale or other transaction
involving the disposition by the other party of any of Holdings Companies or the
USX Companies (a "Unit Sale"); (ii) in any way on behalf of such party or any
other person to assist, encourage or provide information to any other person,
entity or group seeking to comment in an adverse manner and/or in any manner
express an opinion which in any way opposes any proposed Unit Sale; (iii)
respond on behalf of such party or any other person in an adverse manner to any
investigation, inquiry, or request for comment or information by or from any
Governmental Entity or any other person group or entity in respect of any
proposed Unit Sale; or (iv) take any action on behalf of such party to oppose a
proposed Unit Sale. Nothing in this Section 4 shall be construed or interpreted
to prevent or preclude either party from providing exclusively factual
information and/or data in response to any request from a Governmental Entity.
SECTION 5. Miscellaneous.
(a) Applicable Laws; Consent to Jurisdiction. This Agreement shall be
construed and enforced in accordance with the laws of the State of Delaware. The
Trust hereby consents to the jurisdiction of the United States District Court
for Delaware, the Chancery Court of the State of Delaware or the Court of Common
Pleas of New Castle County Delaware for the resolution of any matter under this
Agreement. The Trust also waives any right it may have to challenge the venue or
to argue the non-convenience of any such court.
(b) Entire Agreement. This Agreement and the Reorganization Agreement
(including the Exhibits hereto and any document incorporated by reference
therein and herein), contains the full agreement between the Trust and the
parties to the Reorganization Agreement, supersedes any and all agreements and
amendments thereto, which may have been heretofore negotiated or entered into
between them. There are no further understandings written or oral between the
parties.
(c) Publicity. Except for such disclosure or as otherwise required by law
or pursuant to request of any governmental agency, the Trust agrees that neither
it nor its attorneys, advisors, accountants and agents shall make any press
release or other disclosure concerning the transactions contemplated herein or
in the Reorganization Agreement without the consent of the other parties to the
Reorganization Agreement, which consent shall not be unreasonably withheld or
delayed. The Trust agrees that prior to making any press release or other
disclosure concerning the transactions, it will make available a copy of the
proposed press release or other disclosure for the other parties' comments.
(d) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and are not intended to indicate all of the matter
following them. Accordingly, they shall not control or affect the meaning or
construction of any of the provisions hereof.
(e) Severability. If any provisions of this Agreement shall be determined
to be invalid or unenforceable, the remainder of this Agreement shall not be
affected thereby and shall remain enforceable to the maximum extent permitted by
law.
(f) Survival. All representations, warranties and covenants of the Trustee
shall terminate on the Closing Date except for those covenants specified in
Section 4. Such covenant shall survive until the termination date specified in
such section.
(g) Parties. This Agreement and the Reorganization Agreement are intended
solely for the benefit of the parties to the Reorganization Agreement and no
rights are created or intended to be created in favor of any third parties. This
Agreement and the Reorganization Agreement cannot be assigned by the Trustee
without the written consent of each of the other parties to the Reorganization
Agreement.
(h) Amendment. This Agreement may not be amended or modified other than by
written agreement executed by each of the parties to the Reorganization
Agreement expressly stating that it is a modification of this Agreement.
(i) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Accession Agreement as of the date first set above.
PNC Bank, N.A., as trustee of the
Transtar Management Stock Trust Agreement
By:
-------------------------------------
Name:
Title:
TRANSTAR, INC.
By:
-------------------------------------
Name:
Title:
USX CORPORATION
By:
-------------------------------------
Name:
Title:
TRANSTAR HOLDINGS, L.P.
By: BLACKSTONE TRANSPORTATION
COMPANY, INC., its General Partner
By:
-------------------------------------
Name:
Title:
EXHIBIT C
TAX MATTERS AGREEMENT
This Tax Matters Agreement ("Agreement") is entered into this __ day of
October, 2000, by and among (i) USX Corporation, a Delaware corporation ("USX");
(ii) Transtar Holdings, L.P., a Delaware limited partnership ("Holdings"); (iii)
Bessemer and Lake Erie Railroad Company ("B&LE"); Cuyahoga Dock, Inc.; Duluth,
Missabe and Iron Range Railway Company ("DM&IR"); GLF Credit Corporation; GLF
Great Lakes Corporation; Mon Valley Railway Company; The Pittsburgh & Conneaut
Dock Company ("Dock"); and USS Great Lakes Fleet, Inc. ("Fleet") (individually
referred to as a "Holdings Company" and collectively as the "Holdings
Companies"); and (iv) Transtar, Inc. ("Transtar"); Birmingham Southern Railroad
Company; Elgin, Joliet and Eastern Railway Company ("EJ&E"); Fairfield Southern
Company, Inc.; The Lake Terminal Railroad Company; McKeesport Connecting
Railroad Company; Mobile River Terminal Company; Union Railroad Company; Warrior
and Gulf Navigation Company; and Tracks Traffic and Management Services, Inc.
(individually referred to as a "USX" Company and collectively as the "USX
Companies") (collectively, the "Parties");
WHEREAS: Transtar, Holdings and USX have entered in the Reorganization
and Exchange Agreement, dated as of October __, 2000 (the "Reorganization
Agreement");
WHEREAS: The Parties are entering into this agreement to provide for
the allocation of Taxes involving taxable periods (or portions thereof) ending
on or before the Closing Date and with respect to Operations on or before the
Closing Date, and to provide for various administrative matters relating to
Taxes, including:
1. the preparation and filing of Tax Returns along with the payment of
Taxes shown as due and payable thereon;
2. the retention and maintenance of relevant records necessary to
prepare and file appropriate Tax Returns, as well as providing for appropriate
access to those records by the Parties;
3. the conduct of audits, examinations, and proceedings by Taxing
Authorities which could result in a redetermination of Taxes; and
4. the cooperation of the Parties with one another in order to fulfill
their duties and responsibilities under this Agreement and under the Code and
other applicable law; and
WHEREAS: it is the intent of the Parties to share in certain Taxes that
may result from the transactions described in the Reorganization Agreement in
the manner set forth in Section 4.1 of the Reorganization Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions contained in this Agreement, and intending to be legally bound
hereby, the Parties hereto agree as follows:
Article I
Definitions
Section 1.1 General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural of the terms involved). Any capitalized term used
but not defined herein shall have the meaning set forth in the Reorganization
Agreement.
"Agreement" shall mean this Tax Matters Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the Treasury regulations promulgated thereunder.
"Closing Date" shall mean the date that Transtar exchanges the stock of
B&LE, DM&IR, Fleet and Dock for all of Holdings' stock in Transtar pursuant to
Section 1.2 of the Reorganization Agreement.
"Combined Minnesota Corporate Income Tax" shall mean Taxes shown on or
due with respect to the combined Minnesota Corporate Income Tax Return filed by
Transtar that primarily includes the Operations of DM&IR.
"Holdings Company" shall have the meaning as defined in the recitals
hereto.
"IRS" shall mean the Internal Revenue Service.
"Non-FIT Pre-Closing Taxes" shall mean all Taxes, other than
Pre-Closing Federal Income Taxes, incurred by or imposed on any Transtar Company
with respect to (i) taxable periods ending on or before the Closing Date, (ii)
the portion of a Straddle Period ending on and including the Closing Date, and
(iii) Operations on or before the Closing Date. "Non-FIT Pre-Closing Tax Return"
shall mean any Tax Return involving Non-FIT Pre-Closing Taxes. "Operations"
shall mean any business activity of a Party.
"Paying Party" shall have the meaning in Section 5.3.
"Parties" shall have the meaning as defined in the recitals hereto.
"Post-Closing Carryback" shall have the meaning in Section 2.4(b).
"Pre-Closing Federal Income Taxes" shall mean all Taxes incurred by or
imposed on the Transtar Group or any Transtar Company with respect to the
consolidated federal income tax return of the Transtar Group for a taxable
period (or portion thereof) ending on or before the Closing Date.
"Pre-Closing Federal Income Tax Return" shall mean the consolidated
federal income tax return of the Transtar Group for a taxable period (or portion
thereof) ending on or before the Closing Date.
"Pre-Closing Taxes" shall mean Non-FIT Pre-Closing Taxes and
Pre-Closing Federal Income Taxes.
"Preparing Party" shall have the meaning in Section 3.4.
"Recipient Party" shall have the meaning in Section 5.3.
"Reviewing Party" shall have the meaning in Section 3.4.
"Straddle Period" shall mean any taxable period that begins on or
before the Closing Date and ends after the Closing Date.
"Tax" or "Taxes" shall mean all taxes, assessments or other
governmental charges, including, without limitation, all federal, state, local
or foreign taxes, charges, fees, duties, levies or other assessments including,
without limitation, net or gross income, gross receipts, net or gross proceeds,
ad valorem, real and personal property (tangible and intangible), sales, use,
franchise, user, transfer, value-added, fuel, excess profits, occupational,
employees' income withholding, unemployment, Social Security, Railroad
Retirement, Railroad Unemployment Insurance, alternative or add-on minimum,
estimated, environmental and franchise taxes, including interest, penalties or
additions to tax attributable to or imposed on or with respect to such taxes,
which are imposed by any governmental body whether disputed or not, and shall
include any liability for such amounts as a result of either being a member of a
combined, consolidated, unitary or affiliated group or of a contractual
obligation to indemnify any person or other entity. "Tax Adjustment Amount"
shall mean the amount of Taxes, excluding interest, that would be owed as the
result of (i) filing an amended Non-FIT Pre-Closing Tax Return or (ii)
adjustments, assessments or other changes proposed to be made by a Taxing
Authority with respect to a Non-FIT Pre-Closing Tax Return determined as if such
adjustments, assessments or other changes are appropriate and correct. "Taxing
Authority" shall mean a governmental authority or any subdivision, agency,
commission or authority thereof or any quasi-governmental or private body having
jurisdiction over the assessment, determination, collection or imposition of any
Tax.
"Tax Benefit" shall mean any reduction to Taxes that otherwise would
have been due and payable that is actually realized by a Holdings Company or a
USX Company and that arises from a correlative adjustment made to a Pre-Closing
Federal Income Tax Return as the result of filing an amended Pre-Closing Federal
Income Tax Return or as the result of an adjustment or assessment or other
change by the IRS, but such reduction shall not be in excess of the amount of
Pre-Closing Federal Income Taxes paid after the Closing Date with respect to
such adjustment.
"Tax Return" shall mean any report or return (including information
returns, amended returns and refund claims) required to be filed or that may be
filed for any period with any Taxing Authority (whether domestic or foreign) in
connection with any Tax or Taxes (whether domestic or foreign).
"Transtar Company" shall mean each and any of the Holdings Companies
and the USX Companies.
"Transtar Group" shall mean Transtar and its directly and indirectly
owned corporate subsidiaries that join in the filing of a consolidated federal
income tax return for taxable periods ending on or before the Closing Date.
"Unitary Illinois Corporate Income Tax" shall mean Taxes shown on or due with
respect to the unitary Illinois Corporate Income Tax Return filed by Transtar
that primarily includes the Operations of EJ&E.
"USX Company" shall have the meaning as defined in the recitals hereto.
Section 1.2. References: Interpretation. References in this Agreement
to any gender shall be deemed to include references to all genders, and
references to the singular include references to the plural and vice versa. The
words "include," "includes," and "including," when used in this Agreement shall
be deemed to be followed by the phrase "without limitation." Unless the context
otherwise requires, (i) references in this Agreement to Articles and Sections
shall be deemed references to Articles and Sections of this Agreement, and (ii)
the words "hereof," "hereby," and "herein" when used in this Agreement refer to
this Agreement in its entirety and not to any particular Article, Section or
other provision of this Agreement.
Article II
Allocation of Pre-Closing Taxes
Section 2.1 Federal Income Taxes. Any liability for Pre-Closing Federal
Income Taxes shall be allocated 56% to the Holdings Companies and 44% to the USX
Companies.
To the extent an IRS adjustment, or an adjustment reflected in an
amended Pre-Closing Federal Income Tax Return described in Section 3.2(b)(ii),
increasing Pre-Closing Federal Income Taxes results in a Tax Benefit to a
Holdings Company for a taxable period (or portion thereof) ending after the
Closing Date, such Holdings Company shall pay an amount equal to 44% of such Tax
Benefit to USX on or before the due date (including extensions) for filing the
federal income tax return for such taxable period in which the Tax Benefit is
actually realized.
To the extent an IRS adjustment, or an adjustment reflected in an
amended Pre-Closing Federal Income Tax Return described in Section 3.2(b)(ii),
increasing Pre-Closing Federal Income Taxes results in a Tax Benefit to a USX
Company for a taxable period (or portion thereof) ending after the Closing Date,
such USX Company shall pay an amount equal to 56% of such Tax Benefit to
Holdings on or before the due date (including extensions) for filing the federal
income tax return for such taxable period in which the Tax Benefit is actually
realized.
Section 2.2 Other Pre-Closing Taxes. Any liability for Non-FIT
Pre-Closing Taxes as reflected on (1) a Tax Return as initially filed
(regardless of the due date or the date actually filed) or an initial tax ▇▇▇▇
or assessment from a Taxing Authority (in the case of property taxes only) or
(2) an amended Tax Return filed after the Closing Date but on or before the due
date (including extensions) of the initial return, shall be allocated 56% to the
Holdings Companies and 44% to the USX Companies.
Any liability for Non-FIT Pre-Closing Taxes other than described in
Section 2.2(a) shall be allocated as follows.
Except as provided in Section 2.2(b)(3), if the Tax Adjustment Amount
is $150,000 or more, such liability shall be allocated 56% to the Holdings
Companies and 44% to the USX Companies.
Except as provided in Section 2.2(b)(3), if the Tax Adjustment Amount
is less than $150,000, such liability shall be allocated to or among the
Transtar Company or Transtar Companies whose assets or Operations are the
subject of such Tax.
If the total cumulative liability for Non-FIT Pre-Closing Taxes
allocated to a Transtar Company under Section 2.2(b)(2) exceeds $400,000, then
Sections 2.2(b)(1) and 2.2(b)(2) shall be applied with respect to Tax Adjustment
Amounts arising after such threshold has been reached by substituting "$75,000"
for each place "$150,000" appears.
For purposes of this Section 2.2, EJ&E shall be treated as the Trans
tar Company whose assets or Operations are the subject of the Unitary Illinois
Corporate Income Tax.
For purposes of this Section 2.2, DM&IR shall be treated as the
Transtar Company whose assets or Operations are the subject of the Combined
Minnesota Corporate Income Tax.
Taxes for the portion of a Straddle Period ending on the Closing Date
shall be computed (i) in the case of income, franchise, gross receipts, sales
and use, payroll, transfer, value added, and withholding taxes, on the basis of
an interim closing of the books, and (ii) in the case of all other taxes, on a
per diem basis.
Section 2.3 Split-Off Taxes. Notwithstanding the other provisions of
this Article II, any Taxes described in Section 4.1 of the Reorganization
Agreement shall be allocated among the Parties as set forth in such Section 4.1.
Section 2.4 Carrybacks. Each Holdings Company may make an election
under Section 172(b)(3) of the Code to relinquish the entire carryback period
with respect to any net operating loss attributable to such Holdings Company in
any taxable period ending after the Closing Date that could be carried back to a
Pre-Closing Federal Income Tax Return.
Notwithstanding Section 2.1, any refund or credit of Pre-Closing
Federal Income Taxes that results from the carryback to any taxable period
ending on or before the Closing Date of any net operating loss, capital loss, or
tax credit arising in any taxable period ending after the Closing Date (referred
to as a "Post-Closing Carryback") shall be allocated entirely to the USX
Companies.
The Holdings Companies shall not be allocated any Pre-Closing Federal
Income Taxes if such Taxes would not otherwise have been due and payable but for
a Post-Closing Carryback described in (b) above.
Notwithstanding Section 2.2, any refund or credit of Non-FIT
Pre-Closing Taxes that results from the carryback to any taxable period ending
on or before the Closing Date of any net operating loss, capital loss, or tax
credit arising in any taxable period ending after the Closing Date shall be
allocated entirely to the Transtar Company required to file the relevant Tax
Return pursuant to Section 3.3.
Section 2.5 Refunds of Pre-Closing Taxes. Except as provided in Section
2.4, any refund or credit of Pre-Closing Federal Income Taxes shall be allocated
56% to the Holdings Companies and 44% to the USX Companies.
Except as provided in Section 2.4, any refund or credit of Non-FIT
Pre-Closing Taxes shall be allocated as follows.
To the extent such refund or credit is not in excess of the amount of
such Non-FIT Pre-Closing Tax paid after the Closing Date, such refund or credit
shall be allocated to each Holdings Company and each USX Company in proportion
to such Non-FIT Pre-Closing Tax paid after the Closing Date by such Holdings
Company or USX Company.
To the extent such refund or credit is in excess of the amount of such
Non-FIT Pre-Closing Tax paid after the Closing Date, such refund or credit shall
be allocated 56% to the Holdings Companies and 44% to the USX Companies.
Article III
Preparation and Filing of Returns and Payment of Taxes
Section 3.1 Returns Filed On or Before the Closing Date. Transtar shall
prepare and file or cause to be prepared and filed, consistent with past
practice, all Tax Returns required to be filed (after taking into account
extensions) by any Transtar Company on or before the Closing Date and shall pay
or cause to be paid all amounts shown as due and payable thereon. However, after
the Closing Date, Transtar shall have no liability to Holdings or any Holdings
Company due to the failure of Transtar to timely file or pay or cause to be
timely filed or paid any Pre-Closing Tax Return (i) required to be filed or paid
(after taking into account extensions) on or before the Closing Date or (ii)
actually filed or paid on or before the Closing Date.
Section 3.2 Federal Consolidated Income Tax Return of Transtar Group.
Transtar shall prepare and file or cause to be prepared and filed, consistent
with past practice, all Pre-Closing Federal Income Tax Returns required to be
filed after the Closing Date and shall pay or cause to be paid all amounts shown
as due and payable thereon (with such amounts being subject to allocation under
Section 2.1 and reimbursement under Article V).
Transtar, at the reasonable request of any Party (including itself),
and at such Party's expense except for an amended return described in (ii)
herein, shall prepare and file an amended Pre-Closing Federal Income Tax Return,
provided (i) the filing of such amended return does not increase the amount of
Pre-Closing Federal Income Taxes with respect to such return allocated to any
Party under Section 2.1(a), (ii) such return is being amended to correct an
error or omission to such return as previously filed, provided that all Parties
whose Pre-Closing Federal Income Taxes are increased by the amendment reasonably
agree such error or omission has occurred, or (iii) the Party requesting that
such amended return be filed (x) reimburse any Party for the increase, if any,
in the amount of Pre-Closing Federal Income Taxes with respect to such return
allocated to such Party under Section 2.1(a) and bear all costs and expenses
resulting from such increase or (y) obtain the written consent of such other
Party whose Pre-Closing Federal Income Taxes have increased, which consent will
not be unreasonably withheld or delayed.
Section 3.3 Pre-Closing Non-FIT Tax Returns Filed After the Closing
Date. Any Non-FIT Pre-Closing Tax Return (i) with a due date (including
extensions) on or before the Closing Date but which is not initially filed until
after the Closing Date or (ii) with a due date (including extensions) after the
Closing Date and any amended Non-FIT Pre-Closing Tax Return filed after the
Closing Date, shall be prepared and filed or cause to be prepared and filed,
consistent with past practice, by the Transtar Company legally required to file
such Tax Return, and such Transtar Company shall pay or cause to be paid all
amounts shown as due and payable thereon (with such amounts being subject to
allocation under Section 2.2 and reimbursement under Article V).
A Transtar Company legally required to file a Non-FIT Pre-Closing Tax
Return shall not file an amended Tax Return with respect to such Non-FIT
Pre-Closing Tax Return after the due date (including extensions) for filing the
initial Tax Return unless either (1) or (2) met.
The Tax Adjustment Amount with respect to such amended Tax Return is
less than $150,000, or is less than $75,000 if Section 2.2(b)(3) applies, or
If the Transtar Company is a Holdings Company, the consent of USX is
obtained, and if the Transtar Company is a USX Company, the consent of Holdings
is obtained. In each case such consent shall not be unreasonably withheld or
delayed.
Section 3.4 Review and Approval of Pre-Closing Tax Returns. At least
thirty (30) days prior to the due date (including extensions) of a Pre-Closing
Tax Return, USX, in the case of a Tax Return required to be prepared and filed
by a USX Company pursuant to this Article III, shall submit such Tax Return to
Holdings if any Holdings Company is allocated any portion of the Taxes shown on
such Tax Return pursuant to this Agreement, for the review and approval of
Holdings.
At least thirty (30) days prior to the due date (including extensions)
of a Pre-Closing Tax Return, Holdings, in the case of a Tax Return required to
be prepared and filed by a Holdings Company pursuant to this Article III, shall
submit such Tax Return to USX if any USX Company is allocated any portion of the
Taxes shown on such Tax Return pursuant to this Agreement, for the review and
approval of USX.
The Party reviewing the Pre-Closing Tax Return pursuant to Section
3.4(a) or (b) above ("Reviewing Party" ), shall be deemed to approve such Tax
Return unless it notifies the Party submitting such Pre-Closing Tax Return
("Preparing Party") within seven (7) days of the receipt of such Tax Return. If
such Reviewing Party notifies the Preparing Party of its disapproval of such Tax
Return within such 7-day period, and the Preparing Party and the Reviewing Party
cannot agree on the matter at issue within seven (7) days after such
notification, such matter will be submitted to an independent public accounting
firm following the procedure (including the cost sharing procedure) set forth in
Section 4.3. If such matter cannot be resolved before the due date (including
extensions) of such Tax Return, such return as submitted by the Preparing Party
shall be filed, and after such matter is resolved by the independent public
accounting firm, an amended Tax Return shall be prepared and filed if necessary
to reflect such resolution.
Section 3.5 Tax Return Preparation Costs. Except as provided in Section
3.2(b) and Section 4.3, the Holdings Companies shall reimburse Transtar for 56%
of the reasonable costs incurred by or on behalf of Transtar after the Closing
Date in connection with the preparation and filing of any Pre-Closing Federal
Income Tax Return.
Except as provided in Section 4.3, each Party shall bear all costs
incurred by it in preparing and filing any Non-FIT Pre-Closing Tax Return.
Section 3.6 Returns Filed on Unitary or Combined Basis. For purposes of
Article III and Article IV, EJ&E shall be treated as the Transtar Company
legally required to file the Tax Return for the Unitary Illinois Corporate
Income Tax.
For purposes of Article III and Article IV, DM&IR shall be treated as
the Transtar Company legally required to file the Tax Return for the Combined
Minnesota Corporate Income Tax.
Article IV
Audits
Section 4.1 Pre-Closing Federal Income Tax Returns. Except as provided
in Section 4.1(b), (c) and (d) below, Transtar shall control all matters with
respect to the audit of any Pre-Closing Federal Income Tax Return. Holdings and
each Holdings Company may cooperate, at their own expense, with Transtar in the
resolution of any matters arising from such audit.
Transtar shall not settle or resolve any issue arising from the audit
of any Pre-Closing Federal Income Tax Return if such issue involves Transtar or
a USX Company and the Tax Adjustment Amount with respect to such issue (and
ignoring all unrelated adjustments and changes) for all Pre-Closing taxable
periods in the aggregate is $100,000 or more without the consent of Holdings,
which consent shall not be unreasonably withheld or delayed.
Transtar shall not settle or resolve any issue arising from the audit
of any Pre-Closing Federal Income Tax Return if such issue involves a Holdings
Company without the consent of Holdings, which consent shall not be unreasonably
withheld or delayed.
Transtar shall not agree to any extension of the statute of limitations
for assessment of Pre-Closing Federal Income Taxes for more than six months
after such statute would have otherwise expired without extension without the
consent of Holdings, which consent shall not be unreasonably withheld or
delayed.
Section 4.2 Non-FIT Pre-Closing Taxes. Except as provided in Section
4.2(b), all matters with respect to the audit of any Non-FIT Pre-Closing Tax
Return shall be controlled by the Transtar Company legally required to file such
Tax Return. Any other Party may cooperate, at its own expense, with such
Transtar Company in the resolution of such matters.
If the audit of any Non-FIT Pre-Closing Tax Return results in a Tax
Adjustment Amount of $150,000 or more (or $75,000 or more if Section 2.2(b)(3)
applies), the Transtar Company controlling such audit shall, if a Holdings
Company, obtain the consent of USX, or, if a USX Company, obtain the consent of
Holdings, before settling or resolving any matters with respect to such audit.
Such consent shall not be unreasonably withheld or delayed.
Section 4.3 Disputes. If Holdings or a Holdings Company fails to give
its agreement, approval or consent in a situation described in Section 3.2(b),
Section 3.3 (b)(2), Section 3.4, Section 4.1(b), Section 4.1(c), Section 4.1(d)
or Section 4.2(b), or if USX or a USX Company fails to give its agreement or
consent in a situation described in Section 3.2(b), Section 3.3(b)(2), Section
3.4 or Section 4.2(b), or if the Parties cannot agree on an amount owed under
Section 5.3(a) or the allocation of a refund under Section 5.3(b), the issue
involved shall be submitted to an independent public accounting firm acceptable
to both USX and Holdings. If USX and Holdings cannot agree on an independent
public accounting firm, each shall select an independent public accounting firm
which will then select a third independent public accounting firm to resolve the
dispute. The decision of independent public accounting firm in resolving the
dispute shall be final and binding. The fees and expenses incurred with respect
to the independent public accounting firm resolving the dispute shall be
allocated 56% to the Holdings Companies and 44% to the USX Companies. All other
fees and expenses incurred in resolving the dispute, including the costs of the
independent public accounting firms used to select a third independent public
accounting firm, shall be borne by the Party which incurs such fees and
expenses.
Section 4.4 Notification of Audits. Transtar or the relevant USX
Company and Holdings or the relevant Holdings Company shall promptly notify the
other Party or Parties in writing upon the receipt of an actual notice from the
relevant Taxing authority of any proposed adjustment, assessment or other change
to a Pre-Closing Tax Return that may result in the liability of the other Party
or Parties under this Agreement; provided, however, that the failure to provide
such notice shall not relieve any Party's requirement to provide indemnity under
this Agreement unless such Party is materially prejudiced thereby.
Section 4.5 Costs and Expenses. Except as provided in Section 4.3, each
Party shall bear all fees and expenses incurred by it in resolving a dispute for
Pre-Closing Taxes.
Article V
Payments Between Parties
Section 5.1 - Allocation of Taxes, Costs and Expenses and Refunds Among
the Holdings Companies. The Holdings Companies' 56% share of (i) Pre-Closing
Federal Income Taxes pursuant to Section 2.1, (ii) preparation and filing costs
for Pre-Closing Federal Income Tax Returns pursuant to Section 3.5, (iii) fees
and expenses of an independent public accountant in resolving a dispute
involving Pre-Closing Federal Income Taxes pursuant to Section 4.3 and (iv)
refunds or credits of Pre-Closing Federal Income Taxes pursuant to Section 2.5,
shall be allocated among the Holdings Companies as follows: B&LE - 15.81%; DM&IR
- 48.20%; Dock - 3.86%; and Fleet - 32.13%.
The Holdings Companies' 56% share of (i) Non-FIT Pre-Closing Taxes
except such Taxes specifically allocated to a Holdings Company pursuant to
Section 2.2(b)(2), (ii) fees and expenses of an independent public accountant in
resolving a dispute involving Non-FIT Pre-Closing Taxes pursuant to Section 4.3
and (iii) refunds or credits of Non-FIT Pre-Closing Taxes except such refunds or
credits specifically allocated to a Holdings Company pursuant to Section
2.5(b)(1), shall be allocated among the Holdings Companies as follows: B&LE -
30.03%; DM&IR - 66.02%; Dock - 2.90%; and Fleet - 1.05%.
Each Holdings Company shall severally indemnify and hold harmless USX
and each USX Company against such Holdings Company's share of Pre-Closing Taxes,
preparation and filing fees for Pre-Closing Federal Income Tax Returns, and fees
and expenses of an independent public accountant in resolving a dispute
involving Pre-Closing Taxes, allocated to such Holdings Company under this
Section 5.1 or elsewhere in this Agreement; provided further, that Fleet shall
have joint and several liability with each Holdings Company for 31.41% of all
amounts allocated to such Holdings Company pursuant to Section 5.1(b).
Each Holdings Company shall pay over to a USX Company any refund or
credit of Pre-Closing Taxes received by such Holdings Company that is allocable
to such USX Company under Section 5.2 or elsewhere in this Agreement.
Section 5.2 Allocation of Taxes, Costs and Expenses and Refunds Among
the USX Companies. The USX Companies' 44% share of (i) Pre-Closing Federal
Income Taxes pursuant to Section 2.1, (ii) Non-FIT Pre-Closing Taxes except such
Taxes specifically allocated to a USX Company pursuant to Section 2.2(b)(2),
(iii) refunds or credits of Pre-Closing Federal Income Taxes, (iv) refunds or
credits of Non-FIT Pre-Closing Taxes except such refunds or credits that are
specifically allocated to a USX Company pursuant to Section 2.5(b)(1) and (v)
fees and expenses of an independent public accounting firm in resolving a
dispute involving Pre-Closing Taxes pursuant to Section 4.3, shall be allocated
among the USX Companies as follows: Birmingham Southern Railroad Company -
17.50%; EJ&E - 51.65%; Fairfield Southern Company, Inc. - .59%; The Lake
Terminal Railroad Company - 3.14%; McKeesport Connecting Railroad Company -
1.19%; Mobile River Terminal Company - 7.56%; and Union Railroad Company -
18.37%.
Each USX Company shall severally indemnify and hold harmless Holdings
and each Holdings Company against such USX Company's share of Pre-Closing Taxes
and fees and expenses of an independent public accountant in resolving a dispute
involving Pre-Closing Taxes allocated to such USX Company under this Section 5.2
or elsewhere in this Agreement.
Each USX Company shall pay over to a Holdings Company any refund or
credit of Pre-Closing Taxes received by such USX Company that is allocable to
such Holdings Company under Section 5.1 or elsewhere in this Agreement.
Section 5.3 Notice and Time of Payment. Except as provided in Section
5.3(b) below, to the extent that one Party (the "Paying Party") owes an amount
to another Party ("Recipient Party") pursuant to this Agreement or Section 4.1
of the Reorganization Agreement, the Recipient Party shall notify the Paying
Party and shall provide the Paying Party with its calculations of such amount
owed. The Paying Party shall pay the amount shown in such notice no later than
fifteen (15) days after receiving the notice, unless the Paying Party disagrees
with such amount, in which case the Parties agree to reasonably negotiate any
difference. If such difference cannot be reasonably negotiated within thirty
(30) days after the Recipient Party indicates its disagreement, then the Parties
shall submit the disagreement to an independent public accounting firm following
the procedure set forth in Section 4.3.
Any Party receiving a refund of Pre-Closing Taxes shall, within fifteen
(15) days of receipt, notify any other Party that may be entitled to all or a
portion of the refund and provide a calculation of such other Party's share of
the refund. Such other Party shall notify the first Party within fifteen (15)
days of receiving such notice and calculation of its agreement or disagreement
with such calculation of its share of the refund. If the Parties cannot
reasonably negotiate the allocation of the refund, the Parties shall submit the
disagreement to an independent public accounting firm following the procedure
set forth in Section 4.3. Any refund or portion thereof that is paid to another
Party more than thirty (30) days after receipt by a Party shall bear interest as
set forth in Section 5.5.
Section 5.4 Agreement to Settle Taxes on a Quarterly or More Frequent
Basis. Holdings and USX may agree in a signed writing to settle all payments of
Pre-Closing Taxes made during the 12-month period immediately following the
Closing Date on a quarterly or more frequent basis.
Section 5.5 Interest on Late Payments. If the Paying Party makes any
payment to a Recipient Party beyond the 15-day period in Section 5.3(a) above
(or such other time as agreed pursuant to Section 5.4), or in the case of a
refund, beyond the 30-day period in Section 5.3(b) above, such Paying Party
shall pay interest on the amount unpaid (after resolution of any disagreement as
to such amount), starting with the first day after such 15-day period (or such
other time as agreed pursuant to Section 5.4) or 30-day period, based on the
interest rate for tax underpayments in Section 6621(a) of the Code.
Section 5.6 Payments Treated as Distributions and Contributions. To the
extent permitted by law, all amounts payable to a Party under this Agreement, or
pursuant to Section 4.1 of the Reorganization Agreement, shall be deemed to be
made immediately prior to the termination of the Transtar Group, and shall be
treated as a distribution by the Paying Party to Transtar, and as a contribution
by Transtar to the Recipient Party.
Section 5.7 Gross Up of Payments. All payments to a Recipient Party
under this Agreement shall include the payment of such amount, if any, as shall
be necessary to hold the Recipient Party harmless on an after-Tax basis from all
Taxes required to be paid by the Recipient Party or the Paying Party with
respect to such payments (including any payments made under this Section 5.7).
Article VI
Tax Return Information
Section 6.1 Information and Assistance to be Provided by Holdings.
Holdings and each Holdings Company shall provide to the relevant USX Company all
information in its possession in the ordinary course of business and other
assistance, in each case, that is reasonably requested to enable such USX
Company to prepare and file all Tax Returns required to be filed by it pursuant
to Article III of this Agreement. Each Holdings Company agrees to make any
election, consent or other agreement reasonably required in order for Transtar
to prepare any Pre-Closing Federal Income Tax Return in accordance with this
Agreement.
Section 6.2 Information and Assistance to be Provided by USX. USX and
each USX Company shall provide to the relevant Holdings Company all information
in its possession in the ordinary course of business and other assistance, in
each case, that is reasonably requested to enable such Holdings Company to
prepare and file all Tax Returns required to be filed by it pursuant to Article
III of this Agreement in accordance with this Agreement.
Article VII
Access to Records and Retention of Records and Returns
Section 7.1 Access to Records. Beginning on the Closing Date, each
Party shall provide to any other Party reasonable access to such records,
documents, accounting data and other information (including computer data)
relating to pre-Closing Date periods and to its personnel and premises, for the
purposes of the review or audit of any Pre-Closing Tax Return to the extent
relevant to an obligation of such other Party under this Agreement.
Section 7.2 Retention of Records and Returns. For at least seven (7)
years after the Closing Date, each Party shall retain such records, documents,
accounting data and other information (including computer data) in its
possession in the ordinary course of business reasonably necessary for (i) the
preparation and filing of all Pre-Closing Tax Returns required to be filed by,
on behalf of, or with respect to, another Party under this Agreement, and (ii)
any audits and litigation relating to such Pre-Closing Tax Returns or to any
Pre-Closing Taxes payable by, on behalf of, or with respect to, another Party to
this Agreement.
For at least seven (7) years after the Closing Date, each Party shall
not permit any other Person to dispose of or destroy any Pre-Closing Tax Returns
involving another Party, or other business records and files relating to such
Tax Returns.
After the close of the 7-year period described in (a) and (b) above,
each Party shall not dispose of or destroy, or permit any other Person to
dispose of or destroy (i) such records, data, documents and other information
described in (a) above with respect to another Party or (ii) any Pre-Closing Tax
Returns described in (b) above with respect to another Party, without first
offering to turn over possession thereof to such other Party by written notice
to such other Party at least thirty (30) days prior to the proposed date of such
disposition or destruction.
Article VIII
Miscellaneous
Section 8.1 Confidentiality. Subject to any contrary requirement of law
and the right of each Party to enforce its rights hereunder in any legal action,
each Party agrees that it shall keep strictly confidential, and shall cause its
employees and agents to keep strictly confidential, any information which it or
any of its employees or agents may acquire pursuant to, or in the course of
performing its obligations under, any provision of this Agreement.
Section 8.2 Complete Agreement; Construction. This Agreement and the
Reorganization Agreement shall constitute the entire agreement between the
Parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.
Section 8.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the Parties and delivered to the other Parties.
Section 8.4 Survival of Agreements. All covenants and agreements of the
Parties contained in this Agreement shall survive the Closing Date.
Section 8.5 Expenses. Except as otherwise set forth in this Agreement,
each Party shall bear its own costs and expenses incurred in connection with
this Agreement.
Section 8.6 Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the Parties at
the following addresses (or at such other addresses for a Party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
(a) If to USX or a USX Company, then to:
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Manager - Tax Accounting
With copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior General Tax Attorney
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to Holdings or a Holdings Company, then to:
Transtar Holdings, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esquire
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Section 8.7 Waivers. The failure of any Party to require strict
performance by any other Party of any provision in this Agreement will not waive
or diminish that Party's right to demand strict performance thereafter of that
or any other provision hereof.
Section 8.8 Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by each of the Parties.
Section 8.9 Assignment. This Agreement shall not be assignable, in
whole or in part, directly or indirectly, by any Party without the prior written
consent of the other Parties, which consent shall not be unreasonably withheld
or delayed, and any attempt to assign any rights or obligations arising under
this Agreement without such consent shall be void.
Section 8.10 Successors and Assigns. The provisions to this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and permitted assigns.
Section 8.11 Termination. This Agreement shall not terminate except by
an agreement in writing signed by the Parties. Following termination of this
Agreement, no Party shall have any liability under this Agreement.
Section 8.12 Third Party Beneficiaries. This Agreement is solely for
the benefit of the Parties and should not be deemed to confer upon third parties
any remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
Section 8.13 Title and Headings. Title and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
Section 8.14 Pre-Closing Date Earnings and Profits. The Holdings
Companies and the USX Companies agree to allocate pre-Closing Date earnings and
profits in accordance with Treasury Regulation Sections 1.312-10 and 1.1502-33.
Section 8.15. Governing Law. THIS AGREEMENT AND ALL DEALINGS OF THE
PARTIES WITH RESPECT TO THE MATTERS ADDRESSED HEREIN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO THE PRINCIPLES OF THE CONFLICTS OF LAWS THEREOF) APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN SUCH STATE.
IN WITNESS WHEREOF, each of the parties hereto has caused its name to
be hereunto subscribed by its duly authorized officer as of the date first
written above.
USX CORPORATION
By:
-----------------------------------
Name:
Title:
TRANSTAR HOLDINGS, L.P.
By: BLACKSTONE TRANSPORTATION
COMPANY, INC., its General
Partner
By:
-----------------------------------
Name:
Title:
HOLDINGS COMPANIES:
BESSEMER AND LAKE ERIE RAILROAD
COMPANY
By:
-----------------------------------
Name:
Title:
CUYAHOGA DOCK, INC.
By:
-----------------------------------
Name:
Title:
DULUTH, MISSABE AND IRON RANGE RAILWAY
COMPANY
By:
-----------------------------------
Name:
Title:
GLF CREDIT CORPORATION
By:
-----------------------------------
Name:
Title:
GLF GREAT LAKES CORPORATION
By:
-----------------------------------
Name:
Title:
MON VALLEY RAILWAY COMPANY
By:
-----------------------------------
Name:
Title:
THE PITTSBURGH & CONNEAUT DOCK COMPANY
By:
-----------------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
-----------------------------------
Name:
Title:
USX COMPANIES:
TRANSTAR, INC.
By:
-----------------------------------
Name:
Title:
BIRMINGHAM SOUTHERN RAILROAD COMPANY
By:
-----------------------------------
Name:
Title:
ELGIN, JOLIET AND EASTERN RAILWAY
COMPANY
By:
-----------------------------------
Name:
Title:
FAIRFIELD SOUTHERN COMPANY, INC.
By:
-----------------------------------
Name:
Title:
THE LAKE TERMINAL RAILROAD COMPANY
By:
-----------------------------------
Name:
Title:
MCKEESPORT CONNECTING RAILROAD COMPANY
By:
-----------------------------------
Name:
Title:
MOBILE RIVER TERMINAL COMPANY
By:
-----------------------------------
Name:
Title:
UNION RAILROAD COMPANY
By:
-----------------------------------
Name:
Title:
WARRIOR AND GULF NAVIGATION COMPANY
By:
-----------------------------------
Name:
Title:
TRACKS TRAFFIC AND MANAGEMENT
SERVICES, INC.
By:
-----------------------------------
Name:
Title:
EXHIBIT D
AMENDMENT
OF
TRANSPORTATION SERVICES AGREEMENT
THIS AMENDMENT is made and entered into this ____ day of October, 2000,
by and between USX CORPORATION - U.S. STEEL GROUP, a Delaware Corporation with
an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (hereinafter
"USS"); REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limited liability
company with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (hereinafter
"RTI"); and USS GREAT LAKES FLEET, INC., a Delaware Corporation with an office
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (hereinafter "CARRIER").
WITNESSETH:
WHEREAS, USS, RTI (successor to USS/KOBE Steel Company) and CARRIER are
parties to a Transportation Services Agreement, effective July 1, 1998
(hereinafter the "Agreement"); and WHEREAS, USS, RTI and CARRIER desire to amend
the Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto, intending to be legally bound, agree
as follows:
1. This Amendment shall be effective on the date first set forth above.
2. The term of the Agreement, as set forth in section 1 of the
Agreement, is hereby extended until March 15, 2009 (end of 2008 SHIPPING
SEASON).
3. Except as provided herein, all terms and conditions of the Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives on the date first above
written.
USX CORPORATION - U.S. STEEL GROUP
By:
-----------------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
-----------------------------------
Name:
Title:
REPUBLIC TECHNOLOGIES INTERNATIONAL,
LLC
By:
-----------------------------------
Name:
Title:
EXHIBIT E
AMENDMENT
OF
TRANSPORTATION SERVICES AGREEMENT
THIS AMENDMENT is made and entered into this ___ day of October, 2000,
by and between USX Corporation - U.S. Steel Group, a Delaware corporation with
offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "USS");
Transtar, Inc, a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "Transtar"); and Transtar Holdings
L.P., a Delaware limited partnership (hereinafter "Holdings").
WITNESSETH:
WHEREAS, USS and Transtar are parties to a Transportation Services
Agreement, effective July 1, 1998 (hereinafter the "TSA"); and
WHEREAS, the TSA sets forth certain duties and obligations between USS
and certain Transtar subsidiaries, including the Duluth, Missabe and Iron Range
Railway Company (hereinafter "DMIR") and the Bessemer and Lake Erie Railroad
Company (hereinafter "Bessemer"); and
WHEREAS, Transtar, Holdings and USS have entered into a "Reorganization
and Exchange Agreement", pursuant to which Holdings has obtained ownership and
control of DMIR and Bessemer; and
WHEREAS, Transtar, with the consent of USS, desires to assign to
Holdings, Transtar's rights and obligations under the TSA, insofar as they
pertain to DMIR and Bessemer, and Holdings desires to accept such assignment;
and
WHEREAS, USS and Holdings desire to extend the term of the TSA, to the
extent that it pertains to DMIR and Bessemer.
NOW, THEREFORE, the parties hereto, intending to be legally bound, and
in consideration of the mutual agreements herein contained, hereby agree as
follows:
The Amendment shall be effective on the date first set forth above.
Transtar hereby assigns to Holdings Transtar's rights and obligations
under the TSA, but only to the extent that such rights and obligations pertain
to the DMIR and Bessemer. Holdings accepts and USS consents to this assignment.
The terms and conditions of the TSA, to the extent that they pertain to
DMIR and Bessemer, are hereby incorporated herein by reference.
Section 2 of the TSA, to the extent that it pertains to DMIR and
Bessemer, is hereby deleted, and the following Section 2 is substituted in its
place:
2. TERM. This Agreement shall become effective on July 1, 1998 and
shall remain in effect through June 30, 2008 ("Initial Term"). At the end of the
Initial Term of this Agreement or at the end of the Additional Term established
in Section 3 herein, if any of the services previously performed by DMIR and/or
Bessemer pursuant to this Agreement are subject to competitive bidding, the DMIR
and/or Bessemer shall be offered an opportunity to participate in any
competitive bidding for such services.
5. Except as assigned and modified herein, all terms and conditions of
the TSA shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives on the date first above
written.
TRANSTAR, INC. USX CORPORATION-
U.S. STEEL GROUP
By: By:
------------------------------ -----------------------------------
Name: Name:
Title: Title:
TRANSTAR HOLDINGS, L.P.
By: BLACKSTONE TRANSPORTATION
COMPANY, INC., its General
Partner
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
EXHIBIT F
TERMINATION OF STOCKHOLDERS' AGREEMENT
TERMINATION AGREEMENT (this "Agreement") dated as of _____ __, [2000]
by and among USX CORPORATION, a Delaware corporation ("USX"), TRANSTAR HOLDINGS,
L.P., a Delaware limited partnership ("Holdings") and TRANSTAR, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, USX and Holdings are parties to a Stockholders'
Agreement dated as of December 28, 1988 (the "Existing Stockholders'
Agreement"); and
WHEREAS, the Company, Holdings and USX have entered into that certain
Reorganization and Exchange Agreement (the "Reorganization Agreement") dated as
of October __, 2000; and
WHEREAS, pursuant to the terms of the Reorganization Agreement,
simultaneous with the execution of this Agreement the Company will redeem all of
its currently outstanding capital stock held by Holdings;
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Termination. The Existing Stockholders' Agreement shall be
terminated and have no further force and effect, effective as of the Closing.
Notwithstanding any provision to the contrary contained in the Existing
Stockholders' Agreement, none of the rights, obligations and liabilities of the
parties under the Existing Stockholders' Agreement shall survive the termination
of the Existing Stockholders ' Agreement.
2. Resignations of Directors. Holdings agrees to use its reasonable
efforts to cause each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ (or any of such directors' replacements) to resign.
3. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with and subject to, the laws of the State of New
York applicable to agreements made and to be performed entirely within such
State.
4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
5. Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter hereof. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6. Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
* * * *
IN WITNESS WHEREOF, USX, Holdings and the Company have each executed
and delivered this Agreement as of the date first above written.
USX CORPORATION
By:
------------------------------------
Name:
Title:
TRANSTAR HOLDINGS, L.P.
By: BLACKSTONE TRANSPORTATION
COMPANY, INC., its General Partner
By:
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
TRANSTAR, INC.
By:
------------------------------------
Name:
Title:
EXHIBIT G
AMENDED AND RESTATED ASSUMPTION AND INDEMNIFICATION AGREEMENT
AMENDED AND RESTATED ASSUMPTION AND INDEMNIFICATION AGREEMENT (this
"Agreement") dated as of _____ __, [2000] among USX CORPORATION, a Delaware
corporation ("USX"), USS GREAT LAKES FLEET, INC., a Delaware corporation
("Fleet") and TRANSTAR, INC., a Delaware corporation ("Transtar").
WHEREAS, Transtar, Fleet and certain other corporations entered into,
and USX consented to, that certain Asset Purchase Agreement dated as of December
15, 1988 (the "Asset Purchase Agreement"); and
WHEREAS, USX, Fleet, Transtar and Great Lakes Fleet Acquisition, Inc.
("Transtar Sub") entered into an Assumption and Indemnification Agreement dated
as of December 28, 1988 (the "Original Agreement"); and
WHEREAS, Fleet merged with and into Transtar Sub and Transtar Sub
changed its name to Fleet pursuant to a Certificate of Merger dated [December
28, 1988] ; and
WHEREAS, Transtar, Transtar Holdings, L.P. ("Holdings") and USX have
entered into that certain Reorganization and Exchange Agreement (the
"Reorganization Agreement") dated as of October __, 2000, the transactions
pursuant to which shall take place on the closing date specified therein (the
"Reorganization Closing Date"); and
WHEREAS, under the terms of the Original Agreement, USX, Transtar,
Fleet and Transtar Sub agreed to a certain allocation of obligations for losses,
liabilities, claims, damages, costs and expenses (including counsel fees)
allegedly resulting directly from the use or existence of or exposure to
asbestos (including any product or material containing asbestos) (collectively
"Asbestos Claims"); and
WHEREAS, pursuant to the terms of the Reorganization Agreement, the
parties hereto desire to amend and restate the Original Agreement in its
entirety to provide that (i) USX shall continue its indemnification obligations
and (ii) Fleet's and Transtar's indemnification obligations shall be modified as
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. USX agrees to assume, indemnify and hold Fleet harmless against any
and all Asbestos Claims as to which legal proceedings were commenced under
applicable laws, regulations or court rules before the Closing Date (as defined
in the Asset Purchase Agreement).
2. (a) Fleet agrees to assume, indemnify and hold USX harmless against
any and all Asbestos Claims relating to activities, vessels or properties of the
Fleet or the USX Lake Shipping Division as to which legal proceedings were
commenced under applicable laws, regulations or court rules on or after the
Closing Date (as defined in the Asset Purchase Agreement); provided, however,
with respect to Asbestos Claims relating to activities, vessels or properties of
the Fleet or the USX Lake Shipping Division as to which legal proceedings were
commenced under applicable laws, regulations or court rules on or after the
Closing Date (as defined in the Asset Purchase Agreement) but prior to the
Reorganization Closing Date, Fleet shall assume, indemnify and hold USX harmless
for only 56% of all liabilities associated with such Asbestos Claims.
(b) With respect to Asbestos Claims relating to activities, vessels or
properties of the Fleet as to which legal proceedings were commenced under
applicable laws, regulations or court rules on or after the Closing Date (as
defined in the Asset Purchase Agreement) but prior to the Reorganization Closing
Date, Transtar shall assume, indemnify and hold Fleet harmless for 44% of all
liabilities associated with such Asbestos Claims.
(c) For the purposes of this Agreement, proceedings with respect to
claims which have been filed prior to the Reorganization Closing Date and which
have been " administratively dismissed" by a court of competent jurisdiction and
which are subsequently re-filed or otherwise revived by the plaintiff shall be
deemed to have been commenced on the date on which the original claim with
respect to which such re-filed or revived claim relates was first filed.
(d) Other than as set forth in this Section 2, Transtar is hereby
released from any obligation it may previously have had under the Original
Agreement to assume, indemnify and hold USX harmless against any Asbestos Claim.
3. The parties agree that all shall cooperate with each other and make
available to the responsible party all records and documents which, and all
employees who, are reasonably necessary to defend any proceeding without charge
other than reimbursement of out-of-pocket expenses actually incurred by the
indemnified party.
4. The interpretation and construction of this Agreement, and all
other matters relating hereto, shall be governed by the laws of the Commonwealth
of Pennsylvania.
5. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
6. This Agreement sets forth the entire agreement and understanding of
the parties hereto relating to the subject matter contained herein and merges
all prior discussions between the parties, and neither party shall be bound by
any previous agreements, negotiations, commitments and writings, including, but
not limited to the Original Agreement, other than as expressly stated in this
Agreement.
IN WITNESS WHEREOF, each of Transtar, Fleet and USX has caused its
corporate name to be hereunder subscribed by its officer duly authorized as of
the date first above written.
USX CORPORATION
By:
-------------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
-------------------------------
Name:
Title:
TRANSTAR, INC.
By:
-------------------------------
Name:
Title:
EXHIBIT H
ENVIRONMENTAL INDEMNIFICATION AGREEMENT
ENVIRONMENTAL INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of
_____ __, [2000], among USX CORPORATION, a Delaware corporation ("USX"),
TRANSTAR HOLDINGS, L.P., a Delaware limited partnership ("Holdings") and each of
the subsidiaries of Holdings signatory hereto listed under the caption "Holdings
Companies" (collectively, the "Holdings Companies").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Transtar, Inc., a Delaware corporation ("Transtar") entered into
that certain Asse t Purchase Agreement dated as of December 15, 1988 (the
"Purchase Agreement") among Transtar and each of the subsidiaries of USX listed
on Exhibit I hereto (the "USX Subs") pursuant to which Transtar agreed to
purchase substantially all of the assets of the USX Subs and to acquire such
assets by mergers of the USX Subs into each of the subsidiaries of Transtar
listed on Exhibit II hereto (collectively, the "Transtar Subs"); and
WHEREAS, USX received, as consideration for such purchase, payments of cash
and subordinated notes of Transtar; and
WHEREAS, it was a condition to the obligation of Transtar to consummate
such purchase that USX indemnify Transtar and the Transtar Subs against certain
liabilities; and
WHEREAS, to effect that indemnification, USX, Transtar and the Transtar
Subs entered into an Environmental Indemnification Agreement dated as of
December 28, 1988 (the "Original Agreement"); and
WHEREAS, Transtar, Holdings and USX have entered into that certain
Reorganization and Exchange Agreement (the "Reorganization Agreement") dated as
of October __, 2000; and
WHEREAS, pursuant to the terms of the Reorganization Agreement, the parties
hereto desire to terminate the Original Agreement and enter into this Agreement
to provide that Holdings and the Holdings Companies are the only beneficiaries
of the indemnification obligation of USX; and
WHEREAS, USX, Transtar and the Transtar Subs have agreed to terminate the
Original Agreement by means of a Termination Agreement dated as of the date
hereof.
NOW, THEREFORE, the parties hereto agree as fol-lows:
Section 1. Indemnity. USX agrees to indemnify Holdings and each of the
Holdings Companies, and hold each of them harm-less from and against any and all
claims, losses, liabili-ties, obligations, damages, deficiencies, costs and
expenses, including, without limitation, expenses of inves-tigation and
reasonable attorneys' fees and disbursements, suffered or paid directly or by
application of any assets of Holdings or any Holdings Company after the Closing
Date (as defined in the Purchase Agreement), arising out of or re-lating to (a)
any environmental condition of any kind or na-ture existing prior to the Closing
Date at any of the locations listed in Exhibit III hereto (each such location a
"Cleanup Site"), (b) any pollution of the environment, including without
limitation, ambient air, surface water ground water or land, waste, hazardous or
toxic substances, whether relating to manufacture, storage, disposal, transport,
handling or reporting, or any other environmental condition of any kind or
nature existing prior to the Closing Date on any real property including, with
limitation, the sites listed on Exhibit IV hereto owned by any of the Existing
Transportation Units (as defined in Purchase Agreement) and leased to a third
party, including, without limitation,, USX (the " Leased Sites") which Holdings
or any Holdings Company is required by law to remediate and after reasonable
efforts, Holdings and the relevant Holdings Company are unable to have such
remediation performed by lessee, and (c) any event occurring before the Closing
Date or condition existing as of the Closing Date involving any Cleanup Site or
Leased Site which constitutes or is all to constitute a violation of any
currently applicable Federal, state or local environmental law, regulation or
ordinance including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, the Superfund Amendments Reauthorization Act of 1986, the Clean
Air Act, the Clean Water Act and the Toxic Substances Control Act, to the extent
that such claims, losses, liabilities, obligations, damages, deficiencies, costs
and expenses, in the case of clauses (a), (b) and (c) exceed, in the aggregate,
$1,158,826 ("USX Deductible Amount"), in which event USX shall be liable for
indemnification hereunder only for 75 of every $1 in excess of the USX
Deductible Amount; provided that USX shall be liable for indemnification
hereunder for the full amount (subject to no USX Deductible Amount) of all
claims, losses, liabilities, obligations, damages, deficiencies, costs and
expenses, arising out of or relating to events, conditions or other matters
described in clause (b) above to the extent USX is the lessee of the Leased Site
in question.
Section 2. Arbitration. If USX and Holdings are unable to agree upon the
apportionment of responsibility for, or the date of existence of, any
environmental condition covered by the terms of this Agreement, the dispute
shall be referred to binding arbitration by an arbitral tribunal (the
"Tribunal") composed of three arbitrators, of whom USX shall nominate one,
Holdings shall nominate one and the two arbitrators so nominated shall agree
upon a third. If either USX, on the one hand, or Holdings, on the other, fails
to nominate an arbitrator within thirty (30) days of receiving notice of the
nomination of such arbitrator by the other nominating party, such arbitrator
shall at the written request of any party be appointed by the American
Arbitration Association's office in Washington, D.C. As soon as practicable
after its appointment, the Tribunal shall convene a meeting with USX, and
Holdings or their representatives. Not less than ten (10) Business Days prior to
such meeting, each of USX, on the one hand, or Holdings, on the other, shall
make a written submission to the Tribunal with regard to the issues to be
resolved. At such meeting, the Tribunal shall hear oral presentations by each of
USX, on the one hand, or Holdings, on the other, or its representative and shall
have an opportunity to question each of USX and Holdings with respect thereto.
The Tribunal may issue a decision to resolve the dispute at any time.
Alternatively, the Tribunal may, at its option, schedule one or more further
meetings and request that the parties to the dispute provide further oral
testimony or written submissions with respect to the issues to be resolved. The
Tribunal shall endeavor to complete its review of the issues and issue its
decision with respect to the dispute as soon as practicable. In the event any
party fails to cooperate with the Tribunal or comply with its requests for oral
testimony or written submissions, the Tribunal shall be entitled to draw
appropriate conclusions from such failure and consider such conclusions in
reaching its decision on the dispute. The Tribunal shall issue its final
decision in a written statement addressed to each of USX and Holdings. The
procedural decision of the Tribunal shall be made by a majority of the Tribunal.
Section 3. Expenses. The parties shall cooperate with each other to develop
cost effective and business-justified solutions to the matters described herein.
Holdings and the Holdings Companies shall give USX notice prior to incurring any
expenses for which USX shall be responsible hereunder.
Section 4. Benefits. This Agreement shall inure to the benefit of Holdings
and each of the Holdings Companies and their successors and assigns.
Section 5. Amendments. No changes, amendments or modi-fications of this
Agreement shall be valid unless in writing and signed by all of the parties
hereto affected by any such change, amendment or modification.
Section 6. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered by any reasonable means, including but not limited to per-▇▇▇▇▇
delivery, overnight courier, telex or registered or certified mail,
return-receipt requested and postage pre-paid:
(a) if to Holdings, to:
Transtar Holdings, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
THE BLACKSTONE GROUP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and to:
WHITE & CASE LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., Esq.
(b) if to USX, to:
USX CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
with a copy to:
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
or to such other address as any such party hereto may, from time to time,
designate in writing delivered in a like manner.
Section 7. Governing Law. This Agreement shall be governed by the law of
the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, USX, Holdings and the Holdings Companies have each
executed and delivered this Agreement as of the date first above written.
USX CORPORATION
By:
--------------------------
Name:
Title:
TRANSTAR HOLDINGS, L.P.
By: BLACKSTONE TRANSPORTATION
COMPANY, INC., its General Partner
By:
--------------------------
Name:
Title:
HOLDINGS COMPANIES:
BESSEMER AND LAKE ERIE RAILROAD COMPANY
By:
--------------------------
Name:
Title:
DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY
By:
--------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
--------------------------
Name:
Title:
PITTSBURGH & CONNEAUT DOCK COMPANY
By:
--------------------------
Name:
Title:
USX SUBSIDIARIES
Bessemer Acquisition, Inc.
Birmingham Southern Acquisition, Inc.
DM&IR Acquisition, Inc.
EJ&E Acquisition, Inc.
Lake Terminal Acquisition, Inc.
McKeesport Acquisition, Inc.
P&C Dock Acquisition, Inc.
Union Railroad Acquisition, Inc.
Great Lakes Fleet Acquisition, Inc.
Warrior & Gulf Acquisition, Inc.
Fairfield Southern Acquisition, Inc.
MRT Acquisition, Inc.
Mon Valley Merger, Inc.
Tracks Traffic Acquisition, Inc.
Transall Acquisition, Inc.
TRANSTAR SUBSIDIARIES
Bessemer and Lake Erie Railroad Company
Birmingham Southern Railroad Company
Duluth, Missabe and Iron Range Railway Company
Elgin, Joliet and Eastern Railway Company
The Lake Terminal Railroad Company
McKeesport Connecting Railroad Company
The Pittsburgh & Conneaut Dock Company
Union Railroad Company
USS Great Lakes Fleet, Inc.
Warrior & Gulf Navigation Company
Fairfield Southern Company, Inc.
Mobile River Terminal Company
Mon Valley Railway Company
Tracks Traffic and Management Services, Inc.
Transall, Inc.
List of Existing Environmental Cleanup Sites
BESSEMER AND LAKE ERIE RAILROAD Company
1. Douglassville National Superfund Site a/k/a Berks Associates, Inc. Cleanup
Site, Douglassville, Pennsylvania. B&LE's contributed diesel lube oil to
this site -- 4,032 gallons in 1973 and 2,600 gallons in 1975. Federal EPA
involvement.
2. Delta Chemicals Cleanup Site, Worthington, Pennsylvania. B&LE contributed
used solvents and waste oil to the site in 1985. Both state and federal
authorities are involved.
DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY
1. Arrowhead Refinery National Superfund Site, Hermantown, Minnesota. DM&IR's
contribution is 9,000 gallons waste oil. Federal EPA involvement.
2. Proctor Cleanup Site. Waste oil and PCB con-tamination at DM&IR facility in
Proctor, Minnesota. Removal is being coordinated with state agency.
3. Two Harbors Facility - Abex Site. Two Har-bors, Minnesota. Hazardous
foundry sludge has been discovered on property owned by the DM&IR.
ELGIN, JOLIET AND EASTERN RAILWAY COMPANY
1. ▇▇▇▇ Oil Cleanup Site, DuPage County, Illi-nois. EJ&E's contributed 3,985
gallons of waste oil; groundwater contamination has resulted. State agency
involved.
PITTSBURGH AND CONNEAUT DOCK COMPANY
1. ▇▇▇▇▇▇/Poplar Oil National Superfund Site, Jefferson, Ohio. United States
of America vs. ▇▇▇▇▇ ▇▇▇▇▇▇, et al. and General Motors, et al. vs. A.A.
Automotive Ser-vice & Parts, et al. (including P&C Dock). P&C Dock
contributed 16,315 gallons waste oil to this site. Federal EPA involvement.
(See also USS Great Lakes Fleet.)
UNION RAILROAD COMPANY
1. Swissvale National Superfund Site, Swissvale, Pennsylvania. ▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇ d/b/a Swissvale Auto Surplus Co. vs. ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Corp., et
al. (including URR). Swissvale Auto Surplus Company site involves cleanup
of PCBs and contaminated soil. Federal EPA involvement.
2. Delta Chemicals Cleanup Site, Worthington, Pennsylvania. Union contributed
used solvents and waste oil to the site in 1985. Both state and federal
authorities are involved.
USS GREAT LAKES FLEET, INC.
1. ▇▇▇▇▇▇/Poplar Oil National Superfund Site, Jefferson, Ohio. United States
of America vs. ▇▇▇▇▇ ▇▇▇▇▇▇, et al. and General Motors, et al. vs. A.A.
Automotive Service & Parts, et al. (including the Fleet). The Fleet
contributed 342,000 gallons of waste oil to the site. Federal EPA
involvement.
Certain Leased Sites
1. Albion, Pennsylvania Cleanup Site. A solid waste site at the Bessemer' s
car clean-out site currently leased to a third party may necessitate the
cleanup and disposal of soil. The state's Department of Environmental
Resources has app roved the on-going remediation.
2. Endion Yard Cleanup Site. Duluth, Minnesota. Contaminated soil has been
discovered on property formerly owned and/or leased by the DM&IR. State
agency involvement.
EXHIBIT I
TERMINATION OF ENVIRONMENTAL INDEMNIFICATION AGREEMENT
TERMINATION AGREEMENT (this "Agreement") dated as of _____ __, [2000]
by and among USX CORPORATION, a Delaware corporation ("USX"), TRANSTAR, INC., a
Delaware corporation ("Transtar") and each of the subsidiaries of Transtar
signatory hereto listed under the caption "Transtar Subs" (collectively, the
"Transtar Subs").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, USX, Transtar and the Transtar Subs are parties to an
Environmental Indemnification Agreement dated as of December 28, 1988 (the
"Existing Agreement"); and
WHEREAS, Transtar, Transtar Holdings, L.P. ("Holdings") and USX have
entered into that certain Reorganization and Exchange Agreement (the
"Reorganization Agreement") dated as of October __, 2000; and
WHEREAS, USX, Holdings and certain subsidiaries of Holdings are
parties to an Environmental Indemnification Agreement dated as of the date
hereof which Transtar, Holdings and USX intend to replace the Existing
Agreement; and
WHEREAS, pursuant to the terms of the Reorganization Agreement, the
parties hereto desire to terminate the Existing Agreement;
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Termination. The Existing Agreement shall be terminated and have no
further force and effect, effective as of the Closing. Notwithstanding any
provision to the contrary contained in the Existing Agreement, none of the
rights, obligations and liabilities of the parties under the Existing Agreement
shall survive the termination of the Existing Agreement.
2. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with and subject to, the laws of the State of
Pennsylvania applicable to agreements made and to be performed entirely within
such State.
3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
4. Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter hereof. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
5. Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
* * * *
IN WITNESS WHEREOF, USX, Holdings and the Company have each executed
and delivered this Agreement as of the date first above written.
USX CORPORATION
By:
--------------------------------------
Name:
Title:
TRANSTAR, INC.
By:
--------------------------------------
Name:
Title:
TRANSTAR SUBS:
BESSEMER AND LAKE ERIES RAILROAD COMPANY
By:
--------------------------------------
Name:
Title:
BIRMINGHAM SOUTHERN RAILROAD COMPANY
By:
--------------------------------------
Name:
Title:
DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY
By:
--------------------------------------
Name:
Title:
ELGIN, JOLIET AND EASTERN RAILWAY COMPANY
By:
--------------------------------------
Name:
Title:
THE LAKE TERMINAL RAILROAD COMPANY
By:
--------------------------------------
Name:
Title:
MCKEESPORT CONNECTING RAILROAD COMPANY
By:
--------------------------------------
Name:
Title:
THE PITTSBURGH AND CONNEAUT DOCK COMPANY
By:
--------------------------------------
Name:
Title:
UNION RAILROAD COMPANY
By:
--------------------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
--------------------------------------
Name:
Title:
WARRIOR & GULF NAVIGATION COMPANY
By:
--------------------------------------
Name:
Title:
FAIRFIELD SOUTHERN COMPANY, INC.
By:
--------------------------------------
Name:
Title:
MOBILE RIVER TERMINAL COMPANY
By:
--------------------------------------
Name:
Title:
MON VALLEY RAILWAY COMPANY
By:
--------------------------------------
Name:
Title:
TRACKS TRAFFIC AND MANAGEMENT SERVICES, INC.
By:
--------------------------------------
Name:
Title:
TRANSALL , INC.
By:
--------------------------------------
Name:
Title:
EXHIBIT J
AMENDMENT TO LICENSE AGREEMENT
AMENDMENT (this "Amendment"), dated as of _____ __, [2000], between
USX CORPORATION, a Delaware corporation ("Licensor") on the one hand, and USS
GREAT LAKES FLEET, INC., a Delaware corporation ("Fleet"). All capitalized terms
used herein and not otherwise defined shall have the respective meanings
provided such terms in the License Agreement referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Licensor and Fleet are parties to a License Agreement dated
as of December 28, 1988 (the "License Agreement"); and
WHEREAS, USX, Transtar, Inc. and Transtar Holdings, L.P. have entered
into that certain Reorganization and Exchange Agreement (the "Reorganization
Agreement") dated as of October __, 2000; and
WHEREAS, pursuant to the terms of the Reorganization Agreement, the
parties hereto desire to amend certain provisions of the License Agreement;
NOW, THEREFORE, it is agreed:
1. Section 8 of the License Agreement is hereby amended by deleting
such section in its entirety and inserting the following text in lieu thereof:
"TERM, TERMINATION. This Agreement shall continue in effect until the
second anniversary of execution of this Agreement, except that Licensee shall be
permitted a period of one year there-after in which (i) to remove all use of the
USS in Circle from its ships, (ii) to obtain replace-ment station-ery, business
cards and the like deleting all references to USS, and (iii) to destroy all
bro-chures, labels, advertising and the like or obliterate or remove therefrom
all uses of the Names."
2. Section 8 of the License Agreement is hereby amended by deleting
such section in its entirety and inserting the following text in lieu thereof:
"POST TERMINATION. After the termination of this Agreement [or in the
event of cancellation of this Agreement by Licensor for material default by
Licensee], Licensee shall thereafter cease using the Names except for the period
of one year as expressly provided above in Section 8. Within one year after
termination, Licensee shall take prompt and immediate action to notify all
Federal, State and local governmental bodies of its change in corporate name and
shall take such further action as may be necessary to eliminate all references
to the designation USS in connection with records of the corporate name of
Licensee.]"
3. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the License
Agreement.
4. This Amendment shall be governed and construed in accordance with
the laws of the Commonwealth of Pennsylvania, with-out regard to such State's
choice of law provision. This Amendment may be executed simul-tane-ously in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused its name to
be hereunto subscribed by its duly authorized officer as of the date first
written above.
USX CORPORATION
By:
-------------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
-------------------------------
Name:
Title:
EXHIBIT K
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT (this "Amendment"), dated as of _____ __, [2000], among USX
CORPORATION, a Delaware corporation ("USX"), TRANSTAR, INC., a Delaware
corporation ("Transtar"), the subsidiaries of Transtar signatory hereto under
the caption "USX Companies" (the "USX Companies"), Transtar Holdings LP, a
Delaware limited partnership ("Holdings") and the subsidiaries of Holdings
signatory hereto under the caption "Holdings Companies" (the "Holdings
Companies"). All capitalized terms used herein and not otherwise defined shall
have the respective meanings provided such terms in the Asset Purchase Agreement
referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, USX, Transtar, the USX Companies and the Holdings Companies
are parties to an Asset Purchase Agreement dated as of December 28, 1988 (the
"Asset Purchase Agreement"); and
WHEREAS, USX, Transtar, Inc. and Holdings have entered into that
certain Reorganization and Exchange Agreement (the "Reorganization Agreement")
dated as of October __, 2000; and
WHEREAS, pursuant to the terms of the Reorganization Agreement, the
parties hereto desire to amend certain provisions of the Asset Purchase
Agreement;
NOW, THEREFORE, it is agreed:
1. Section 10.11 of the Asset Purchase Agreement is hereby amended by
deleting such section in its entirety and inserting the following text in lieu
thereof:
"Section 10.11 Pension Liability by Reason of Subsequent Events. In
the event that the employment of any Employee employed by Holdings or a Holdings
Company has been terminated after December 28, 1988 or is terminated in the
future as a direct or indirect result of a job elimination, or by reason of a
shutdown or relocation of the business, department or any subdivision thereof,
or by reason of a break in continuous service due to layoff, and such Employee
has been or is granted an immediate non-contributory and/or contributory pension
under the USX Pension Plan, as amended, or in the event that an arbitrator or
court of competent jurisdiction has ruled or rules that such a Holdings or
Holdings Company Employee is entitled to such a pension or to severance pay from
USX, USX shall be reimbursed for the total cost of benefits, including its
immediate non-contributory and contributory pension or severance payment. The
total costs to be reimbursed include the benefits paid to such Employee as
severance pay and the pension benefits paid to such Employee during the period
between the date the pension commenced or commences and earlier of the date on
which the Employee attains age 62 or the date on which such Employee is
re-employed by Holdings or a Holdings Company, USX or a USX Company. To the
extent that such reimbursement has not been made, such reimbursement is to be
made by Holdings or the Holdings Company, as the case may be, as and when USX or
the USX Pension Plan, as amended, makes payment for such benefits; provided that
in the event an Employee elects to receive a lump sum distribution under the USX
Pension Plan, as amended, Holdings or the Holdings Company, as the case may be,
shall reimburse, to the extent such reimbursement has not been made, the monthly
pension amount that would have been payable for each month prior to the
attainment of age 62.
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Asset Purchase
Agreement.
3. This Amendment shall be governed and construed in accordance with
the laws of the Commonwealth of Pennsylvania, with-out regard to such State's
choice of law provision. This Amendment may be executed simul-tane-ously in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused its name to
be hereunto subscribed by its duly authorized officer as of the date first
written above.
USX CORPORATION
By:
------------------------------------
Name:
Title:
TRANSTAR, INC.
By:
------------------------------------
Name:
Title:
TRANSTAR HOLDINGS, LP
By: BLACKSTONE TRANSPORTATION
COMPANY, INC., its General Partner
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
HOLDINGS COMPANIES:
BESSEMER AND LAKE ERIE RAILROAD COMPANY
By:
------------------------------------
Name:
Title:
DULUTH, MISSABE AND IRON RANGE RAILWAY COMPANY
By:
------------------------------------
Name:
Title:
USS GREAT LAKES FLEET, INC.
By:
------------------------------------
Name:
Title:
THE PITTSBURGH & CONNEAUT DOCK COMPANY
By:
------------------------------------
Name:
Title:
MON VALLEY RAILWAY COMPANY
By:
------------------------------------
Name:
Title:
CUYAHOGA DOCK COMPANY
By:
------------------------------------
Name:
Title:
COMPANIES:
BIRMINGHAM SOUTHERN RAILROAD COMPANY
By:
------------------------------------
Name:
Title:
ELGIN, JOLIET AND EASTERN RAILWAY COMPANY
By:
------------------------------------
Name:
Title:
THE LAKE TERMINAL RAILROAD COMPANY
By:
------------------------------------
Name:
Title:
MCKEESPORT CONNECTING RAILROAD COMPANY
By:
------------------------------------
Name:
Title:
UNION RAILROAD COMPANY
By:
------------------------------------
Name:
Title:
WARRIOR & GULF NAVIGATION COMPANY
By:
------------------------------------
Name:
Title:
FAIRFIELD SOUTHERN COMPANY, INC.
By:
------------------------------------
Name:
Title:
MOBILE RIVER TERMINAL COMPANY
By:
------------------------------------
Name:
Title:
TRACKS TRAFFIC AND MANAGEMENT SERVICES, INC.
By:
------------------------------------
Name:
Title:
[TRANSALL, INC.
By:
------------------------------------
Name:
Title:]
EXHIBIT L
AMENDMENT NO. 1 TO SERVICES AND TECHNICAL ASSISTANCE AGREEMENT
AMENDMENT (this "Amendment"), dated as of _____ __, [2000], by and
between USX CORPORATION, a Delaware corporation ("USX"), and TRANSTAR INC., a
Delaware corporation ("Transtar"), on behalf of itself and of each of the Direct
Corresponding Companies and Indirect Corresponding Companies (each as defined in
the Asset Purchase Agreement, and hereinafter referred to collectively as the
"Corresponding Companies"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Services
and Technical Assistance Agreement (defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, USX and Transtar, on behalf of itself and each of the
Corresponding Companies, are parties to a Services and Technical Assistance
Agreement dated as of December 28, 1988 (the "1988 Services Agreement"); and
WHEREAS, USX, Transtar and Transtar Holdings, LP, a Delaware limited
partnership, have entered into a Reorganization and Exchange Agreement (the
"Reorganization Agreement") dated September __, 2000; and
WHEREAS, pursuant to the terms of the Reorganization Agreement, the
parties hereto desire to amend certain provisions of the 1988 Services
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, and
intending to be legally bound, the parties hereto agree as follows:
1. Transtar hereby represents that it has not assigned any, nor all,
of its rights pursuant to Section 4.2 of the 1988 Services Agreement.
2. The 1988 Services Agreement is hereby amended by deleting all
references to the Direct Corresponding Companies, the Indirect Corresponding
Companies, the Corresponding Companies, and their respective agents, successors
and assigns.
3. Section 4.6 of the 1988 Services Agreement is hereby amended by
deleting such section in its entirety and inserting the following text in lieu
thereof:
"Nothing expressed by or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation other than USX and
Transtar any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provisions herein, this Agreement being intended to be and
being for the sole and exclusive mutual benefit of USX and Transtar."
4. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the 1988 Services
Agreement.
5. This Amendment shall be governed and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to such State's
choice of law provision.
6. This Amendment may be executed simultaneously in counterpart, each
of which shall be deemed an original but both of which together shall constitute
but one and the same instrument.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused its name to
be hereunto subscribed by its duly authorized officer as of the date first
written above.
USX CORPORATION
By:
------------------------------------
Name:
Title:
TRANSTAR, INC.
By:
------------------------------------
Name:
Title:
EXHIBIT O
BILLING METHODOLOGY FOR SHARED SERVICES
The parties to each of the Services Agreement and the B&LE Services
Agreement agree to determine initial billing rates for such services on the
basis of Transtar's 2000 Business Plan, Transtar's current Service and
Investment Plan ("SIP"), current salary and fringe benefit rates for employees
of Transtar and its subsidiaries as of the Closing Date, and the matters
reflected in the B&LE lease rental expense (as further described below).
Holdings shall have the right to participate in the development of future SIPs
for periods covered by the Services Agreement. The parties shall review, or
cause to be reviewed, billing results for all costs outlined below every six
months. Based upon such review, the parties shall retroactively adjust billing
rates for the Services to reflect actual experience and such billing rates as
adjusted, shall constitute the billing rates for the next six month billing
period.
1. MIS COSTS
(a) Application Development and Support
The projected cost for each project itemized in any SIP which relates
to both the USX Companies and the Holdings Companies shall be allocated among
the USX Companies and the Holdings Companies scheduled to benefit from the
project based upon actual revenues for the previous fiscal year of the companies
to which such project relates. Any special project that requires an adjustment
to the SIP shall be jointly approved by a representative from each of the USX
Companies and the Holdings Companies.
(b) Network and Communications
These costs shall be allocated among the USX Companies and the
Holdings Companies based upon the number of nodes (network connections) attached
to the Transtar Enterprise Network that are attributed to each company, such
allocation to be subject to adjustment at each semi-annual review.
(c) Centralized Production, Support and Administration
These costs shall be divided evenly between the USX Companies and the
Holdings Companies at all times and shall not be subject to adjustment at each
semi-annual review.
2. ENGINEERING, OPERATING SYSTEMS AND LEGAL COSTS
Initially, the USX Companies and the Holdings Companies will each pay
50% of the incurred costs of these three departments between the USX Companies
and the Holdings Companies. The party providing these Services shall cause its
employees to maintain time sheets to record actual work performed for the
benefit of each operating company. The parties shall use such time sheets as the
basis of a each semi-annual review to determine any adjustment to the original
50/50 allocation. All hourly billing rates of a department shall represent the
composite rate for such department. All billing costs for union-represented
employees shall be represented by a standard composite union-represented
employee. All other incurred costs excluding employment costs shall be the
actual costs of each department.
3. PAYROLL, BENEFITS AND CLAIMS COSTS:
The costs of the Payroll, Benefits Administration and Claims
departments for an employee of such departments shall reflect, in the case of a
union represented employee, a standard composite union-represented employee (as
determined by Transtar for purposes of the relevant collective bargaining
agreements, and the actual payroll expense of a management employee. All other
incurred costs of a department shall be the actual costs of such department. The
costs of these departments shall be allocated on the basis of a moving average
of actual active employees (both union-represented employees and management
employees). The allocation of these costs shall initially be billed at on a
50/50 basis and shall be subject to adjustment at each semi-annual review.
4. BUILDING RENTAL
Holdings shall ▇▇▇▇ Transtar its share of the building costs of the
main office building of B&LE pursuant to the terms of the Monroeville Building
Lease. Transtar shall allocate such costs to each of the departments noted above
according to their relative usage of Transtar's space. Each department shall
charge the USX Companies and the Holdings Companies the portion of such costs
allocated to such department according to their respective use of the services
of such department.
EXHIBIT P
MEDIATION, ARBITRATION & FORCE MAJEURE
1. MEDIATION. At any time prior to the commencement of any arbitration
provided under Section 2 of this agreement a party may submit a dispute arising
hereunder to non-binding mediation. The mediator shall be selected by the party
submitting the dispute with the concurrence of the other party (not to be
unreasonably withheld). Neither submission of a dispute to mediation nor
conclusion of the mediation process shall be a condition precedent to exercise
of the arbitration procedures available to the parties under this agreement. If
a dispute is submitted to mediation:
1) the parties shall mediate the dispute in good faith;
2) mediation shall occur in Allegheny County, Pennsylvania;
3) final decision makers for each party on any matter in dispute shall
personally attend all mediation sessions;
4) the mediator shall have complete control of the mediation timing
and process, provided, however, that the mediation shall conclude no later than
fourteen (14) calendar days from the day of the initial meeting between the
mediator and the parties;
5) all agreements reached in mediation shall be reduced to writing
before concluding the mediation process;
6) the parties may, but shall not be obligated to, jointly agree to
have the mediator make a final and binding decision;
7) no discovery will be taken during the mediation process; and -
8) the mediation process shall be confidential and each party
participating shall have the right to designate any information provided to the
mediator as "Confidential and Proprietary".
2. ARBITRATION. All disputes arising under this agreement shall, upon
the good faith election of one of the parties, be referred to binding
arbitration conducted expeditiously in accordance with CPR Rules for
Non-Administered Arbitration of Business Disputes ("CPR Rules") by a three
person panel of arbitrators, each party choosing one arbitrator and the two
arbitrators so chosen selecting a third, neutral arbitrator. The failure or
inability of either party to choose an arbitrator or of the arbitrators chosen
by the parties to select a third neutral arbitrator shall be resolved in
accordance with the CPR Rules. Arbitration shall be conducted at a mutually
convenient location in Allegheny County, Pennsylvania or at such other location
as the parties may agree. The award in writing signed by any two of the
arbitrators shall be final and binding. In order to resolve any disputes
hereunder, the arbitrators shall implement the specific rights and obligations
set forth in this agreement while fulfilling the intent stated in Section 4
hereof. Either party shall have the right to seek, and the arbitrators shall
determine, declaratory relief of the nature generally set forth in the Uniform
Declaratory Judgments Act (as in effect in the Commonwealth of Pennsylvania and
as the same may be amended from time to time) including, but not limited to,
questions of construction of this agreement, or a declaration of rights, status
or other legal relations hereunder. The arbitrators shall apply the substantive
statutory and common law of the Commonwealth of Pennsylvania to the dispute and
the evidentiary laws of the Commonwealth of Pennsylvania to the arbitration
proceeding. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. Sections 1-16, and judgment upon the award entered by the
arbitrators may be entered by any court having jurisdiction thereof. The
arbitrators shall not award damages in excess of compensatory damages (such
damages may include, without limitation, the cost of obtaining reasonable
replacement services and other reasonable mitigation costs). The costs and
expenses of the arbitration (other than attorneys' fees, if any) shall be borne
one-half by Holdings and one-half by Transtar. The arbitrators shall be
permitted to review existing documents or records of any party to the extent
that, in the sole discretion of the arbitrators, such documents and/or records
are deemed to be relevant. Either party shall have the right to designate any
information sought in discovery or provided to the arbitrators at their request
as confidential and/or proprietary, in which case the party so designating such
information may require the execution of a customary confidentiality agreement
with respect to such information prior to providing such information to the
other party.
3. FORCE MAJEURE. In the event Transtar's performance hereunder is
delayed or made impossible or commercially impracticable due to war, flood,
riot, fire, explosion, strike, lockout or other difference with workers,
shortage of energy sources, material or labor, delay in or compliance with or
other action taken to carry out the intent or purpose of any law, regulation or
other requirement of any governmental authority, Acts of God, or any cause
beyond Transtar's control, Transtar shall have additional time within which to
perform this agreement as may be reasonably necessary under the circumstances.
Nothing contained in this paragraph shall be interpreted to extend the term of
this agreement or to require Transtar to provide services for longer than the
periods specified herein. ] In case of any dispute as to the reasonableness of a
resulting delay in performance, the parties shall submit the matter to dispute
resolution in accordance with the procedures set forth in Sections 1 and 2
above.
4. INTENT OF AGREEMENT. This agreement, and all agreements
implementing this agreement, shall be administered and interpreted in order to
fulfill the intent stated in this Section 4. Any arbitrator(s) considering
disputes pursuant to Section 2 hereof shall attempt to render a decision which
fulfills the express terms of this agreement, while attempting to fulfill the
intent stated in this Section 4. Such intent includes the following principles:
(a) The parties hereto intend that no party, successor or assign shall
be either unreasonably enriched or unreasonably harmed by any implementation
and/or interpretation of said terms, conditions and provisions of this
agreement.
(b) Services should be provided to both the USX Companies and the
Holdings Companies on a non-discriminatory basis and, unless otherwise mutually
agreed, based on the same priorities as those on which services were provided
immediately prior to the date of this agreement.
(c) The Services provider shall be responsible for maintaining
consistent quality levels for all Services. Services will be provided on the
basis of (including frequency, schedule, level of detail and other matters), and
at least at, the quality at which they were provided immediately prior to the
date of this agreement.
(d) Other than to assist and cooperate with the migration to a new
service provider, the Services provided pursuant to this agreement do not
include transition or installation services. Further, it is understood and
agreed that the transactions outlined in the Reorganization and Exchange
Agreement contemplate that each Holdings Company, and Holdings to the extent it
receives Services, will eventually incur the cost to transition and migrate its
Services needs to another service provider.
(e) No warranty, implied or otherwise, is provided with any Service or
transition service. USX and the USX Companies disclaim all liability, including
that arising from the negligence of USX and the USX Companies or any of their
directors, officers, employees, agents, contractors or suppliers for any Service
provided, or any failure to perform under the Services Agreement, except for
that which arises out of bad faith, gross negligence or intentional misconduct
Exhibit Q
Lease Term Sheet
The following represent the material terms of the lease of the
Monroeville premises currently occupied by the USX Companies. Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Reorganization and Exchange Agreement to which this Term Sheet is an
Exhibit.
Lessor........................ Bessemer & Lake Erie Railroad Company ("B&LE")
Lessee........................ Transtar, Inc. ("Transtar")
Premises...................... Approximately 115,153 square feet of office space
located in the B&LE's headquarters building located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ in
Monroeville, Pennsylvania.
Term.......................... Commencing on the date of the split-off of the
Holding Companies and coterminous with the Services Agreement (excluding
renewals under Section 7.3(e)(iii) of the Reorganization and Exchange
Agreement).
Renewals...................... No renewal options will be included in the lease.
Rent.......................... $13.881(1) per square foot (the "Basic Rent").
Basic Rent will reflect the costs of floor space, property tax expense,
ordinary course repair and maintenance, cafeteria subsidy, utilities,
janitorial and cleaning services, depreciation, landscaping, snow removal,
medical service provided by the building, mail delivery provided by the
building and all other building services currently provided and all other
costs associated with the leased premises. In the event that the square
footage utilized by the Lessee is reduced as a result of a service
reduction by the Holdings Companies pursuant to the Services Agreement,
then the aggregate Basic Rent will be adjusted to reflect such reduction in
utilized square footage.
(1) This rent calculation will be subject to confirmation by USX and Holdings
prior to the execution of the lease.
CPI Adjustment................ The Lessor shall have the right to adjust the
Basic Rent upward at any time after the first anniversary of the
commencement of the lease term by a factor equal to the percentage increase
in the average CPI Urban Cities Average over the trailing six months over
the average CPI Urban Cities Average over the trailing six months as of the
month and year of the last increase in the Basic Rent, or if there has been
no such increase, the date of the commencement of the lease term; provided
that not more than one such increase shall be effected in any six month
period.
MajorRepairs/CapEx........... Relocation of offices shall be mutually agreed
upon and shall be paid for by the party initiating the move. Any
maintenance project with a total projected cost of more than $100,000 shall
be discussed and jointly approved by the Lessor and the Lessee prior to the
actual commencement of any project; such approval not to be unreasonably
withheld; provided that the Lessee shall not have the right to approve
repairs or maintenance which are, in the judgment of Holdings, reasonably
necessary to preserve the structural soundness of the building or the
protect the safety of the occupants. Unless otherwise agreed, the cost of
any major repair shall not be included in Basic Rent and shall be borne
separately by the parties and shall be allocated based upon their relative
utilization of the building.
Default....................... The lease shall contain customary events of
default. The Lessor shall have the right to retake the leased premises and
to terminate the lease in the event of a default that goes uncured after
thirty days' notice and opportunity to cure.
Dispute Resolution............ The lease will contain dispute resolution
provisions similar to those set forth in the Services Agreement.