Exhibit 99.2
ASSET PURCHASE AGREEMENT
dated as of April 10, 2003
by and among
AK STEEL CORPORATION
and
NATIONAL STEEL CORPORATION
and
THE SUBSIDIARIES OF NATIONAL STEEL CORPORATION
SET FORTH ON THE SIGNATURE PAGES HERETO
ARTICLE 1 DEFINITIONS ............................................................................ 1
1.1 Defined Terms .............................................................................. 1
1.2 Interpretation ............................................................................. 12
ARTICLE 2 TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES ....................................... 12
2.1 Assets to be Acquired ...................................................................... 12
2.2 Excluded Assets ............................................................................ 15
2.3 Liabilities to be Assumed by Buyer ......................................................... 15
2.4 Excluded Liabilities ....................................................................... 16
2.5 Changes in List of Assumed Contracts ....................................................... 17
ARTICLE 3 CLOSING; PURCHASE PRICE ................................................................ 18
3.1 Closing; Transfer of Possession; Certain Deliveries ........................................ 18
3.2 Deposit Escrow ............................................................................. 19
3.3 Purchase Price ............................................................................. 19
3.4 Purchase Price Adjustment .................................................................. 19
3.5 Allocation of Purchase Price ............................................................... 20
3.6 Designation of Affiliates by Buyer ......................................................... 21
3.7 Section 338(h)(10) Election ................................................................ 21
3.8 Designation of Exchange Accommodation Titleholder .......................................... 21
ARTICLE 4 INDEMNITY ESCROW ....................................................................... 21
4.1 Creation of Escrow ......................................................................... 21
4.2 Duration and Term .......................................................................... 21
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER ............................................... 22
5.1 Due Organization ........................................................................... 22
5.2 Authorization; Validity .................................................................... 22
5.3 No Violation ............................................................................... 23
5.4 Third Party Approvals ...................................................................... 23
5.5 Title to Assets; Sufficiency and Condition of Assets ....................................... 23
5.6 Intellectual Property ...................................................................... 24
5.7 Compliance with Laws ....................................................................... 24
5.8 Title to Property .......................................................................... 24
5.9 Brokers and Finders ........................................................................ 25
5.10 Taxes ...................................................................................... 25
5.11 Labor Matters; Employee Relations .......................................................... 25
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5.12 ERISA Compliance; Absence of Changes in Benefits Plans ...................................... 25
5.13 Litigation .................................................................................. 26
5.14 Customers and Suppliers ..................................................................... 26
5.15 Accounts Receivable ......................................................................... 26
5.16 Inventory ................................................................................... 27
5.17 Financial Statements and SEC Filings ........................................................ 27
5.18 Contracts ................................................................................... 27
5.19 Permits ..................................................................................... 28
5.20 Environmental Matters ....................................................................... 28
5.21 Capital Expenditures ........................................................................ 28
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER ................................................. 28
6.1 Due Organization ............................................................................ 29
6.2 Authority; Validity ......................................................................... 29
6.3 No Violation ................................................................................ 29
6.4 Third Party Approvals ....................................................................... 29
6.5 Brokers and Finders ......................................................................... 30
6.6 Compliance with Laws ........................................................................ 30
6.7 Litigation .................................................................................. 30
ARTICLE 7 COVENANTS OF THE PARTIES ................................................................ 30
7.1 Conduct of Business Pending the Closing ..................................................... 30
7.2 Bankruptcy Court Order ...................................................................... 31
7.3 Notification of Certain Matters ............................................................. 32
7.4 Access ...................................................................................... 32
7.5 Public Announcements ........................................................................ 33
7.6 Cure of Defaults ............................................................................ 33
7.7 ERISA and Employment Matters ................................................................ 34
7.8 Further Agreements .......................................................................... 34
7.9 Payment of Transfer Taxes and Tax Filings ................................................... 34
7.10 Utilities ................................................................................... 35
7.11 Proration of Taxes and Certain Charges ...................................................... 35
7.12 Regulatory Approvals; Reasonable Efforts; Notification; Consent ............................. 36
7.13 Railroad Assets ............................................................................. 37
7.14 Rejected Contracts .......................................................................... 37
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7.15 Further Assurances .......................................................................... 37
7.16 Union Negotiations .......................................................................... 37
7.17 Closing Financial Certificate ............................................................... 38
7.18 Transition Services Agreement ............................................................... 38
7.19 Credit Support Arrangements ................................................................. 38
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF THE PARTIES ................................................ 39
8.1 Conditions Precedent to Obligations of Buyer ................................................ 39
8.2 Conditions Precedent to the Obligations of Sellers .......................................... 41
ARTICLE 9 TERMINATION ............................................................................. 42
9.1 Termination of Agreement .................................................................... 42
9.2 Consequences of Termination ................................................................. 43
ARTICLE 10 INDEMNIFICATION ......................................................................... 44
10.1 Indemnification of Buyer .................................................................... 44
10.2 Indemnification of Sellers .................................................................. 44
10.3 Indemnification Procedures .................................................................. 45
10.4 Survival of Representations and Warranties .................................................. 47
10.5 Termination of Indemnification .............................................................. 47
10.6 Limitations on Indemnification .............................................................. 47
ARTICLE 11 MISCELLANEOUS ........................................................................... 48
11.1 Expenses .................................................................................... 48
11.2 Assignment .................................................................................. 48
11.3 Parties in Interest ......................................................................... 48
11.4 Notices ..................................................................................... 49
11.5 Choice of Law ............................................................................... 50
11.6 Entire Agreement; Amendments and Waivers .................................................... 50
11.7 Counterparts ................................................................................ 50
11.8 Invalidity .................................................................................. 50
11.9 Headings .................................................................................... 51
11.10 Exclusive Jurisdiction ...................................................................... 51
11.11 WAIVER OF RIGHT TO TRIAL BY JURY ............................................................ 51
11.12 Beneficiaries ............................................................................... 51
11.13 Counting .................................................................................... 51
11.14 Preparation of this Agreement ............................................................... 51
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Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Deposit Escrow Agreement
Exhibit C Form of Headquarters Lease
Exhibit D Form of Indemnity Escrow Agreement
Exhibit E RESERVED
Exhibit F Form of Trademark License Agreement
Exhibit G Form of ▇▇▇▇ of Sale
Exhibit H Bankruptcy Court Approval
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of April 10, 2003 (the
"Agreement Date") by and among National Steel Corporation, a Delaware
corporation (the "Company"), the Subsidiaries of the Company set forth on the
signature pages hereto and in Schedule 1 (collectively with the Company, the
"Sellers" and each a "Seller") and AK Steel Corporation, a Delaware corporation
(together with any designated Subsidiaries, "Buyer").
WITNESSETH:
WHEREAS, Sellers are engaged in, among other things, the production,
transportation and sale of coke and steel products;
WHEREAS, Sellers each commenced a case (collectively, the "Chapter 11
Case") on March 6, 2002 under chapter 11 of title 11 of the United States Code,
11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Northern District of Illinois, Eastern Division (the
"Bankruptcy Court"); and
WHEREAS, Sellers wish to sell to Buyer the assets of the Business as
are specified herein, and Buyer wishes to purchase such assets and to assume
those liabilities relating to the Business as are specified herein, all in the
manner and subject to the terms and conditions set forth in this Agreement and
pursuant to, inter alia, Sections 363 and 365 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the premises, and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following respective meanings:
"Accounts Payable" shall mean those trade accounts payable of Sellers
relating to the Business or the Acquired Assets, incurred in bona fide business
transactions in the ordinary course of business after the commencement of the
Chapter 11 Case. Accounts Payable shall not include any Cure Amounts or any
Excluded Liabilities.
"Accounts Receivable" shall mean: (i) all of Sellers' trade accounts
receivable relating to the Business and other rights to payment from customers
of the Business and the full benefit of all security for such accounts or rights
to payment, including all trade accounts receivable representing amounts
receivable in respect of goods shipped or products sold or services rendered to
customers of the Business; (ii) all other accounts or notes receivable of
Sellers and the full benefit of all security for such accounts or notes
receivable arising in the conduct of the Business; and (iii) any claim, remedy
or other right related to any of the foregoing, in each case existing on January
30, 2003 or arising in the ordinary course of the conduct of the Business after
January 30, 2003 and in each case that have not been satisfied or discharged
prior to the close of
business on the Business Day immediately preceding the Closing Date or have not
been written off or sent to collection prior to the close of business on the
Business Day immediately preceding the Closing Date (it being understood that
the receipt of a check prior to the close of business on the Business Day
immediately preceding the Closing Date shall constitute satisfaction or
discharge of the applicable account or note receivable to the extent of the
payment represented thereby).
"Acquired Assets" shall have the meaning specified in Section 2.1.
"Acquired Entities" shall have the meaning specified in Section 2.1(o).
"Acquired Facilities" shall mean the following plants and facilities of
Sellers: Great Lakes Plant; Midwest Plant; Granite City Plant; Seller
headquarters (Mishawaka, IN); ProCoil processing and distribution center
(Canton, MI); and National Steel Pellet Company (Mesabi Iron Range, Minnesota).
"Acquired Real Property" shall mean collectively the Owned Real
Property and the Leased Real Property.
"Adjustment Payment Date" shall have the meaning specified in Section
3.4(f).
"Affiliate" shall mean, with respect to any Person, any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such Person, including any officer, director or greater than
10% shareholder of such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits, Schedules and the Disclosure Schedule, in each case as amended,
restated, supplemented or otherwise modified from time to time.
"Agreement Date" shall have the meaning specified in the preamble.
"Allocation" shall have the meaning specified in Section 3.5.
"Alternative Transaction" shall have the meaning specified in Section
7.2(b).
"Antitrust Law" shall mean the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign Laws or Orders that require notification to
a Governmental Entity of mergers and acquisitions or that are designed or
intended to prohibit, restrict or regulate mergers and acquisitions and actions
having the purpose or effect of monopolization or restraint of trade.
"Assignment and Assumption Agreement" shall mean the assignment and
assumption agreement to be entered into by Sellers and Buyer concurrently with
the Closing, substantially in the form of Exhibit A.
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"Assumed Contracts" shall have the meaning specified in Section 2.1(c).
"Assumed Liabilities" shall have the meaning specified in Section 2.3.
"Auction Date" shall mean the date of the commencement of the "Auction"
contemplated by the Sales Procedures Order.
"Bad Debts Reserve" shall mean the Company's provision for doubtful
accounts, determined in accordance with GAAP and the Company's accounting
policies, attached hereto as Schedule 1.1(a), consistently applied by the
Company.
"Bankruptcy Code" shall have the meaning specified in the recitals.
"Bankruptcy Court" shall have the meaning specified in the recitals.
"Bankruptcy Court Approval" shall have the meaning specified in Section
8.1(d).
"Basket Amount" shall have the meaning specified in Section 10.6(a).
"Benefits Plan" shall mean any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) sponsored, maintained, contributed to or
required to be contributed to at any time by the Company or any of its
Subsidiaries for any of their respective present or former employees, retirees
or spouses, dependents or other beneficiaries of present or former employees or
retirees.
"Business" shall mean the production, sale and transportation of coke
and steel products carried on by Sellers, including the mining of ore and the
production of iron ore pellets at National Steel Pellet Company but excluding
any other production of iron ore pellets or mining of ore and excluding the
mining of coal.
"Business Day" shall mean any day other than a Saturday, Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to open.
"Buyer" shall have the meaning specified in the preamble.
"Buyer Indemnitees" shall have the meaning specified in Section 10.1.
"Buyer Material Adverse Effect" shall mean any state of facts, events,
changes or effects, that, individually or aggregated with other states of facts,
events, changes or effects, (a) is materially adverse to or materially impairs,
the ability of Buyer to perform its obligations under this Agreement, or (b)
prevents or materially delays consummation of any of the transactions
contemplated by this Agreement.
"Buyer SEC Documents" shall have the meaning specified in Section
6.6(b).
"Buyer Stock" shall have the meaning specified in Section 5.22(a).
"Cash Consideration" shall have the meaning specified in Section 3.3.
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"Cash Discount Reserve" shall mean the Company's reserve for discounts
credited against Accounts Receivable paid in advance of their due date,
determined in accordance with GAAP and the Company's accounting policies,
attached hereto as Schedule 1.1(a), consistently applied by the Company.
"Chapter 11 Case" shall have the meaning specified in the recitals.
"Claims Reserve" shall mean the Company's reserves, determined in
accordance with GAAP and the Company's accounting policies, attached hereto as
Schedule 1.1(a), consistently applied by the Company, to satisfy claims made by
customers with respect to products of the Company or any of its Subsidiaries.
"Closing" shall have the meaning specified in Section 3.1(a).
"Closing Date" shall have the meaning specified in Section 3.1(a).
"Closing Date Items" shall have the meaning specified in Section
3.4(c).
"Closing Financial Certificate" shall have the meaning specified in
Section 7.17.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning specified in the preamble.
"Company Financial Statements" shall have the meaning specified in
Section 5.17(a).
"Company Reserves" shall mean, collectively, the Bad Debts Reserve, the
Cash Discount Reserve and the Claims Reserve.
"Company SEC Documents" shall have the meaning specified in Section
5.17(b).
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated as of September 10, 2002 between the Company and Buyer.
"Contract" shall mean any contract, lease, license, purchase order,
sales order or other agreement, practice, arrangement, understanding or
commitment, whether or not in written form, that is binding upon a Person or its
property.
"Cure Amounts" shall have the meaning specified in Section 2.4(n).
"Deposit Escrow" shall have the meaning specified in Section 3.2.
"Deposit Escrow Agreement" shall mean the Deposit Escrow Agreement of
even date herewith entered into by and among Buyer, the Company as the
representative of Sellers and the Escrow Agent substantially in the form of
Exhibit B.
"DIP Order" shall mean that certain Final Order (I) Authorizing Debtors
in Possession to Enter Into Postpetition Credit Agreement and Obtain
Postpetition Financing Pursuant to Sections 363 and 364 of the Bankruptcy Code,
(II) Granting Liens, Security Interests and Superpriority
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Claims and (III) Providing For the Payment of Secured Prepetition Indebtedness
entered by the Bankruptcy Court on April 2, 2002 and found at Docket No. 345 in
the Chapter 11 Case.
"Disclosure Schedule" shall have the meaning specified in the first
paragraph of Article 5.
"Environmental Laws" shall mean all Laws relating to protection of
human health and the environment, including the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. (S)(S) 9601 et. seq., the
Resource Conservation and Recovery Act, 42 U.S.C. (S)(S) 6901 et. seq., the
Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601, et. seq., the Clean Water
Act, 33 U.S.C. (S)(S) 1251 et. seq., the Oil Pollution Act, 33 U.S.C.(S)(S) 2701
et. seq., the Clean Air Act, 42 U.S.C. (S)(S) 7401 et. seq. and the Occupational
Safety and Health Act, 29 U.S.C. (S)(S) 651 et. seq., and state and local
equivalents of all of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean Fifth Third Bank.
"Estimated Inventory Value" shall mean the Inventory Value (excluding
the Inventory Value of the Inventory of National Steel Pellet Company)
determined as of the close of business on the last day of the month immediately
prior to the Closing Date.
"Estimated Net Receivables Amount" shall mean the aggregate amount of
Accounts Receivable (excluding the amount of Accounts Receivable of National
Steel Pellet Company) minus the aggregate amount of Accounts Payable (excluding
the amount of Accounts Payable of National Steel Pellet Company) minus the
Company Reserves (excluding the amount of Company Reserves related to National
Steel Pellet Company) calculated as of the close of business on the last day of
the month immediately prior to the Closing Date.
"Estimated Working Capital Adjustment" shall have the meaning specified
in Section 3.4(b).
"Estimated Working Capital Amount" shall have the meaning specified in
Section 3.4(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder or under any successor federal statute.
"Excluded Assets" shall have the meaning specified in Section 2.2.
"Excluded Liabilities" shall have the meaning specified in Section 2.4.
"Final Order" shall mean an order or judgment of the Bankruptcy Court
(i) that is not the subject of a pending appeal, petition for certiorari, motion
for reconsideration or other proceeding for review, rehearing or reargument,
(ii) that has not been reversed, stayed, modified or amended, and (iii)
respecting which the time to appeal, to petition for certiorari, to move for
reconsideration or to seek review, rehearing or reargument shall have expired,
as a result of
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which such order shall have become final in accordance with Rule 8002 of the
Federal Rules of Bankruptcy Procedure and other applicable Laws.
"Financing" shall mean the financing provided pursuant to any credit
agreement or other Contract evidencing indebtedness entered into by any Seller
after the commencement of the Chapter 11 Case.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"Governmental Entity" shall mean any (i) federal, state, local,
municipal, foreign or other government; (ii) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); or (iii) body exercising,
or entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature, including any
arbitration tribunal.
"Hazardous Substance" shall have the meaning specified in Section 5.20.
"Headquarters Lease" shall mean the lease for a portion of the building
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, to be entered into by
and between Buyer and the Company concurrently with the Closing, substantially
in the form of Exhibit C.
"Hired Non-CB Employee" shall have the meaning specified in Section
7.7.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, and any successor law and the rules and regulations
thereunder or under any successor law.
"Identified Employee" shall mean those Non-CB Employees identified by
Buyer prior to the Closing Date to whom Buyer shall offer employment effective
as of the Closing Date.
"Indemnified Party" shall have the meaning specified in Section
10.3(a).
"Indemnifying Party" shall have the meaning specified in Section
10.3(a).
"Indemnity Escrow" shall have the meaning specified in Section
3.1(c)(ii).
"Indemnity Escrow Agreement" shall mean the Indemnity Escrow Agreement
to be entered into by and among Buyer, the Company and the Escrow Agent
concurrently with the Closing, substantially in the form of Exhibit D.
"Indemnity Termination Date" shall have the meaning specified in
Section 10.5.
"Independent Accounting Firm" shall have the meaning specified in
Section 3.4(d).
"Intellectual Property" shall have the meaning specified in Section
2.1(k).
"Inventory" shall have the meaning specified in Section 2.1(e).
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"Inventory Value" shall mean the value of all Inventory included in the
Acquired Assets determined in accordance with GAAP and the Company's inventory
policies, attached hereto as Schedule 1.1(a), consistently applied by Sellers.
"Knowledge", with respect to Sellers or the Company and its
Subsidiaries, shall mean the knowledge of those individuals listed on Schedule
1.1(b) attached hereto, together with any other successor individuals who hold
the positions with the Company listed on Schedule 1.1(b), in each case,
including facts of which such individuals should be aware in the reasonably
prudent exercise of their duties.
"Law" shall mean any federal, state, provincial, local or foreign
statute, law, ordinance, regulation, rule, code, order, principle of common law,
judgment or decree enacted, promulgated, issued, enforced or entered by any
Governmental Entity, or court of competent jurisdiction, or other requirement or
rule of law.
"Leased Machinery and Equipment" shall have the meaning specified in
Section 2.1(b).
"Leased Real Property" shall have the meaning specified in Section
2.1(a).
"Liabilities" shall mean, as to any Person, all debts, adverse claims,
liabilities, commitments, responsibilities, and obligations of any kind or
nature whatsoever, direct or indirect, absolute or contingent, including
liabilities for compliance, investigation, remediation, removal and response
under Environmental Laws, of such Person, whether accrued, vested or otherwise,
whether known or unknown and whether or not actually reflected, or required to
be reflected, in such Person's balance sheet or other books and records.
"Lien" shall mean any claim, pledge, option, charge, hypothecation,
easement, security interest, right-of-way, encroachment, mortgage, deed of
trust, defect of title, restriction on transferability, restriction on use or
other encumbrance.
"Losses" shall have the meaning specified in Section 10.1.
"Machinery and Equipment" shall have the meaning specified in Section
2.1(b).
"Material Adverse Effect" shall mean any state of facts, events,
changes or effects that, individually or aggregated with other states of facts,
events, changes or effects, (a) is materially adverse to or materially impairs,
(i) the value, condition or use of the Acquired Assets taken as a whole or the
value or condition, financial or otherwise, of the Business taken as a whole,
other than (x) changes in economic or business conditions generally or in the
steel industry specifically (provided that the Business is not materially
disproportionately affected), (y) changes in laws and regulations impacting the
steel industry generally (except as otherwise provided in Section 8.1(g)(i)
hereof), or (z) changes or effects resulting from the execution or announcement
of this Agreement, provided, however, the Company shall have the burden of
proving that the execution or announcement of the Agreement caused such changes
or effects, or (ii) the ability of any party hereto to perform its obligations
under this Agreement, or (b) prevents or materially delays consummation of any
of the transactions contemplated by this Agreement.
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"Material Contract" shall mean any Contract with respect to the
Business to which the Company or any of its Subsidiaries is a party or by which
any of the Acquired Assets are bound and (i) which is outside of the ordinary
course of business; (ii) to which any Significant Customer is a party; (iii) to
which any Significant Supplier is a party; (iv) pursuant to which the Sellers
would be required to make payments in excess of $10 million from and after
January 30, 2003; (v) master agreements, blanket purchase orders or other
Contracts, which relate to the transportation or disposal of Hazardous
Substances, other than receipts, bills of lading, trip tickets and purchase
orders issued pursuant to such master agreements, purchase agreements or other
Contracts related to the transportation or disposal of Hazardous Substances;
(vi) which is an employment agreement or severance agreement or is a collective
bargaining agreement with any labor union; (vii) which creates a joint venture
or partnership or which otherwise involves the sharing of profits, losses, costs
or Liabilities with any other Person; (viii) which is a lease for any real
property or any material Machinery and Equipment used or held for use in the
Business; (ix) which is an Assumed Contract, other than an Ordinary Course
Contract; or (x) to which any officer or director of the Company or any of its
Subsidiaries, or any Affiliate of any such officer or director is a party.
"Net Receivables Amount" shall have the meaning specified in Section
3.4(e).
"Non-CB Employees" shall mean employees of any Seller not represented
by a labor union for collective bargaining.
"Notices" shall have the meaning specified in Section 11.4.
"Objection Notice" shall have the meaning specified in Section 3.4(d).
"Order" shall mean any judgment, order, injunction, writ, ruling,
decree, stipulation or award of any Governmental Entity or private arbitration
tribunal.
"Ordinary Course Contract" shall mean any Contract related to the
Business and the Acquired Assets entered into by any Seller after January 30,
2003 and prior to the Closing Date in the ordinary course of business, for the
provision of goods or services to or by any Seller in a bona fide business
transaction, and which (i) is for a term that does not exceed 12 months
following the Closing or that is terminable by such Seller, without Liability,
at will or upon advance notice not to exceed 30 days, and (ii) the performance
of which does not involve consideration in excess of (A) $1 million in any
twelve-month period following the Closing, (B) with the consent of Buyer, which
consent shall not be unreasonably withheld, $10 million in any twelve-month
period following the Closing, or (C) prevailing market terms, solely with
respect to purchases of goods on spot markets for a term not to exceed 30 days;
provided, however, in no event shall a Contract be deemed an Ordinary Course
Contract if (v) such Contract is a Material Contract, (w) such Contract is with
any current or former employee of the Company or any of its Subsidiaries, (x)
such Contract is with respect to any Financing, (y) the counterparty to such
Contract is also party to a Contract with a Seller entered into prior to the
commencement of the Chapter 11 Case as to which such Seller has not satisfied
all Liabilities thereunder, other than any such Contract that is on prevailing
market terms or (z) the execution, delivery and performance of such Contract by
any Seller would violate any provision of this Agreement, including the
covenants set forth in Section 7.1.
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"Owned Machinery and Equipment" shall have the meaning specified in
Section 2.1(b).
"Owned Real Property" shall have the meaning specified in Section
2.1(a).
"Pension Plan" shall mean any employee benefit pension plan (as defined
in Section 3(2) of ERISA) sponsored, maintained, contributed to or required to
be contributed to at any time by the Company or any of its Subsidiaries for any
of their respective present or former employees or retirees or spouses,
dependents or other beneficiaries of present or former employees or retirees.
"Permits" shall mean permits, licenses, registrations, certificates of
occupancy, approvals, consents, clearances and other authorizations issued by
any Governmental Entity.
"Permitted Liens" shall mean: (i) Liens for Taxes not yet due and
payable; (ii) easements, licenses or similar non-monetary liens or non-monetary
matters of record on Acquired Real Property or any zoning and other restrictions
imposed by a Governmental Entity that do not, individually or in the aggregate,
adversely impact the operation of the Business or the use of the Acquired
Assets; (iii) encumbrances arising under leases or subleases of Acquired Real
Property, which do not materially detract from the value of such Acquired Real
Property or interfere with the use of or conduct of business on the Acquired
Real Property; or (iv) such other Liens or title exceptions as Buyer may approve
in writing in its sole discretion.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization, a joint stock company, a labor union, an estate, a
Governmental Entity or any other entity.
"Plans" shall mean all Benefits Plans and all Pension Plans and each
other plan, program, policy, practice or arrangement (written or oral, formal or
informal, whether done on an individual ad hoc basis or as part of a consistent
pattern or practice of providing benefits to similarly situated individuals)
relating to deferred compensation, bonus, performance compensation, stock
purchase, stock option, stock appreciation, severance, vacation, sick leave,
holiday pay, fringe benefits, personnel policy, reimbursement program,
incentive, insurance, welfare or similar plan, program, policy, practice or
arrangement, in each case sponsored, maintained or contributed to, or required
to be maintained or contributed to, by the Company or any of its Subsidiaries or
any other Person or entity that, together with any of the Company or its
Subsidiaries, is treated as a single employer within the meaning of Section 4001
of ERISA for the benefit of any present or former officer, employee or director,
retiree or spouses, dependents or other beneficiaries of any of the foregoing.
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative, or informal), other than the Chapter 11 Case, commenced, brought,
conducted or heard by or before or otherwise involving, any Governmental Entity
or arbitrator.
"Purchase Price" shall have the meaning specified in Section 3.3.
"Railroad Assets" shall mean any Acquired Assets or any Subsidiaries of
the Company as to which a change of control is regulated by the Surface
Transportation Board.
9
"Release" shall have the meaning specified in Section 5.20.
"Representative" shall mean, with respect to any Person, such Person's
officers, directors, employees, agents, representatives and financing sources
(including any investment banker, financial advisor, accountant, legal counsel,
agent, representative or expert retained by or acting on behalf of such Person
or its Subsidiaries).
"Retiree Benefits" shall have the meaning ascribed to such term in the
Bankruptcy Code.
"Sale Motion" shall have the meaning specified in Section 7.2(c).
"Sale Procedures Order" means an order approving procedures for a sale
under Section 363 of the Bankruptcy Code to be entered by the Bankruptcy Court
and establishing procedures for such sale.
"SEC" shall mean the United States Securities and Exchange Commission
and any successor Governmental Entity.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Seller" shall have the meaning specified in the preamble.
"Seller Credit Support Arrangements" shall have the meaning specified
in Section 7.19.
"Seller Indemnitees" shall have the meaning specified in Section 10.2.
"Significant Customers" shall have the meaning specified in Section
5.14.
"Significant Suppliers" shall have the meaning specified in Section
5.14.
"Statement" shall have the meaning specified in Section 3.4(c).
"Subsidiary" shall mean, with respect to any Person (a) a corporation,
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a subsidiary of such Person, or by such Person and one or
more subsidiaries of such Person, (b) a partnership in which such Person or a
subsidiary of such person is, at the date of determination, a general partner of
such partnership, or (c) any other Person (other than a corporation) in which
such Person, a subsidiary of such Person or such Person and one or more
subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
"Supplies" shall have the meaning specified in Section 2.1(d).
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"Surface Transportation Board" shall mean the Surface Transportation
Board established pursuant to the ICC Termination Act of 1995, as amended.
"Taxation," "Tax" or "Taxes" shall mean all forms of taxation,
assessment, levy, duty or other governmental charge imposed by any Governmental
Entity, including any income, alternative or add-on minimum, accumulated
earnings, personal holding company, franchise, capital stock, environmental,
profits, windfall profits, gross receipts, sales, use, value added, transfer,
registration, stamp, premium, excise, customs duties, severance, real property,
personal property, ad valorem, occupancy, license, occupation, employment,
payroll, social security, (including national insurance contributions)
disability, unemployment, withholding, corporation, inheritance, value added,
stamp duty reserve, estimated or other similar tax, assessment, levy, duty
(including duties of customs and excise) or other governmental charge of any
kind whatsoever, replaced by or replacing any of them chargeable by any Taxation
Authority together with all penalties, interest and additions thereto, whether
disputed or not.
"Tax Authority" or "Taxation Authority" shall mean any taxing or other
authority (whether within or outside the U.S.) competent to impose Tax.
"Tax Return" shall mean any and all returns, declarations, reports,
documents, claims for refund, or information returns, statements or filings
which are required to be supplied to any Tax Authority, including any schedule
or attachment thereto, and including any amendments thereof.
"Third Party Claim" shall have the meaning specified in Section
10.3(a).
"Topping Fee" shall have the meaning specified in Section 7.2(b).
"Trademark License Agreement" shall mean the Trademark License
Agreement to be entered into by and among Buyer, the Company and National Steel
Pellet Company concurrently with the Closing, substantially in the form of
Exhibit F.
"Trademarks" shall mean all trade names, logos, common law trademarks
and servicemarks and all registrations and applications therefor.
"Transition Services Agreement" shall have the meaning specified in
Section 7.18.
"Transfer Tax" or "Transfer Taxes" shall mean any federal, state,
provincial, county, local, foreign and other sales, use, transfer, conveyance,
documentary transfer, recording or other similar Tax, fee or charge imposed upon
the sale, transfer or assignment of property or any interest therein or the
recording thereof, and any penalty, addition to Tax or interest with respect
thereto, but such term shall not include any Tax on, based upon or measured by,
the net income, gains or profits from such sale, transfer or assignment of the
property or any interest therein.
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act of 1988, as amended, and any successor Law, and the rules and regulations
thereunder and under any successor Law.
"Working Capital Adjustment" shall have the meaning specified in
Section 3.4(e).
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"Working Capital Amount" shall have the meaning specified in Section
3.4(e).
1.2 Interpretation.
(a) Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
(b) Words denoting any gender shall include all genders. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
(c) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(d) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(e) All references to "$" and dollars shall be deemed to refer
to United States currency.
(f) All references to any financial or accounting terms shall
be defined in accordance with GAAP.
(g) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(h) The meanings given to terms defined herein shall be equally
applicable to both singular and plural forms of such terms.
ARTICLE 2
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Assets to be Acquired. At the Closing, and upon the terms and
conditions set forth herein and subject to the approval of the Bankruptcy Court
pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, Sellers shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept, all of the right, title and interest, free and clear of all
Liens (other than Liens included in the Assumed Liabilities and Permitted
Liens), of Sellers in each and all of the Acquired Assets. "Acquired Assets"
shall mean all properties, assets and rights, except as set forth herein, of
every nature, tangible and intangible, of Sellers used, or held for use, in the
Business, real or personal, now existing or hereafter acquired, whether or not
reflected on the books or financial statements of the Sellers as the same shall
exist on the Closing Date, including the following assets:
(a) all right, title and interest of Sellers in the real
property set forth on Schedule 2.1(a)-1, together with all buildings,
structures, fixtures, and improvements erected
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thereon, and all rights, privileges, easements, licenses, hereditaments and
other appurtenances relating thereto (the "Owned Real Property"), and all right,
title and interest of Sellers in the real property set forth on Schedule
2.1(a)-2, together with all buildings, structures, fixtures, and improvements
erected thereon, and all rights, privileges, easements, licenses, hereditaments
and other appurtenances relating thereto (the "Leased Real Property"); provided,
however, that the Acquired Assets shall not include any of the real property set
forth on Schedule 2.2(i) or any other real property that is not identified on
Schedule 2.1(a)-1 or Schedule 2.1(a)-2;
(b) all (i) Sellers' owned equipment, machinery, furniture,
fixtures and improvements and tooling used or held for use in the Business (the
"Owned Machinery and Equipment"), (ii) rights of Sellers to the equipment,
machinery, furniture, fixtures and improvements and tooling used or held for use
in the Business, which are leased pursuant to an Assumed Contract (the "Leased
Machinery and Equipment" and collectively with the Owned Machinery and
Equipment, the "Machinery and Equipment"), and (iii) rights of Sellers to the
warranties, express or implied, and licenses received from manufacturers and
sellers of the Machinery and Equipment;
(c) those leases (including leases and subleases of Acquired
Real Property and of Machinery and Equipment) and other Contracts (together with
all of Seller's deposits thereunder) entered into by any Seller that are
executory and unexpired as of the Closing Date and are set forth on Schedule
2.1(c), any other Contract added to the list of Assumed Contracts in accordance
with Section 2.5, and the Ordinary Course Contracts (collectively, the "Assumed
Contracts");
(d) all supplies, items, spare parts and other materials
utilized to operate and maintain the Machinery and Equipment or to process raw
materials and work in process used or held for use in the Business (the
"Supplies");
(e) all inventories of raw materials, slabs, works in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies used or held for use in the Business (the
"Inventory");
(f) all cars, trucks, fork lifts, other industrial vehicles and
other motor vehicles owned by the Sellers and used or held for use in the
Business or leased by the Sellers where the lease for such vehicle is an Assumed
Contract;
(g) all railroad cars, railroad switching, service and repair
facilities, rolling stock and vehicles, machinery and related equipment used or
held for use in the Business;
(h) all Accounts Receivable;
(i) all Permits used in or necessary to conduct the Business or
applicable to the Acquired Assets and all pending applications therefor,
including those Permits set forth on Schedule 2.1(i);
(j) copies or originals of all books, records, files or papers,
whether in hard copy or electronic format, used in the Business or in respect of
the Acquired Assets, including engineering information, test results, training
manuals, sales and promotional literature, plans, processes, sales and purchase
correspondence, personnel and employment records (other than
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records with respect to former employees or employees who do not become
employees of Buyer as of the Closing Date), customer lists, vendor lists,
catalogs, research material, technical information, diagrams, drawings, quality
control data, maintenance schedules, operating and production records, safety
and environmental reports, data, studies and documents, fixed asset ledgers, Tax
Returns regarding real property, personal property and ad valorem taxes with
respect to the Acquired Assets, including any exemption or abatement agreements
or certifications and supporting documentation for such Tax Returns, including
any such items classified as privileged, confidential or proprietary material,
and any right and interest any Seller may have to possession or control of the
knowledge of, any such material by, and related expertise of, any employee,
agent, contractor or supplier of any Seller;
(k) all right, title or interest in or to any computer software
(including process control software), source code and object code, and all
documentation related thereto, and any patents, patent registrations, patent
applications, Trademarks (other than the Trademarks set forth on Schedule
2.2(k)), copyrights, copyright applications, copyright registrations, know-how,
processes, trade secrets, proprietary data, formulae, and other intangible
property used or held for use in the Business (collectively, the "Intellectual
Property"), including those listed on Schedule 2.1(k); and all rights thereunder
or in respect thereof, including rights to ▇▇▇ and collect and remedies against
past, present and future infringements or misappropriations thereof, and rights
of priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof used or held for use
in the Business; provided, however, with respect to any Intellectual Property
not set forth on Schedule 2.1(k)(i), to the extent Sellers have not obtained the
necessary consents to assign any such Intellectual Property to Buyer on or
before the Closing Date, then notwithstanding anything to the contrary contained
herein, until such consents are obtained, this Agreement shall not constitute an
agreement to assign such Intellectual Property, and Sellers shall (A) use all
commercially reasonable efforts to obtain such consents and (B) enter into any
reasonable arrangement designed to provide Buyer with the benefits of, and cause
Buyer to bear the costs and obligations of, Sellers' ownership of such
Intellectual Property;
(l) all goodwill associated with the Business or the Acquired
Assets;
(m) all credits and allowances for air and water emissions and
water intakes Sellers have, are entitled to or have applied for, with respect to
the Acquired Facilities, including any air emissions for which Sellers have
credit or which Sellers have banked, applied to bank or agreed to sell or trade;
(n) all prepaid expenses and deposits of Sellers made in
connection with the Business, including those set forth on Schedule 2.1(n); and
(o) all of any Seller's equity interest in Double G Coatings,
L.P., Delray Connecting Railroad Company, Steel Health Resources LLC, and NSL
Inc. (collectively, the "Acquired Entities").
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT, (i) THE ACQUIRED ASSETS ARE BEING SOLD ON AN "AS IS", "WHERE IS"
BASIS AND (ii) NO SELLER MAKES ANY OTHER WARRANTIES,
14
INCLUDING MERCHANTABILITY, FITNESS OR OTHERWISE WITH RESPECT TO THE ACQUIRED
ASSETS.
2.2 Excluded Assets. The Acquired Assets do not include Sellers'
right, title or interest in or to any of the following properties and assets of
Sellers (collectively, the "Excluded Assets"):
(a) cash (including checks received prior to the close of
business on the Closing Date, whether or not deposited or cleared prior to the
close of business on the Closing Date), commercial paper, marketable securities,
certificates of deposit and other bank deposits, treasury bills and other cash
equivalents;
(b) shares of capital stock of any Seller or securities
convertible into, exchangeable or exercisable for shares of capital stock of any
Seller;
(c) any Contract that is not an Assumed Contract;
(d) any assets of any Plan, including any plan or arrangement
providing pension benefits or post-retirement health or medical benefits to any
present or former employee of the Company or any of its Subsidiaries and any
rights under any such Plan or any Contract between any employee or consultant
and the Company or any of its Affiliates;
(e) all avoidance actions or similar causes of action, arising
under Sections 544 through 553 of the Bankruptcy Code, other than any such
actions related to any Assumed Contract;
(f) all rights to or claims for refunds, overpayments or
rebates of Taxes for periods ending on or prior to the Closing Date;
(g) all claims that Sellers may have against any third Person
with respect to any other Excluded Assets;
(h) all rights of Sellers under any collective bargaining
agreement, agreement with any labor union, employment agreement or severance
agreement;
(i) all real property that is set forth on Schedule 2.2(i) and
any other real property that is not set forth on Schedule 2.1(a)-1 or Schedule
2.1(a)-2;
(j) the company seal, minute books, charter documents, stock or
equity record books and such other books and records as pertain to the
organization, existence or capitalization of Sellers; and
(k) the properties and assets set forth in Schedule 2.2(k).
2.3 Liabilities to be Assumed by Buyer. At the Closing, Buyer will
assume only the following obligations of Sellers (the "Assumed Liabilities") and
no others: (i) the Accounts Payable; (ii) all Liabilities of Sellers under the
Assumed Contracts; provided, however, Buyer shall not assume or agree to pay,
discharge or perform any Liabilities arising out of any breach
15
by Sellers of any provision of any Assumed Contract, including Liability for
breach, misfeasance or under any other theory relating to Sellers' conduct prior
to the Closing; and (iii) those Liabilities listed on Schedule 2.3.
2.4 Excluded Liabilities. Other than the Assumed Liabilities, Buyer
shall not and does not assume any other Liability whatsoever (including
Liabilities relating to the conduct of the Business or to the Acquired Assets
(and the use thereof) at any time on or prior to the Closing Date), whether
relating to or arising out of the Business or Acquired Assets or otherwise,
fixed or contingent, disclosed (whether on the Disclosure Schedule or
otherwise), or undisclosed (collectively, the "Excluded Liabilities"). Without
limiting the foregoing, Buyer shall not and does not assume any of the following
(each of which shall be included within the definition of "Excluded Liability"):
(a) all Liabilities relating to or arising, whether before, on
or after the Closing, out of, or in connection with, any of the Excluded Assets;
(b) all Liabilities, other than the Accounts Payable, that
arise (whether under the Assumed Contracts or otherwise) with respect to the
Acquired Assets or the use thereof on or prior to the Closing Date or relate to
periods ending on or prior to the Closing Date or are to be observed, paid,
discharged or performed on or prior to the Closing Date (in each case, including
any Liabilities that result from, relate to or arise out of tort or other
product liability claim);
(c) litigation and related claims and Liabilities or any other
claims against the Company or any of its Subsidiaries of any kind or nature
whatsoever, other than Accounts Payable, involving or relating to facts, events
or circumstances arising or occurring on or prior to the Closing Date, no matter
when raised (including Liability for breach, misfeasance or under any other
theory relating to the Company's or any such Subsidiary's conduct, performance
or non-performance);
(d) all Liabilities relating to any Contract between any
employee or consultant and the Company or any of its Subsidiaries;
(e) all Liabilities relating to any environmental, health or
safety matter (including any Liability or obligation arising under any
Environmental Law) arising out of or relating to the Company's or any of its
Subsidiary's operation of their respective businesses or their leasing,
ownership or operation of real property;
(f) all Liabilities for damages to persons or property arising
out of alleged defects in products sold by the Company or any of its
Subsidiaries, or arising under warranties, express or implied, issued by the
Company or any of its Subsidiaries;
(g) all Liabilities in excess of the Claims Reserve to repair
or replace, or to refund the sale price (plus related expenses) of, products
sold and delivered by the Company or any of its Subsidiaries prior to the
Closing Date;
(h) all Liabilities of the Company or any of its Subsidiaries
under any collective bargaining agreement, agreement with any labor union,
employment agreement or severance agreement;
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(i) all Liabilities of the Company or any of its Subsidiaries,
or of any trust or other entity established to provide employee benefits, to
their present or former employees, retirees or spouses, dependents or other
beneficiaries of present or former employees or retirees, including all
Liabilities attributable to, incurred in connection with, arising from or
relating to, any Plan, whether formal or informal and whether legally binding or
not;
(j) all Liabilities of the Company or any of its Subsidiaries
attributable to, incurred in connection with, arising from, or relating to, a
violation of any Laws governing employee relations, including
anti-discrimination Laws, wage and hour Laws, labor relations Laws and
occupational safety and health Laws;
(k) all Liabilities related to (i) the termination of
employment of any employees of Sellers, including employees of Sellers who
become employees of Buyer, including all Liabilities arising under the WARN Act,
and (ii) earned but unpaid salary, bonuses, accrued but unpaid vacation days,
accrued but unpaid medical and dental expenses, accrued and unpaid other forms
of compensation and all other accrued welfare benefits of all employees of the
Company or any of its Subsidiaries, including employees of Seller who become
employees of Buyer and, whether or not accrued, any obligations under Section
4980B of the Code to provide continuation of group medical coverage with respect
to any such employee or other qualified beneficiary;
(l) except as set forth in Section 7.9, all Liabilities for any
and all Transfer Taxes due as a result of the transactions contemplated by this
Agreement;
(m) except as set forth in Section 7.9, all Liabilities for any
and all Taxes due or payable by the Company or any of its Subsidiaries for any
period ending on or before the Closing Date or as a result of the operation of
the Business or the ownership of the Acquired Assets on or before the Closing
Date, without regard to whether such taxes are within the scope of the
representation set forth in Section 5.10 hereof;
(n) all amounts payable pursuant to Section 365(b)(1)(A) or (B)
of the Bankruptcy Code in order to effectuate, pursuant to the Bankruptcy Code,
the assumption by Sellers and assignment by Buyer of Assumed Contracts under the
Bankruptcy Court Approval (the "Cure Amounts"), other than as specifically set
forth herein;
(o) other than Accounts Payable, all notes, bonds or other
evidences of indebtedness, including any of the foregoing entered into with
respect to any of the Acquired Facilities; and
(p) all Liabilities for fraud, breach, misfeasance or under any
other theory relating to conduct, performance or non-performance of the Company
or any of its Subsidiaries.
2.5 Changes in List of Assumed Contracts. From time to time after the
date hereof and prior to the Closing, (i) Buyer may remove Contracts, other than
Ordinary Course Contracts, from the list of Assumed Contracts, (ii) Buyer and
the Company, by mutual agreement, may add Contracts to the list of Assumed
Contracts, and (iii) Buyer, in its sole discretion, may add to the list of
Assumed Contracts any material Contract the existence and terms of which were
not disclosed to Buyer in reasonable detail prior to January 30, 2003. If any
Contract is added to the
17
list of Assumed Contracts, Sellers shall take such steps as are necessary,
including payment of all Cure Amounts, to cause such Contract to be assumed by,
and assigned to, Buyer.
ARTICLE 3
CLOSING; PURCHASE PRICE
3.1 Closing; Transfer of Possession; Certain Deliveries.
(a) The consummation of the transactions contemplated herein
(the "Closing") shall take place on the second Business Day after the
satisfaction of all of the conditions set forth in Article 8 (or the waiver
thereof by the party entitled to waive that condition) or on such other date as
the parties hereto shall mutually agree. The Closing shall be held at the
offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), at 10:00 a.m., local
time, unless the parties hereto otherwise agree. The actual date of the Closing
is herein called the "Closing Date." For purposes of this Agreement, from and
after the Closing, the Closing shall be deemed to have occurred at 12:01 A.M. on
the Closing Date.
(b) At the Closing, Sellers shall deliver to Buyer:
(i) duly executed bills of sale, substantially in the
form of Exhibit G attached hereto, transferring the Acquired Assets to Buyer;
(ii) duly executed real property special warranty (or the
equivalent) deeds in recordable form, in form and substance acceptable to Buyer,
to effect the sale, transfer, assignment and delivery of the Acquired Real
Property;
(iii) the Assignment and Assumption Agreement, duly
executed by Sellers;
(iv) all other instruments of conveyance and transfer, in
form and substance reasonably acceptable to Buyer, as are necessary to convey
the Acquired Assets to Buyer; and
(v) all other previously undelivered certificates,
agreements and other documents required to be delivered by Sellers at or prior
to the Closing in connection with the transactions contemplated by this
Agreement.
(c) At the Closing, Buyer shall deliver:
(i) to Sellers, the Purchase Price, less the Indemnity
Escrow, in accordance with the provisions of Section 3.3;
(ii) to the Escrow Agent, $25 million in cash (the
"Indemnity Escrow"), to be held for a period of 12 months from the Closing Date
and disbursed in accordance with the terms and conditions of the Indemnity
Escrow Agreement;
(iii) the Assignment and Assumption Agreement, duly
executed by Buyer; and
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(iv) all other previously undelivered certificates,
agreements and other documents required to be delivered by Buyer at or prior to
the Closing in connection with the transactions contemplated by this Agreement.
3.2 Deposit Escrow. On January 30, 2003, Buyer executed and delivered
to Sellers the Deposit Escrow Agreement and deposited with the Escrow Agent $6.5
million (the "Deposit Escrow"). The Deposit Escrow shall be held and disbursed
pursuant to the terms of the Deposit Escrow Agreement and this Agreement.
3.3 Purchase Price. In consideration of the Acquired Assets, and
subject to the terms and conditions of this Agreement, Buyer shall assume the
Assumed Liabilities as provided in Section 2.3 and at the Closing shall pay to
Sellers an aggregate purchase price (together with the amount of the Indemnity
Escrow, the "Purchase Price") of $1.125 billion comprised of: (a) the Deposit
Escrow, which shall be transferred directly to Sellers by the Escrow Agent; (b)
subject to Section 3.4(a) and Section 3.4(b), $918.5 million (including the
Indemnity Escrow) in immediately available funds, by wire transfer to an account
or accounts designated by Sellers, other than the Indemnity Escrow which shall
be delivered to the Escrow Agent (collectively, together with the Deposit
Escrow, the "Cash Consideration"); and (c) $200 million by assumption of the
Assumed Liabilities. Each Seller shall receive that portion of the Cash
Consideration set forth opposite such Seller's name on Schedule 3.3 hereof.
3.4 Purchase Price Adjustment.
(a) The Cash Consideration shall be increased for lease
payments made by Sellers pursuant to those Assumed Contracts set forth on
Schedule 3.4(a) in respect of lease payments due and payable on or after January
1, 2003, as follows: (i) the Cash Consideration shall be increased by $1.00 for
each $1.00 of lease payments set forth on Schedule 3.4(a) made by Seller, not to
exceed $2 million in the aggregate; and (ii) with respect to lease payments in
excess of $2 million in the aggregate, the Cash Consideration shall be increased
by $0.75 for each $1.00 of lease payments set forth on Schedule 3.4(a) made by
Seller.
(b) The Purchase Price may be reduced at the Closing, at
Buyer's election, on the basis of the Estimated Net Receivables Amount and the
Estimated Inventory Value set forth on the Closing Financial Certificate
delivered by the Company pursuant to Section 7.17. If the Estimated Net
Receivables Amount plus the Estimated Inventory Value (the "Estimated Working
Capital Amount") is less than $450 million, then Buyer may, at Buyer's election,
reduce the Cash Consideration to be paid to Sellers at the Closing by the amount
of such shortfall (the "Estimated Working Capital Adjustment").
(c) The Purchase Price shall be adjusted pursuant to subsection
(e) of this Section 3.4 after the Closing. Within sixty (60) days following the
Closing Date, Buyer shall prepare and deliver to the Company a Notice (the
"Statement") setting forth the Net Receivables Amount and the Inventory Value
(together, the "Closing Date Items"), as of the close of business on the Closing
Date. The Closing Date Items shall be determined in accordance with GAAP and the
same accounting principles, procedures and methods that were used to prepare the
Company Financial Statements. After the Closing Date, at Buyer's request, the
Company and each of the other Sellers shall assist Buyer and its Representatives
in the preparation of the Statement and
19
shall provide Buyer and its Representatives any information reasonably requested
and shall further provide them with access at all reasonable times during
regular business hours and upon reasonable notice to personnel, books and
records of the Company and each of the other Sellers for such purpose.
(d) Unless the Company notifies Buyer in writing within 30 days
after Buyer's delivery of the Statement of any objection to any component of the
computation of the Closing Items set forth therein (the "Objection Notice"),
such computation shall be final and binding. The Objection Notice shall specify
the amount of and the basis for the objections set forth therein. The Objection
Notice shall include only objections based on (i) mathematical errors in
computation of the Closing Date Items, or (ii) Closing Date Items not having
been prepared in accordance with GAAP or the same accounting principles,
procedures and methods that were used to prepare the Company Financial
Statements. If Buyer and the Company cannot resolve any such objections, then
such objections shall be resolved by an independent nationally recognized
accounting firm reasonably acceptable to Buyer and the Company (the "Independent
Accounting Firm"). The determination of the Independent Accounting Firm shall be
made as promptly as practicable, and in no event later than 75 days after
delivery of the Statement, and shall be final and binding on the parties, absent
manifest error, which error may only be corrected by such Independent Accounting
Firm. The fees and expenses of the Independent Accounting Firm shall be paid
one-half by Buyer and one-half by the Company.
(e) If the aggregate amount of Accounts Receivable included in
the Acquired Assets (excluding the amount of Accounts Receivable of National
Steel Pellet Company included in the Acquired Assets) minus (i) the aggregate
amount of Accounts Payable included in the Assumed Liabilities (excluding the
amount of Accounts Payable of National Steel Pellet Company included in the
Assumed Liabilities) and (ii) the Company Reserves, excluding the amount of
Company Reserves related to National Steel Pellet Company (the "Net Receivables
Amount"), plus the Inventory Value, excluding the Inventory Value of the
Inventory of National Steel Pellet Company included in the Acquired Assets (the
"Working Capital Amount"), is less than $450 million then the Purchase Price
shall be decreased by the amount of the shortfall (the "Working Capital
Adjustment"). Any Working Capital Adjustment resulting from this Section 3.4(e)
shall be offset by any reduction to the Purchase Price made at the Closing based
on the Estimated Working Capital Adjustment.
(f) The amount of the Working Capital Adjustment shall be paid
on the Adjustment Payment Date. The "Adjustment Payment Date" shall be the date
that is 35 days after the delivery of the Statement; provided, however, if
Sellers dispute the Statement, the Adjustment Payment Date shall be the date
that is 15 days after the final determination of the Closing Date Items in
accordance with the provisions of Section 3.4(d).
3.5 Allocation of Purchase Price. Buyer and each Seller shall agree
upon an allocation of the Purchase Price and the Assumed Liabilities among the
Acquired Assets (the "Allocation") for all income Tax purposes. The Allocation
shall be consistent with the Code and based on an initial proposal by Buyer.
Sellers will have the right to raise reasonable objections to the Allocation
within 15 days after Buyer's delivery thereof, in which event Buyer and Sellers
will negotiate in good faith to resolve such dispute. If Buyer and Sellers
cannot resolve such dispute within 15 days after Sellers notify Buyer of such
objections, such dispute with respect to
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the Allocation shall be presented to the Independent Accounting Firm, which
shall, within 30 days thereafter, render a decision, which shall be final and
binding upon each of the parties. The fees, costs and expenses incurred in
connection therewith shall be shared in equal amounts by Buyer and Sellers.
Buyer and Sellers each shall report and file all Tax Returns (including amended
Tax Returns and claims for refunds) consistent with the Allocation, and shall
take no position contrary thereto or inconsistent therewith (including in any
audits or examinations by any Tax Authority or any other Proceedings). Buyer and
Sellers shall cooperate in the preparation of, and shall timely file, any forms
(including Form 8594) with respect to the Allocation, including any amendments
to such forms required with respect to any adjustment to the Purchase Price,
pursuant to this Agreement. Notwithstanding any other provisions of this
Agreement, the foregoing agreement shall survive the Closing Date without
limitation.
3.6 Designation of Affiliates by Buyer. Prior to the Closing, Buyer
may designate one or more of its Subsidiaries to acquire at the Closing all or
part of the Acquired Assets, in which event all references to "Buyer" shall be
deemed to refer to each such Subsidiary with respect to the Acquired Assets to
be acquired by such Subsidiary; provided, however, that no designation otherwise
permitted by this Section 3.6 shall relieve Buyer from any of its liabilities or
obligations hereunder.
3.7 Section 338(h)(10) Election. Sellers shall cooperate with Buyer's
request to make an election under Section 338(h)(10) of the Code to treat the
purchase and sale of any Seller's equity interest in any of the Acquired
Entities as a purchase and sale of the assets of the entity, to the extent
permitted by the Code.
3.8 Designation of Exchange Accommodation Titleholder. Prior to
Closing, Buyer may designate one or more Persons as a "qualified intermediary"
within the meaning of Internal Revenue Service Regulation 1.1031(k)-1(g)(4), or
an "exchange accommodation titleholder" within the meaning of Internal Revenue
Service Revenue Procedure 2000-37, 2000-2 CB 308, to acquire at the Closing all
or part of Buyer's rights to this Agreement or the Acquired Assets in order to
effectuate a like-kind exchange under Section 1031 of the Code. Buyer's
Liabilities under this Agreement shall be no greater, and no less, than such
Liabilities would have been had the Buyer or its Subsidiaries directly acquired
the Acquired Assets.
ARTICLE 4
INDEMNITY ESCROW
4.1 Creation of Escrow. At the Closing, as collateral security for
the payment of any indemnification obligations of Sellers pursuant to Article 10
hereof, the Indemnity Escrow shall be delivered to the Escrow Agent.
4.2 Duration and Term. The Indemnity Escrow shall be held, invested
and disbursed by the Escrow Agent in accordance with the terms of the Indemnity
Escrow Agreement. The Escrow Agent shall hold the Indemnity Escrow pursuant to
the Indemnity Escrow Agreement until the later of: (a) the first Business Day
following the Indemnity Termination Date; or (b) the resolution of any claim for
indemnification or payment that is pending on the Indemnity Termination Date,
but only to the extent of the amount of such pending claim.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
In connection with the following representations and warranties,
attached to this Agreement is a disclosure schedule (the "Disclosure Schedule")
arranged in numbered parts corresponding to the Section numbering in this
Agreement of the following representations and warranties. The information
disclosed in any numbered part of the Disclosure Schedule shall be deemed to
relate to and to qualify only the particular representation or warranty set
forth in the corresponding numbered Section in this Agreement and shall not be
deemed to relate to or qualify any other representation or warranty unless so
stated otherwise, specifying each other representation and warranty to which it
relates. No reference to or disclosure of any item in the Disclosure Schedule
shall be construed as an admission or indication that such item or other matter
is material or that such item or other matter is required to be referred to or
disclosed in the Disclosure Schedule. Sellers jointly and severally hereby
represent and warrant to Buyer that, as of January 30, 2003 and as of the
Closing Date (except with respect to representations and warranties made as of a
particular date, which shall be deemed to be made only as of such date), except
as set forth on the Disclosure Schedule:
5.1 Due Organization. Each Seller is a corporation, limited liability
company or partnership, duly organized under the laws of its jurisdiction of
incorporation or formation, with full power and authority to conduct its
business as presently conducted, to own or use its properties and assets and to
perform all of its obligations under all Assumed Contracts. Each Seller is duly
qualified to do business and in good standing under the Laws of each
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified and in good standing
would not reasonably be expected to have a Material Adverse Effect. Schedule 5.1
of the Disclosure Schedule lists the form of organization, the jurisdiction of
incorporation or formation, and the holders of the outstanding capital stock or
other equity interests of each Seller and the Acquired Entities.
5.2 Authorization; Validity. Each Seller has the requisite power and
authority to execute and deliver this Agreement and the other documents and
instruments to be executed and delivered by it pursuant hereto and to perform
its obligations hereunder and thereunder. The execution and delivery of this
Agreement by each Seller and the other agreements to be executed and delivered
by such Seller pursuant hereto, and the performance by such Seller of its
obligations hereunder, including the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of each Seller, including by any action or required approval of the
equityholder or equityholders of each Seller. This Agreement has been duly and
validly executed and delivered by each Seller and (assuming this Agreement
constitutes a valid and binding obligation of Buyer and each of the other
agreements to be executed and delivered by parties pursuant hereto other than
Sellers constitute a valid and binding obligation of such other parties and
subject to Bankruptcy Court Approval) constitutes, and each of the other
agreements to be executed and delivered by each Seller pursuant hereto upon such
Seller's execution and delivery will constitute, valid and legally binding
obligations of such Seller enforceable against such Seller in accordance with
its respective terms.
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5.3 No Violation. Subject to receipt and maintenance of the Orders,
consents, approvals, waivers and authorizations referred to in Section 5.4 and
the Bankruptcy Court Approval, the execution, delivery and performance by each
Seller of this Agreement and the transactions contemplated hereby, do not and
will not: (a) conflict with or result in, with or without the giving of notice
or lapse of time or both, any violation of or constitute a breach or default, or
give rise to any right of acceleration, payment, amendment, cancellation or
termination, under (i) the certificate of incorporation, bylaws or other
formation documents of such Seller, (ii) any mortgage, indenture, lease,
Contract, or other agreement to which any Seller is a party or by which any of
any Seller's assets or properties are subject, including any Assumed Contract,
or (iii) any Law or Order pertaining to the Business, the Acquired Assets or to
which any Seller is otherwise subject, except in the cases of clauses (ii) and
(iii) where such conflict, violation, breach, default or right would not
reasonably be expected to have a Material Adverse Effect; or (b) result in the
creation of any Lien (other than Liens included in the Assumed Liabilities and
Permitted Liens) upon any of the Acquired Assets.
5.4 Third Party Approvals. Schedule 5.4 of the Disclosure Schedule
sets forth a true and complete list of each Order, consent, approval, waiver or
authorization of any Governmental Entity and each material consent, approval,
waiver or authorization of any other Person that is required in connection with
the execution, delivery and performance by Sellers of this Agreement and the
other documents and instruments to be executed and delivered by Sellers pursuant
hereto and the transactions contemplated hereby and thereby other than (a)
Orders, consents, approvals, waivers or authorizations of, or declarations or
filings with, the Bankruptcy Court, (b) filings pursuant to the HSR Act, and (c)
approvals required by the Surface Transportation Board in connection with the
sale of the Railroad Assets.
5.5 Title to Assets; Sufficiency and Condition of Assets. All of each
Seller's right, title and interest in and to the Acquired Assets (or in the case
of any leased or licensed Acquired Assets, each Seller's rights under such
leases or licenses) shall be transferred to Buyer at Closing, free and clear of
all Liens (other than Liens included in the Assumed Liabilities and Permitted
Liens). At Closing, Sellers will have good and marketable title to each of the
Acquired Assets, except for those Acquired Assets leased by Sellers, as to which
Sellers will have valid leasehold interests. The Acquired Assets constitute all
of the properties, assets and rights used by the Sellers or necessary or useful
for Buyer to conduct and operate the Business as conducted and operated by
Sellers. All of the Acquired Assets are in good order and repair for assets of
comparable age and past use and are capable of being used in the ordinary course
of business in the manner necessary to operate the Business, except where the
failure to be in such condition would not, individually or in the aggregate,
have a Material Adverse Effect. The condition of each Acquired Asset that is
leased pursuant to an Assumed Contract is in compliance with the provisions of
such Assumed Contract.
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5.6 Intellectual Property.
(a) Schedule 5.6(a) of the Disclosure Schedule sets forth a
true and complete list of all material Intellectual Property used or held for
use in the Business and all jurisdictions where such Intellectual Property is
registered or protected or where applications have been filed, together with all
patent, registration and application numbers. Sellers own and have the right to
use, or, in the case of licensed rights, have valid rights to use, such
Intellectual Property, free and clear of all Liens (other than Permitted Liens).
(b) Schedule 5.6(b) of the Disclosure Schedule sets forth a
true and complete list of all material licenses, sublicenses and other
agreements pursuant to which (i) any Seller has authorized any other Person to
use Intellectual Property, or (ii) any Person has authorized any Seller to use
any Intellectual Property.
(c) To the Knowledge of Sellers, the Intellectual Property does
not infringe upon, violate or misappropriate the rights of any Person.
Consummation of the transactions contemplated hereby will not result in the loss
or impairment of any of the material Intellectual Property or any material right
pertaining thereto. Sellers have taken reasonable precautions and security
measures to protect the secrecy, confidentiality and value of the trade secrets
of the Business. As of January 30, 2003, no Seller has Knowledge of any
infringement or unauthorized use by any Person of any material Intellectual
Property.
5.7 Compliance with Laws. Except with respect to those matters
covered by Section 5.11 and Environmental Laws (which are covered by Section
5.20), (i) each Seller is in compliance with all applicable Laws, except where
the failure to be in compliance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) as of January
30, 2003, no Seller has received any notice of any alleged violation of any Law
applicable to it. No Seller is in default in any material respect of any Order
applicable to the Acquired Assets or the transactions contemplated under this
Agreement. No investigations, inquiries or reviews by any Governmental Entity
with respect to the Business have been commenced, nor to the Knowledge of any
Seller, are any contemplated that would impose any material Liability on Buyer
or, from and after the Closing Date, the Acquired Assets or the Business.
5.8 Title to Property.
(a) Schedule 5.8(a) identifies all of the real property owned
or leased by the Company or any of its Subsidiaries and used or held for use in
the Business.
(b) Neither the Company nor any of its Subsidiaries has
received any written notice of, or has Knowledge of, condemnation or eminent
domain proceedings pending or threatened that affect the Acquired Real Property.
Neither the Company nor any of its Subsidiaries has received any written notice
of, or, except where any such violations would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, has any
Knowledge of, any zoning, ordinance, building, fire or health code or other
legal violation affecting any such Acquired Real Property.
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(c) There are no encroachments or other facts or conditions
affecting any of the Acquired Real Property that would be revealed by an
accurate survey or inspection thereof, which encroachments, facts or conditions
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. None of the buildings and structures on such Acquired
Real Property encroaches in any material respect upon real property of another
Person or upon the area of any easement affecting the Acquired Real Property.
5.9 Brokers and Finders. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission from Buyer in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries.
5.10 Taxes.
(a) The Company and its Subsidiaries have timely filed with the
appropriate Tax Authorities all material Tax Returns required to be filed by any
of them. All Tax Returns filed by the Company and its Subsidiaries are true,
complete and correct in all material respects. All Taxes covered by such Tax
Returns (whether or not shown on any Tax Return) have been timely paid, except
for Taxes (i) disclosed on Schedule 5.10(a)(i) of the Disclosure Schedule, (ii)
which are being contested in good faith in appropriate Proceedings and disclosed
on Schedule 5.10(a)(ii), or (iii) which, individually or in the aggregate, would
not reasonably be expected to result in any material Liability to Buyer or
Sellers.
(b) None of the Acquired Assets is subject to a safe harbor
lease within the meaning of Section 168(f)(8) of the Internal Revenue Code of
1954 as in effect prior to the enactment of the Tax Reform Act of 1986, Public
Law 99-514.
5.11 Labor Matters; Employee Relations.
(a) There are no material claims or Proceedings pending or, to
the Knowledge of any Seller, threatened, between the Company or its Subsidiaries
and any employees of the Company or any of its Subsidiaries. There are no
strikes, slowdowns, work stoppages, lockouts, or, to the Knowledge of any
Seller, threats thereof, by or with respect to any employees of the Company or
its Subsidiaries.
(b) The Company and each of its Subsidiaries is and has been in
compliance with all applicable Laws respecting employment, except where the
failure to be in compliance would not reasonably be expected to have a Material
Adverse Effect.
5.12 ERISA Compliance; Absence of Changes in Benefits Plans. Schedule
5.12 of the Disclosure Schedule sets forth a true and complete list, as of
January 30, 2003, of all Plans. True and complete copies of each of the
following documents, including any amendments made on or prior to January 30,
2003, have been made available by Sellers to Buyer: (i) each Plan and all
amendments thereto, and the most recent descriptions thereof which have been
distributed to plan participants; (ii) all funding arrangements with respect to
the Plans; (iii) all actuarial or other assumptions used to calculate funding
obligations with respect to any Plan or any change in the manner in which such
contributions are determined; and (iv) a brief description of any Plan which is
not in writing. No "reportable event," as defined in Section 4043(b) of ERISA
and the
25
regulations promulgated thereunder, has occurred under any Plan and to the
Knowledge of the Sellers no action is contemplated by any Seller or any other
Person that would constitute a reportable event, in each case which could
reasonably result in the imposition of any Liabilities upon Buyer. No Seller
participates in any Plan that is a "multiemployer plan," as such term is defined
in Section 4001(a)(3) of ERISA in respect of any employee of the Business.
5.13 Litigation. Other than the Chapter 11 Case, there are no material
actions pending, or, to the Sellers' Knowledge, threatened against any Seller in
connection with the Acquired Assets or the Business or which could give rise to
or increase an Assumed Liability. There are no Orders against any Seller or any
of their respective properties or businesses that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.14 Customers and Suppliers. Schedule 5.14 of the Disclosure Schedule
sets forth a complete and accurate list of all Significant Customers and
Significant Suppliers. "Significant Customers" are: (i) the 10 customers that
have purchased the most, in terms of dollar value, products or services sold by
the Business during the year ended December 31, 2001; and (ii) the 10 customers
that have purchased the most, in terms of dollar value, products or services
sold by the Business during the 9-month period ending September 30, 2002.
"Significant Suppliers" are: (y) the 10 suppliers that have sold the most, in
terms of dollar value, products or services to the Business during the year
ended December 31, 2001; and (z) the 10 suppliers that have sold the most, in
terms of dollar value, products or services to the Business during the 9-month
period ending September 30, 2002. As of January 30, 2003, no Significant
Customer or Significant Supplier has given any Seller notice terminating,
canceling or materially reducing, or threatening to terminate, cancel or
materially reduce, any Contract or relationship with Seller. As of January 30,
2003, no Significant Customer (i) has notified the Company or any Subsidiary
that the Company or any Subsidiary no longer meets the customers' quality
specifications or any certification requirements imposed upon steel suppliers or
(ii) to Sellers' Knowledge, has threatened to terminate such certification.
During the three-month period immediately preceding January 30, 2003, there has
been no material increase in (i) the dollar amount of customer claims relating
to the quality of Sellers' products or services, or (ii) the percentage of
products shipped by Sellers that do not conform, as determined consistently with
the Sellers' past practices, to original or prime product requirements (whether
full or limited warranty), in each case as compared with the comparable period
of the preceding calendar year.
5.15 Accounts Receivable. Schedule 5.15 of the Disclosure Schedule is
a complete and accurate list, as of November 30, 2002, of the Accounts
Receivable of Sellers, including an aging of all Accounts Receivable showing
amounts due in 30-day aging categories. Sellers have provided reserves for
Accounts Receivable in accordance with GAAP and the Company's accounting
policies attached hereto as Schedule 1.1(a), consistently applied by Sellers. On
the Closing Date, Sellers will deliver to Buyer a complete and accurate list, as
of a date within five Business Days of the Closing Date, of the Accounts
Receivable. All Accounts Receivable represent valid obligations arising from
bona fide business transactions in the ordinary course of business consistent
with past practice. Subject to the Company Reserves and any write-down of any
Accounts Receivable in connection with the Working Capital Adjustment in Section
3.4, there is no contest, claim, counterclaim, defense or right of set-off under
any Contract or otherwise with any obligor of any Account Receivable relating to
the amount or validity of such Account Receivable.
26
5.16 Inventory. All Inventory is in good and merchantable quality and
is useable and saleable in the ordinary course of business, except for those
items the value of which (i) has been reduced in accordance with GAAP and the
Company's inventory policies, attached hereto as Schedule 1.1(a), consistently
applied by Sellers or (ii) is or will be reduced in connection with the Working
Capital Adjustment in Section 3.4.
5.17 Financial Statements and SEC Filings.
(a) The Company has delivered or made available to Buyer a
true, correct and complete copy of the (i) the audited consolidated balance
sheet of the Company as of December 31, 2002, and audited consolidated
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the year then ended; and (ii) consolidated balance sheet of the
Company as of September 30, 2002 and consolidated statement of operations and
cash flows for the nine months then ended (the financial statements referred to
in clause (i) and (ii) collectively, the "Company Financial Statements"). The
Company Financial Statements are consistent in all material respects with the
books and records of the Business. The Company Financial Statements (including
the related notes) have been prepared in accordance with GAAP consistently
applied and fairly present the results of operations and financial condition of
the Company and its Subsidiaries for the periods covered thereby, subject to
normal year-end audit adjustments made in accordance with past practice in the
case of the Company Financial Statements for the nine-month period ended
September 30, 2002. Other than the Financing, since December 31, 2001, Seller
has not borrowed, incurred, assumed, prepaid, guaranteed, or become subject to
any material liability or modified any existing material liability (absolute,
accrued or contingent) other than (i) in the ordinary course of business
consistent with past practice in nature and amount, (ii) as shown on the Company
Financial Statements or (iii) which has been discharged, satisfied or paid in
the ordinary course of business since December 31, 2001.
(b) Each of the forms, reports and documents filed by the
Company with the SEC since December 31, 2001 (the "Company SEC Documents")
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act as in effect on the dates so filed. With
respect to the Acquired Assets, the Assumed Liabilities and the Business, none
of the Company SEC Documents (as of the respective filing dates or, if amended,
as of the date of the last such amendment filed prior to January 30, 2003)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
5.18 Contracts. All of the Assumed Contracts are in full force and
effect and constitute valid and binding agreements of the Company or the
Subsidiary party thereto, enforceable in accordance with their respective terms,
and to the knowledge of the Company or any Subsidiary that is a party to any
such Assumed Contract, the other parties thereto, subject, as to enforceability
against each such other party, to bankruptcy, moratorium or other insolvency
laws and to equitable principles of general application (regardless if
enforcement is sought at law or in equity). With respect to the Assumed
Contracts, upon entry of the Bankruptcy Court Approval and payment of the Cure
Amounts, (i) neither the Company nor any Subsidiary will be in breach or default
of its obligations thereunder, (ii) to the Knowledge of the Company or any of
its
27
Subsidiaries, no conditions exist that with notice or lapse of time or both
would constitute a default thereunder, and (iii) to the Knowledge of the Company
or any of its Subsidiaries, no other party to any of the Assumed Contracts is in
breach or default thereunder, except in each case where such breach or default
would not reasonably be expected to have a Material Adverse Effect. Schedule
5.18 of the Disclosure Schedule sets forth a complete and correct list, as of
January 30, 2003, of all Material Contracts other than those Contracts that are
"Material Contracts" solely because such Contracts are "Assumed Contracts."
5.19 Permits. Schedule 5.19 of the Disclosure Schedule sets forth a
true, complete and correct list of all material Permits held by the Company or
its Subsidiaries as of January 30, 2003 in connection with the Business or the
Acquired Assets (including the date of expiration of each Permit). Each Permit
is valid and in full force and effect and neither the Company nor any of its
Subsidiaries is in default under or in violation of, and no condition exists
that with notice or lapse of time or both would constitute a default under or a
violation of, any such Permit, except for such defaults or violations which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
5.20 Environmental Matters. Each Seller and each Acquired Entity is in
compliance with all Environmental Laws. Sellers possess and are in compliance
with all Permits required under Environmental Laws for the conduct of the
Business. There are no pending or, to the Knowledge of the Company or any of its
Subsidiaries, threatened Proceedings against the Company or any of its
Subsidiaries alleging a violation of or Liability under any Environmental Law.
There has been no Release of any Hazardous Substance that will or is reasonably
likely to require abatement or correction under Environmental Laws at (A) any of
the Acquired Real Property or (B) any property to which any Seller sent waste
materials for treatment, storage or disposal since January 1, 2001. Sellers have
provided to Buyer copies of all information necessary for an understanding of
the presence or migration of any Hazardous Substance on, in or under the
Acquired Real Property. Schedule 5.20 of the Disclosure Schedule sets forth: (i)
with respect to the Acquired Assets and Assumed Liabilities, all accruals or
reserves of the Company or any of its Subsidiaries relating to matters arising
under any Environmental Law as of November 30, 2002; and (ii) a list, as of
January 30, 2003, of all environmental audits and all Notices of Violation
relating to the Business, the Acquired Assets and the Assumed Liabilities. As
used herein, "Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment; and "Hazardous Substance" means any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. (S)(s) 9601 et. seq., and petroleum, including crude oil and any
fraction or any derivative thereof.
5.21 Capital Expenditures. As of January 30, 2003, the Company has
made available to Buyer the most recent capital spending plans of the Company
and its Subsidiaries relating to the Business or the Acquired Assets, including
any plans relating to any matter arising under any Environmental Law.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer hereby represents and warrants to Sellers, as of January 30, 2003
and as of the Closing Date (except with respect to representations and
warranties made as of a particular date, which shall be deemed to be made only
as of such date), as follows (and Buyer makes no other representations or
warranties to Sellers):
6.1 Due Organization. Buyer is a corporation validly existing and in
good standing under the laws of the state of its incorporation and has the
requisite corporate power and authority to own, lease and operate the assets to
be sold hereunder and to conduct its business as presently conducted. Buyer is
duly qualified to do business and in good standing under the laws of each
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified and in good standing
would not reasonably be expected to have a Buyer Material Adverse Effect.
6.2 Authority; Validity. Buyer has the requisite power and authority
to execute and deliver this Agreement and the other documents and instruments to
be executed and delivered by Buyer pursuant hereto and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the other agreements to be executed and delivered by Buyer
pursuant hereto, and the consummation by Buyer of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes, and each of the other agreements to be
executed and delivered by Buyer pursuant hereto upon its execution and delivery
by Buyer will constitute (assuming in each case the due and valid authorization,
execution and delivery thereof by the other parties thereto and the entry of the
Bankruptcy Court Approval by the Bankruptcy Court), valid and legally binding
obligations of Buyer enforceable against Buyer in accordance with its terms.
6.3 No Violation. The execution, delivery and performance by Buyer of
this Agreement and the transactions contemplated hereby, do not and will not
conflict with or result in, with or without the giving of notice or lapse of
time or both, any violation of or constitute a breach or default, or give rise
to any right of acceleration, payment, amendment, cancellation or termination,
under (a) the certificate of incorporation or bylaws of Buyer, (b) any mortgage,
indenture, lease, Contract or other agreement to which Buyer is a party or by
which Buyer or any of its properties or assets is bound or subject, or (c) any
Law or Order to which Buyer is bound or subject, except in the cases of clauses
(b), and (c) where such conflict, breach, default or right would not,
individually or in the aggregate, reasonably be expected to have a Buyer
Material Adverse Effect.
6.4 Third Party Approvals. Except for any approvals required in order
to comply with the provisions of the HSR Act and approvals required by the
Surface Transportation Board in connection with the acquisition of the Railroad
Assets, the execution, delivery and performance by Buyer of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the transactions contemplated hereby and thereby do not
require any consents, waivers, authorizations or approvals of, or filings with,
any Governmental Entity or any other Person which have not been obtained by
Buyer.
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6.5 Brokers and Finders. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission from Sellers in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer.
6.6 Compliance with Laws. Buyer is in compliance with all applicable
Laws, except where the failure to be in compliance would not reasonably be
expected to have a Buyer Material Adverse Effect.
6.7 Litigation. Except as disclosed in the Buyer SEC Documents, there
are no actions pending against the Company or any of its Subsidiaries or any of
their respective properties that would, individually or in the aggregate,
reasonably be expected to have a Buyer Material Adverse Effect.
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 Conduct of Business Pending the Closing. During the period from
January 30, 2003 and continuing until the earlier of the termination of this
Agreement in accordance with its terms or the Closing, the Company shall, and
shall cause each of its Subsidiaries to, carry on the Business in the ordinary
course of business and, to the extent consistent therewith, use all commercially
reasonable efforts to preserve the Business intact and preserve the goodwill of
and relationships with Governmental Entities, customers, suppliers, partners,
lessors, licensors, licensees, contractors, distributors, agents, officers and
employees and others having business dealings with the Business, provided that
the foregoing shall not prevent Sellers from rejecting Contracts that are not
Assumed Contracts. During the period from the date of this Agreement through the
Closing Date, the Company shall endeavor to maintain the Net Receivables Amount,
the Inventory Value and each component of Inventory at or in excess of the
amounts set forth on Schedule 7.1. Without limiting the generality of the first
sentence of this Section 7.1, during the period from January 30, 2003 through
the Closing Date, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Buyer:
(a) abandon any rights under any of the Assumed Contracts;
terminate, amend, modify or supplement the terms of any Assumed Contract; or
fail to honor or perform, the Assumed Contracts;
(b) other than sales of Inventory in the ordinary course of
business or the disposition of obsolete equipment, lease, license, surrender,
relinquish, sell, transfer, convey, assign or otherwise dispose of any Acquired
Assets;
(c) mortgage, pledge or subject to Liens (other than Permitted
Liens), any property, business or any of the Acquired Assets, other than as
would not result in any Liability that would be or would increase an Assumed
Liability as of or subsequent to the Closing;
(d) incur or permit to be incurred any Liability (other than
Accounts Payable or in connection with the performance of Assumed Contracts)
that would be or would increase an Assumed Liability as of or subsequent to the
Closing;
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(e) fail to replenish the Inventory and Supplies of the
Business in the ordinary course of business;
(f) increase the salary of any Identified Employee at or after
the time such person becomes an Identified Employee, other than in the ordinary
course of business consistent with past practice;
(g) make or rescind any material Tax election or take any
material Tax position (unless required by law) or file any Tax Return or change
its fiscal year or financial or Tax accounting methods, policies or practices,
or settle any Tax Liability, except in each case as would not reasonably be
expected to affect the Buyer;
(h) institute, settle or agree to settle any litigation, action
or Proceeding before any court or Governmental Entity relating to the Acquired
Assets, or modify in any manner that is adverse to the Business or the Acquired
Assets, rescind or terminate a material Permit, allowance, or credit (or
application therefor) relating to the Business or the Acquired Assets;
(i) transfer or grant any rights under, modify any existing
rights under, or enter into any settlement regarding the breach or infringement
of, any material Intellectual Property; or
(j) enter into any Contract to do any of the foregoing.
7.2 Bankruptcy Court Order.
(a) On February 6, 2003, the Bankruptcy Court entered the Sales
Procedures Order, which was subsequently modified, prior to the date hereof.
Sellers will not modify the Sales Procedures Order without Buyer's consent.
(b) The Sale Procedures Order shall include provisions
approving the payment of a fee in the amount of $15 million (the "Topping Fee")
by Sellers to Buyer, which fee shall become payable upon the earlier to occur of
(x) the approval by the Bankruptcy Court of a sale or sales of a material
portion of the Acquired Assets to a purchaser other than Buyer, and (y) the
filing of a plan of reorganization that does not contemplate the sale of the
Acquired Assets to Buyer in accordance with the terms hereof (in each case,
provided that such approval or filing has occurred prior to any termination of
this Agreement pursuant to Article 9 hereof, an "Alternative Transaction"). The
Topping Fee shall be paid in cash: (i) in the case of an Alternative Transaction
described in clause (x) above, upon the date of the closing of the Alternative
Transaction, without the requirement of any notice or demand from Buyer,
directly from, and shall be secured by, the cash component of the consideration
paid in such Alternative Transaction; or (ii) in the case of the filing of a
plan of reorganization described in clause (y) above, from the assets of Sellers
upon the approval of such plan by the Bankruptcy Court, without the requirement
of any notice or demand from Buyer. The obligations of Sellers to pay the
Topping Fee shall be entitled to administrative expense claim status under
Sections 503(b)(1)(A) and 507(a)(1) of the Bankruptcy Code, shall not be
subordinate to any other administrative expense claim, other than any
superpriority claim granted under the DIP Order or any adequate protection order
in existence at the time the Topping Fee is approved, and shall survive the
termination of this Agreement in accordance with Section 9.2 hereof.
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(c) Concurrently with the filing of the applications or motions
seeking approval of the Sale Procedures Order, each of the Sellers shall file
with the Bankruptcy Court applications or motions seeking that the Bankruptcy
Court enter the Bankruptcy Court Approval (the "Sale Motion").
(d) Buyer agrees that it will promptly take such actions as are
reasonably requested by Sellers, on behalf of Sellers, to assist in obtaining
the Bankruptcy Court Approval, including furnishing affidavits or other
documents or information for filing with the Bankruptcy Court for purposes,
among others, of demonstrating that Buyer is a "good faith" Buyer under Section
363(m) of the Bankruptcy Code. In the event the Bankruptcy Court Approval shall
be appealed, Sellers shall use all reasonable efforts to defend such appeal.
7.3 Notification of Certain Matters. Sellers shall give prompt Notice
to Buyer, and Buyer shall give prompt Notice to Sellers, of (i) any notice or
other communication from any Person alleging that the consent of such Person
which is or may be required in connection with the transactions contemplated by
this Agreement is not likely to be obtained prior to Closing, and (ii) any
written objection or Proceeding that challenges the transactions contemplated
hereby or the entry of the Bankruptcy Court Approval. Sellers shall give prompt
Notice to Buyer of (i) any notice of any alleged violation of Law applicable to
any Seller; (ii) the commencement of any investigation, inquiry or review by any
Governmental Entity with respect to the Business or that any such investigation,
inquiry or review, to the Knowledge of any Seller, is contemplated; (iii) the
infringement or unauthorized use by any Person of any material Intellectual
Property (of which any Seller has Knowledge); and (iv) the execution of any
Material Contract (and Sellers shall deliver or make available a copy thereof to
Buyer). Sellers shall use commercially reasonable efforts to give prompt Notice
to Buyer of the execution of any Ordinary Course Contract and, upon the request
of Buyer to make available to Buyer copies of any such Ordinary Course
Contracts. In addition, from the date of the entry of the Sale Procedures Order
until the Closing Date, Buyer shall, once per week, update the Company on the
status of its negotiations with the United Steelworkers of America.
7.4 Access.
(a) Subject to applicable Law, from the date hereof until the
Closing Date, Sellers (i) shall give Buyer and its Representatives reasonable
access during normal business hours to the offices, properties, officers,
employees, accountants, auditors, counsel and other representatives, books and
records of the Company and its Subsidiaries; provided, however, that Buyer's
inspection of Sellers' properties shall not, without the consent of the Company,
which consent shall not be unreasonably withheld or delayed, include the
environmental sampling of any environmental media, including air, soil, surface
water or groundwater, (ii) shall furnish to Buyer and its Representatives such
financial, operating and property related data and other information as such
persons reasonably request, and (iii) shall instruct the Company's and its
Subsidiaries' employees, counsel and financial advisors to cooperate reasonably
with Buyer in its investigation of the business of the Company and its
Subsidiaries. All such information shall be provided subject to the provisions
of the Confidentiality Agreement. In addition, notwithstanding any provision of
the Confidentiality Agreement to the contrary, Buyer shall, with the prior
consent of the Company, which consent shall not be unreasonably withheld or
delayed, have the right to contact and negotiate directly with Seller's joint
venturers and other
32
partners, parties to the Assumed Contracts and lenders with respect to any
Acquired Assets or Assumed Liabilities. The Company shall have the right to
participate in such negotiations and agrees to cooperate with Buyer, at Buyer's
request, in any such negotiations. It is acknowledged and understood that no
investigation by Buyer or other information received by Buyer shall operate as a
waiver or otherwise affect any representation, warranty or other agreement given
or made by Seller hereunder. Buyer agrees that any on-site inspections of any
Acquired Real Property, including any inspection or study pursuant to Section
7.4(b)(ii) or Section 7.4(b)(iii), shall be conducted in the presence of Sellers
or its Representatives. All inspections shall be conducted so as not to
interfere unreasonably with the use of the Acquired Real Property by Sellers.
(b) From and after the Closing Date, Sellers shall give Buyer
and Buyer's Representatives reasonable access during normal business hours to
the offices, facilities, plants, properties, officers, employees, books and
records of Sellers pertaining to the Business, and Sellers shall cause their
Representatives to furnish to Buyer such financial, technical, operating and
other information pertaining to the Business as Buyer's Representatives shall
from time to time reasonably request and to discuss such information with such
Representatives. Sellers shall, and shall cause each of their Affiliates to,
cooperate with Buyer as may reasonably be requested by Buyer for purposes of (i)
enabling an independent accounting firm selected by Buyer to conduct an audit of
the Business, including access to the Company's independent auditors' working
papers pertaining to the Business or the Assets; (ii) undertaking, with the
consent of the Company, which consent shall not be unreasonably withheld or
delayed, any study of the condition or value of the Acquired Assets including
any environmental assessment; and (iii) undertaking any study relating to
Sellers' compliance with Laws, including Environmental Laws; and the Company
acknowledges that information or access may be requested and used for such
purpose.
(c) From and after the Closing Date, Buyer shall give Sellers
and Sellers' Representative reasonable access during normal business hours to
the books and records pertaining to the Excluded Assets and Excluded Liabilities
and, to the extent that Sellers retain any Liabilities with respect to such
items, the Acquired Assets or Assumed Liabilities. Buyer shall, and shall cause
each of its Affiliates to, cooperate with Sellers as may reasonably be requested
by Sellers for such purposes.
7.5 Public Announcements. From the Agreement Date until the earlier
of the Closing or the termination of this Agreement, Buyer and the Company will
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release, any court filing or pleading
filed with the Bankruptcy Court relating primarily to this Agreement or the
transactions contemplated hereby, or other public statements with respect to the
transactions contemplated by this Agreement, and neither Buyer nor any Seller
shall issue any such press release or make any such public statement without the
prior approval of the other party, in each case except as may be required by
Law, court process or by obligations pursuant to any listing agreement with any
national securities exchange. Buyer and each Seller shall cause its Affiliates,
employees, officers and directors to comply with this Section 7.5.
7.6 Cure of Defaults. Subject to Bankruptcy Court Approval, the
Sellers shall, on or prior to the Closing, cure any and all defaults and
breaches under and satisfy any Liability arising
33
from or relating to pre-Closing periods under the Assumed Contracts so that such
Assumed Contracts may be assumed by Sellers and assigned to Buyer in accordance
with the provisions of Section 365 of the Bankruptcy Code and this Agreement.
Each Seller agrees that it will promptly take such actions as are reasonably
necessary or desirable to obtain a Final Order of the Bankruptcy Court providing
for the assumption and assignment of the Assumed Contracts.
7.7 ERISA and Employment Matters. Buyer shall offer employment,
effective as of the Closing Date, to the Identified Employees on such terms as
Buyer shall determine in its sole discretion. Seller shall terminate the
employment of all Hired Non-CB Employees immediately prior to the Closing Date
and shall comply with any and all requirements of the WARN Act in connection
therewith. Sellers shall indemnify and hold harmless Buyer from all costs,
liabilities and expenses, including reasonable attorneys' fees, incurred by
Buyer as a result of any violation of, or failure to comply with, the WARN Act
based on the transactions contemplated by this Agreement. For purposes of the
WARN Act and this Section 7.7, "Closing Date" shall mean the "effective date" of
the transaction contemplated by this Agreement, as defined in the WARN Act. Each
Identified Employee who accepts Buyer's offer of employment shall be deemed to
be a "Hired Non-CB Employee" on the day such employee commences active
employment with Buyer (not earlier than the Closing Date). With respect to
Buyer's medical insurance coverage benefit plans, such plans shall (i) provide
coverage to each Hired Non-CB Employee as of the day such employee commences
active employment with Buyer and (ii) waive pre-existing condition limitations
to the same extent waived under the applicable plan of Buyer, except that the
benefits under such plans, including any new plans, may be adjusted or limited
to take into account similar benefits provided under any federal or state
assistance programs, subject to applicable Law.
7.8 Further Agreements. Sellers shall use all commercially reasonable
efforts to promptly deliver to Buyer any mail or other communication received by
Sellers after the Closing Date pertaining to the Acquired Assets, the Business
or the Assumed Liabilities. Buyer shall use all commercially reasonable efforts
to promptly deliver to Sellers any mail or other communication received by it
after the Closing Date pertaining to the Excluded Assets or any Excluded
Liabilities and any cash, checks or other instruments of payment in respect
thereof. From and after the Closing Date, Sellers shall use all commercially
reasonable efforts to refer all inquiries with respect to the Business, the
Acquired Assets and the Assumed Liabilities to Buyer, and Buyer shall use all
commercially reasonable efforts to refer all inquiries with respect to the
Excluded Assets and the Excluded Liabilities to Sellers.
7.9 Payment of Transfer Taxes and Tax Filings. All Transfer Taxes
arising out of the transfer of the Assets and any Transfer Taxes required to
effect any recording or filing with respect thereto shall be borne one-half by
Buyer and one-half by Sellers. The Transfer Taxes shall be calculated assuming
that no exemption from Transfer Taxes is available, unless otherwise indicated
in the Bankruptcy Court Approval or, at Closing, Sellers or Buyer, as
appropriate, provides an appropriate resale exemption certificate or other
evidence acceptable to Buyer or Seller, as appropriate, of exemption from such
Transfer Taxes. Sellers and Buyer shall cooperate to timely prepare and file any
Tax Returns relating to such Transfer Taxes, including any claim for exemption
or exclusion from the application or imposition of any Transfer Taxes. Sellers
shall pay such Transfer Taxes and shall file all necessary documentation and
returns with respect to such Transfer Taxes when due, and shall promptly,
following the filing thereof,
34
furnish a copy of such return or other filing and a copy of a receipt showing
payment of any such Transfer Tax to Buyer. Notwithstanding the foregoing, the
Sale Motion shall seek, among other things, that the Bankruptcy Court Approval
contain a provision that the sale, transfer, assignment and conveyance of the
Acquired Assets to Buyer hereunder shall be entitled to the protections afforded
under Section 1146(c) of the Bankruptcy Code. Each party hereto shall furnish or
cause to be furnished to the other, upon request, as promptly as practicable,
such information and assistance relating to the Assets and the Business as is
reasonably necessary for filing of all Tax Returns, including any claim for
exemption or exclusion from the application or imposition of any Taxes or making
of any election related to Taxes, the preparation for any audit by any taxing
authority and the prosecution or defense of any claim, suit or proceeding
relating to any Tax Return.
7.10 Utilities. To the extent practicable, the parties hereto shall
notify the gas, water, sewage treatment, telephone and electric utility
companies that Buyer shall be responsible for the payment of all obligations of
the Business or the Acquired Assets incurred therefor on or after the Closing
Date. Sellers shall request the gas, water and electric utility companies to
cause meters to be read as of the Closing Date, and Sellers shall be responsible
for the payment of all charges for such services incurred and provided through
the Closing Date. Sellers shall cause the telephone companies to render a ▇▇▇▇
for telephone service incurred through the Closing Date, and Sellers shall be
responsible for the payment of such bills. In the event that after the Closing
Date, any provider of phone, gas, water or electric utilities seeks payment from
Buyer of unpaid phone, gas, water or electric utilities provided to Sellers on
or prior to the Closing Date, Sellers shall pay such unpaid amounts as promptly
as is required (after reasonable Notice from Buyer) to avoid any discontinuation
of utility service to Buyer. To the extent that Buyer pays such unpaid amounts,
Sellers shall promptly reimburse Buyer for the cost of such payments; provided,
however, Sellers shall not be obligated to reimburse Buyer for any such amounts
included in Accounts Payable for purposes of the Working Capital Adjustment.
7.11 Proration of Taxes and Certain Charges.
(a) Except as otherwise expressly provided herein, all real
property Taxes, personal property Taxes or similar ad valorem obligations levied
with respect to the Acquired Assets for any taxable period that includes the day
before the Closing Date and ends after the Closing Date, whether imposed or
assessed before or after the Closing Date, shall be prorated between Sellers and
Buyer as of 12:01 A.M. on the Closing Date. If any Taxes subject to proration
are paid by Buyer, on the one hand, or Sellers, on the other hand, the
proportionate amount of such Taxes paid (or in the event a refund of any portion
of such Taxes previously paid is received, such refund) shall be paid promptly
by (or to) the other after the payment of such Taxes (or promptly following the
receipt of any such refund); provided, however, Sellers shall not be obligated
to reimburse Buyer for any such amounts included in Accounts Payable for
purposes of the Working Capital Adjustment.
(b) Except as otherwise expressly provided herein, all
installments of special assessments or other charges on or with respect to the
Acquired Assets payable by Sellers for any period in which the Closing Date
shall occur, including base rent, common area maintenance, royalties, all
municipal, utility or authority charges for water, sewer, electric or gas
charges, garbage or waste removal, and cost of fuel, shall be apportioned as of
the Closing Date and each
35
party shall pay its proportionate share promptly upon the receipt of any ▇▇▇▇,
statement or other charge with respect thereto. If such charges or rates are
assessed either based upon time or for a specified period, such charges or rates
shall be prorated as of 12:01 A.M. on the Closing Date. If such charges or rates
are assessed based upon usage of utility or similar services, such charges shall
be prorated based upon meter readings taken on the Closing Date.
(c) Except as otherwise expressly provided herein, all amounts
due pursuant to the terms of the Assumed Contracts, other than those Contracts
set forth on Schedule 3.4(a) attached hereto, for any period in which the
Closing Date shall occur shall be prorated as of 12:01 A.M. on the Closing Date.
(d) If any amounts subject to proration pursuant to subsections
(b) or (c) of this Section 7.11 are paid by Buyer, on the one hand, or Sellers,
on the other hand, the other party shall promptly reimburse the payor the other
party's proportionate amount of such payment; provided, however, Sellers shall
not be obligated to reimburse Buyer for any such amounts included in Accounts
Payable for purposes of the Working Capital Adjustment.
7.12 Regulatory Approvals; Reasonable Efforts; Notification; Consent.
(a) Each of the parties will use all reasonable efforts to
take, or cause to be taken, all actions and use all reasonable efforts to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement, including (i) the obtaining of all other necessary actions,
nonactions, waivers, and Permits from Governmental Entities and the making of
all other necessary registrations and filings (including filings under the HSR
Act), (ii) the obtaining of all necessary consents, approvals or waivers from
third parties, and (iii) the execution and delivery of any additional
certificates, agreements, instruments, reports, schedules, statements, consents,
documents and information necessary to consummate the transactions contemplated
by this Agreement.
(b) Except as required by Law, each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the transactions contemplated by this Agreement. If any party hereto or
Affiliate thereof receives a request for additional information or documentary
material from any such Government Entity with respect to the transactions
contemplated by this Agreement, then such party will use its reasonable efforts
to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. Each party hereto shall bear its respective filing fees associated
with the filings required under the HSR Act or under any Antitrust Law.
(c) Neither Buyer nor any of its Subsidiaries shall be required
to (A) divest, or cause or permit the Company or its Subsidiaries or Affiliates
to divest, any of their respective businesses, product lines or assets, (B) hold
the Acquired Assets separately, or (C) take or agree to take any other actions
or agree to any limitations that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or an adverse effect on
the value, financial condition, business or results of operations of Buyer or
its pre-closing Subsidiaries that
36
would be material to an entity having assets, liabilities, revenues and earnings
similar in amount to those of the Company. Buyer shall not be required to waive
any of the conditions to this Agreement set forth in Article 8.
7.13 Railroad Assets.
(a) Within ten days following the Agreement Date, Buyer shall
make or cause to be made all filings with and submissions to the Surface
Transportation Board under the ICC Termination Act that are required in
connection with the consummation of the transactions contemplated by this
Agreement in respect of the Railroad Assets. Sellers shall assist and support
Buyer in the preparation of such filings and submissions, and Buyer shall
provide Sellers an opportunity to review and comment on all such filings and
submissions prior to their transmittal to the Surface Transportation Board.
(b) If the approvals or exemptions of the transactions from the
Surface Transportation Board contemplated by this Agreement in respect of the
Railroad Assets have not been obtained or become effective on or before the
Closing Date, then notwithstanding anything to the contrary contained herein,
until such approvals or exemptions are obtained, this Agreement shall not
constitute an agreement to assign the Railroad Assets, and to the extent
permitted by Law and subject to any required exemptions or approvals, from and
after the Closing Date, (i) the Company shall use commercially reasonable
efforts to cause the Railroad Assets to continue to be operated in the ordinary
course of business or as otherwise reasonably directed by Buyer; (ii) the
Company shall, and it shall cause its Subsidiaries to, enter into any reasonable
arrangement designed to provide Buyer with the benefits of, and cause Buyer to
bear the costs and obligations of, the Company's ownership of the Railroad
Assets; and (iii) the Company shall not accept any dividends or distributions in
respect of the stock of any of its Subsidiaries that owns or constitutes any
Railroad Assets and shall have no obligation to make any additional capital
contribution to any such Subsidiaries.
7.14 Rejected Contracts. No Seller shall reject any Assumed Contract
in any bankruptcy proceeding following the date hereof without the prior written
consent of the Buyer.
7.15 Further Assurances. Subject to the terms and conditions herein
provided, following the Closing Date, Sellers shall execute and deliver to Buyer
such bills of sale, endorsements, assignments and other good and sufficient
instruments of assignment, transfer and conveyance, in form and substance
reasonably satisfactory to Buyer, as shall be necessary to vest in Buyer all of
Sellers' right, title and interest in and to the Acquired Assets. Simultaneously
with such delivery, Sellers shall take such reasonable steps as may be
reasonably necessary or appropriate at and after the Closing, so that Buyer
shall be placed in actual possession and operating control of the Acquired
Assets. Sellers shall, and shall cause their respective Affiliates to, provide
copies or otherwise make available to Buyer and Buyer's Representatives, all
information and records (financial and otherwise) relating to, or otherwise used
or useful in the Business, and not otherwise included in the Acquired Assets.
7.16 Union Negotiations. The Company agrees that, promptly following
the Agreement Date, it shall commence a process to, unless otherwise agreed to
by the Company and Buyer, reject any and all collective bargaining agreements
between the Sellers and the United
37
Steelworkers of America and the Retiree Benefits associated therewith, in
accordance with Sections 1113 and 1114 of the Bankruptcy Code. The Company shall
use commercially reasonable efforts to conclude such process by no later than
June 10, 2003. Buyer agrees that, after the Company has successfully rejected
all such collective bargaining agreements, the Buyer shall promptly use all
reasonable efforts to propose collective bargaining agreements and initiate
negotiations of such collective bargaining agreements with each of the Security,
Police, Fire Professionals of America International Union, the International
Chemical Workers Union, the Bricklayers & Allied Craftworkers International
Union and the Laborers' International Union of North America, and to keep the
Company reasonably informed of the progress of any such negotiations.
7.17 Closing Financial Certificate. The Company shall prepare, in good
faith, and deliver to Buyer, at least three Business Days prior to the Closing
Date, a certificate signed by the Company's Chief Executive Officer and Chief
Financial Officer (the "Closing Financial Certificate") setting forth the
Estimated Net Receivables Amount and the Estimated Inventory Value.
7.18 Transition Services Agreement. Each of Buyer and the Company
shall use all reasonable efforts to negotiate a mutually satisfactory transition
services agreement, pursuant to which Buyer or one of its Affiliates shall
provide, in exchange for payment therefor, specified services to the Company
(the "Transition Services Agreement"), to be entered into as of the Closing
Date. The Transition Services Agreement shall not obligate Buyer to be
responsible for any Excluded Liabilities.
7.19 Credit Support Arrangements. Buyer acknowledges that, in the
course of the conduct of the Business by Sellers, Sellers have entered into
various arrangements (the "Seller Credit Support Arrangements"), including
letters of credit, guaranty, surety and other similar obligations (all as set
forth on Schedule 2.2(k)). Buyer and Sellers agree that the Seller Credit
Support Arrangements are not intended to inure to the benefit of Buyer after the
Closing and that Sellers intend to monetize the Seller Credit Support
Arrangements after the Closing. Buyer agrees that Sellers shall have no
responsibility to continue any of the Seller Credit Support Arrangements in
order to satisfy obligations with respect to the Business and the Acquired
Assets arising after the Closing Date. Buyer agrees that, to the extent that the
Seller Credit Support Arrangements serve to secure performance of obligations
relating to the Business or the Acquired Assets which arise after the Closing,
Buyer will enter into replacement credit support arrangements if and as
necessary to secure such post-Closing obligations. Sellers and Buyer agree that:
(i) Sellers are solely responsible for all workers' compensation claims with
respect to injuries or other occurrences which occur prior to the Closing, and
Buyer shall have no obligation to enter into replacement credit support
arrangements to the extent they relate to such obligations; and (ii) Buyer shall
be solely responsible for all workers' compensation claims with respect to
injuries or other occurrences which occur after the Closing, and Buyer will
enter into credit support arrangements if and as necessary to the extent they
relate to such obligations. In addition, Buyer agrees to cooperate with Sellers
to enable Sellers to monetize the Seller Credit Support Arrangements for which
Buyer is not required to enter into replacement credit support arrangements in
accordance with the immediately preceding two sentences. Seller shall reimburse
Buyer for reasonable out-of-pocket expenses of Buyer in connection with such
38
cooperation, it being understood that such cooperation will not include any
obligation to pay the counterparties to such Seller Credit Support Arrangements.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF THE PARTIES
8.1 Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by Buyer in Buyer's sole discretion, except that
Buyer shall not waive the condition in Section 8.1(f)) at or prior to the
Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties of Sellers contained herein shall be true and
correct in all material respects on the date hereof and shall be true and
correct in all respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date, except to the extent that any such representation or warranty
is expressly made as of a specified date, in which case such representation or
warranty shall have been true and correct as of such date; provided, however,
that the failure of any such representations or warranties to be true and
correct on and as of the Closing Date shall not constitute a basis for Buyer to
refuse to consummate the transactions contemplated hereby unless such failure,
either individually or in the aggregate, has resulted in or would reasonably be
expected to result in, a Material Adverse Effect; provided, further, that for
the purposes of this Section 8.1(a), all references to materiality in Article 5
shall be disregarded; and provided further, that for the purposes of the
indemnification provision in Section 10.1(a) the references to materiality and
Material Adverse Effect in this Section 8.1(a) shall be disregarded.
(b) Performance of Obligations. Sellers shall have performed in
all material respects all obligations and agreements contained in this Agreement
required to be performed by them on or prior to the Closing Date.
(c) Officer's Certificate. Buyer shall have received a
certificate, dated the Closing Date, of an executive officer of each Seller to
the effect that the conditions specified in Sections 8.1(a) and (b) above have
been fulfilled.
(d) Bankruptcy Court Approval. The Bankruptcy Court shall have
entered an order or orders (the "Bankruptcy Court Approval") substantially in
the form set forth in Exhibit H hereto, which, among other things, (i) approves,
pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, (A) the execution,
delivery and performance by Sellers of this Agreement, including each and every
term and condition hereof, and the other instruments and agreements contemplated
hereby, (B) the sale of the Assets to Buyer on the terms set forth herein, and
(C) the performance by Sellers of their respective obligations under this
Agreement; (ii) authorizes and directs the Sellers to assume and assign to Buyer
the Assumed Contracts; and (iii) finds that Buyer is a "good faith" buyer within
the meaning of Section 363(m) of the Bankruptcy Code. The Bankruptcy Court
Approval shall be in full force and effect and shall not have been stayed,
enjoined or modified. Sellers shall have delivered to Buyer (i) a certified copy
of the order or orders providing for Bankruptcy Court Approval, and (ii) copies
of all affidavits of service of Sellers' motion seeking Bankruptcy Court
Approval or notice of such motion filed
39
by or on behalf of Sellers. The Sale Procedures Order shall have been entered by
the Bankruptcy Court and shall have become a Final Order.
(e) Assumed Contracts. All of the material Assumed Contracts
shall (i) be in full force and effect and assignable to and assumable by Buyer
without the consent of the other party thereto or consent thereto shall have
been obtained, and (ii) have had all of any Seller's breaches and defaults
thereunder cured in accordance with Section 7.6 hereof.
(f) USWA Agreement. Unless otherwise agreed to by the Buyer,
all collective bargaining agreements and Retiree Benefits among the Sellers and
the United Steelworkers of America shall have been rejected in accordance with
Sections 1113 and 1114 of the Bankruptcy Code.
(g) No Material Adverse Change.
(i) Since September 30, 2002, no event, occurrence, fact,
condition, change, development or effect shall have occurred or shall exist
that, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on the Company and Sellers, taken as a whole.
(ii) For the three-month period ending on the last day of
the month immediately preceding the Closing Date:
(A) the aggregate revenues from coated steel shipped
to the automotive market from the Company and its Subsidiaries shall not be less
than $95 million; and
(B) the aggregate revenues from chrome, tin and
blackplate shipped to the container market from the Company and its Subsidiaries
shall not be less than $65 million.
(h) No Intercompany Indebtedness; No Liens. Each of Delray
Connecting Railroad Company, Double G Coatings, L.P., Steel Health Resources,
LLC and NSL, Inc., shall have been released from its obligation to repay
indebtedness owing at or accruing prior to Closing to the Company or any of its
Subsidiaries and no indebtedness of any Seller to the Company or any of its
Subsidiaries shall give rise to or increase an Assumed Liability. The assets of
Delray Connecting Railroad Company shall be free and clear of all Liens (other
than Permitted Liens).
(i) No Violation of Orders. No provisions of any applicable Law
or Order enacted, entered, promulgated, enforced or issued by any Governmental
Entity shall be in effect that (i) prevents the sale and purchase of the
Acquired Assets or any of the other transactions contemplated by this Agreement,
(ii) would adversely affect or interfere with the operation of the Business as
contemplated to be conducted after the Closing in a manner that would reasonably
be expected to constitute a Material Adverse Effect, or (iii) would require
Buyer or any of its Affiliates to sell or otherwise dispose of, hold separate or
otherwise divest itself of, any of the Acquired Assets or any of the assets,
properties or business of Buyer or any of its Affiliates.
40
(j) HSR Act. Any applicable waiting period under the HSR Act or
any other applicable Antitrust Laws, in each case, if required, shall have
expired or shall have been earlier terminated, and all necessary approvals under
all applicable Antitrust Laws shall have been obtained.
(k) Title Insurance. At Buyer's sole cost and expense, a title
insurance company acceptable to Buyer in its sole discretion shall have issued a
commitment to issue to Buyer an ALTA (or local equivalent) owner's coverage
policy of title insurance for each of the properties described on Schedule
2.1(a)-1 and Schedule 2.1(a)-2, insuring the interest to be acquired by Buyer in
each property, subject only to standard survey exceptions and Permitted Liens,
and in each case in an amount acceptable to Buyer in its sole discretion, but in
no event in an amount greater than the fair market value of each property.
(l) Indemnity Escrow Agreement. Sellers shall have executed and
delivered to Buyer the Indemnity Escrow Agreement.
(m) Transition Services Agreement. The Company shall have
executed and delivered to Buyer the Transition Services Agreement.
(n) Headquarters Lease. The Company shall have executed and
delivered to Buyer the Headquarters Lease.
(o) Trademark License Agreement. The Company and National Steel
Pellet Company shall have executed and delivered to Buyer the Trademark License
Agreement.
(p) Closing Financial Certificate. The Company shall have
delivered to Buyer the duly executed Closing Financial Certificate.
8.2 Conditions Precedent to the Obligations of Sellers. The
obligation of Sellers to consummate the transactions contemplated by this
Agreement is subject to the satisfaction (or waiver by Seller) at or prior to
the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained herein shall be true and
correct in all material respects on the date hereof in and shall be true and
correct in all respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date, except to the extent that any such representations or warranty
is made as of a specified date, in which case such representation or warranty
shall have been true and correct as of such date; provided, however, that the
failure of any such representations or warranties to be true and correct on and
as of the Closing Date shall not constitute a basis for Sellers to refuse to
consummate the transactions contemplated hereby unless such failure, either
individually or in the aggregate, has resulted in or would reasonably be
expected to result in, a Buyer Material Adverse Effect; provided, further, that
for the purposes of this Section 8.2(a), all references to materiality in
Article 6 shall be disregarded; and provided, further, that for the purposes of
the indemnification provision in Section 10.2(a), the references to materiality
and Buyer Material Adverse Effect in this Section 8.2(a) shall be disregarded.
41
(b) Performance of Obligations. Buyer shall have performed in
all material respects all obligations and agreements contained in this Agreement
required to be performed by it prior to or on the Closing Date.
(c) Officer's Certificate. Sellers shall have received a
certificate, dated the Closing Date, of an officer of Buyer to the effect that
the conditions specified in Sections 8.2(a) and (b) above have been fulfilled.
(d) Bankruptcy Court Approval. The Bankruptcy Court Approval
shall be in full force and effect and shall not have been stayed, enjoined or
modified.
(e) No Injunction. No preliminary or permanent injunction or
other Order issued by, and no Proceeding or Order by or before any Governmental
Entity nor any Law or Order promulgated or enacted by any Governmental Entity
shall be in effect or pending which declares this Agreement invalid or
unenforceable in any respect or which materially delays, restrains, enjoins or
otherwise prohibits or seeks to restrain, enjoin or otherwise prohibit the
transactions contemplated hereby.
(f) HSR Act. Any applicable waiting period under the HSR Act or
any other applicable Antitrust Laws, in each case, if required, shall have
expired or shall have been earlier terminated, and all necessary approvals under
all applicable Antitrust Laws shall have been obtained.
(g) Indemnity Escrow Agreement. Buyer shall have executed and
delivered to Sellers the Indemnity Escrow Agreement.
(h) Transition Services Agreement. Buyer shall have executed
and delivered to Sellers the Transition Services Agreement.
(i) Headquarters Lease. Buyer shall have executed and delivered
to Sellers the Headquarters Lease.
(j) Trademark License Agreement. Buyer shall have executed and
delivered to Sellers the Trademark License Agreement.
ARTICLE 9
TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior to the Closing:
(a) by written agreement of the Company and Buyer;
(b) by either Buyer or the Company:
(i) if the Closing shall not have occurred on or before
the date that is the earliest of (x) June 13, 2003; and (y) ten Business Days
following the entry of the Bankruptcy Court Approval; provided, however, that
the terminating party is not in material and
42
willful breach of any of its representations and warranties contained in this
Agreement and has not failed in any material respect to perform any of its
obligations hereunder;
(ii) if there shall be any Law or regulation that makes
consummation of the transactions contemplated hereby illegal or otherwise
prohibited, or if any judgment, injunction, order or decree permanently
restraining, prohibiting or enjoining Buyer or the Company from consummating the
transactions contemplated hereby is entered and such judgment, injunction, order
or decree shall become final; or
(iii) if the Bankruptcy Court denies a request to reject
the collective bargaining agreements and Retiree Benefits with United
Steelworkers of America under, as applicable, Sections 1113 and 1114 of the
Bankruptcy Code.
(c) by Buyer:
(i) if there shall have been a breach by any Seller of
any of its representations, warranties, covenants or agreements contained in
this Agreement, which breach would result in the failure to satisfy one or more
of the conditions set forth in Section 8.1, and such breach shall be incapable
of being cured or, if capable of being cured, shall not have been cured within
15 days after written Notice thereof shall have been received by the Company; or
(ii) if the Sale Procedures Order shall fail to be in
full force and effect or shall have been stayed, reversed, modified or amended
in any respect without the prior written consent of Buyer;
(d) by the Company, if there shall have been a breach by Buyer
of any of its representations, warranties, covenants or agreements contained in
this Agreement, which breach would result in the failure to satisfy one or more
of the conditions set forth in Section 8.2, and such breach shall be incapable
of being cured or, if capable of being cured, shall not have been cured within
15 days after written Notice thereof shall have been received by Buyer; or
(e) automatically, upon the occurrence of an Alternative
Transaction.
9.2 Consequences of Termination. In the event of any termination of
this Agreement by either or both of Buyer and the Company pursuant to Section
9.1, written Notice thereof shall forthwith be given by the terminating party to
the other party hereto, specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall thereupon terminate and become
void and of no further force and effect, and the transactions contemplated
hereby shall be abandoned without further action of the parties hereto;
provided, however, that such termination shall not relieve any party hereto of
any Liability for willful breach of this Agreement; provided further, that in
connection with any such termination each party shall be and shall remain liable
for any payments owed or that become owed pursuant to, or that arise as a result
of any such termination pursuant to, Section 7.2(b) hereof or the Sale
Procedures Order, including, without limitation, the Topping Fee. The Topping
Fee shall not be paid more than once to Buyer.
43
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification of Buyer. Subject to the time and other
limitations in Articles 4 and 10, Sellers, jointly and severally, covenant and
agree to indemnify and hold harmless Buyer, its officers, directors, employees,
agents and Affiliates (the "Buyer Indemnitees") from and against, and pay or
reimburse the Buyer Indemnitees for, any and all Liabilities, losses, claims,
damages, punitive damages, causes of action, lawsuits, administrative
proceedings (including informal proceedings), investigations, audits, demands,
assessments, adjustments, judgments, settlement payments, deficiencies,
penalties, fines, interest (including interest from the date of such damages)
and costs and expenses (including without limitation reasonable attorneys' fees
and disbursements of every kind, nature and description) (collectively,
"Losses") resulting from or arising out of:
(a) the inaccuracy of any representation or warranty made by
any Seller herein or in any certificate delivered pursuant to this Agreement;
(b) any failure of any Seller to perform any covenant or
agreement hereunder or to fulfill any other obligation in respect hereof; and
(c) any Excluded Assets or any Excluded Liabilities, including
fines, penalties and claims by any Person for damages or monetary relief to the
extent such fines, penalties or claims are with respect to pre-Closing periods
and relate to facts, events or circumstances arising or occurring on or prior to
the Closing Date. The foregoing indemnification by Sellers shall not extend to
or include Liabilities for investigation, remediation, restoration, including
restoration of injuries to natural resources, response or RCRA corrective action
with respect to the matters set forth on Schedule 10.1(c).
Sellers' obligations under this Article 10 shall not be affected or
reduced by any knowledge of Buyer at or prior to the Closing of any breach by
any Seller of any representation, warranty, covenant or agreement, regardless of
whether Buyer gave written Notice thereof to Seller, or vice versa, and
regardless of whether Buyer elected to consummate the transactions contemplated
hereby despite such knowledge.
10.2 Indemnification of Sellers. Buyer hereby agrees to indemnify and
hold harmless each Seller, its officers, directors, employees, agents and
Affiliates (the "Seller Indemnitees") from and against, and pay or reimburse the
Seller Indemnitees for, any and all Losses resulting from or arising out of:
(a) the inaccuracy of any representation or warranty made by
Buyer herein or in any certificate delivered pursuant to this Agreement;
(b) any failure of Buyer to perform any covenant or agreement
made or contained in this Agreement or to fulfill any other obligation in
respect hereof;
(c) the Assumed Liabilities; and
44
(d) Liabilities with respect to, arising out of or relating to,
the ownership, possession or use of the Acquired Assets and the operation of the
Business on or after the Closing Date.
10.3 Indemnification Procedures.
(a) In order for a Buyer Indemnitee or a Seller Indemnitee (an
"Indemnified Party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving a claim or demand made
by any person or entity against the Indemnified Party (a "Third Party Claim"),
such Indemnified Party must notify the parties obligated to provide
indemnification pursuant to Section 10.1 or 10.2 hereof (each, an "Indemnifying
Party") in writing, and in reasonable detail, of the Third Party Claim promptly
after receipt by such Indemnified Party of written Notice of the Third Party
Claim; provided, however, that failure to give any Notice or make any deliveries
required under this Article 10 shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure. Such notice shall state the nature and
the basis of such claim and, if estimable, a reasonable estimate of the amount
thereof. Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, promptly after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim.
(b) The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel (provided that such counsel is
not reasonably objected to by the Indemnified Party), any Third Party Claim;
provided that, and for so long as, the Indemnifying Party pursues the same in
good faith and diligently and provided that the Third Party Claim does not
relate to an actual or potential Loss to which Section 10.3(e) applies in which
the Indemnified Party is Buyer. If the Indemnifying Party undertakes to defend
or settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Indemnifying Party and
its counsel in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party that are in the Indemnified Party's possession or
control and making employees of the Indemnified Party available on a mutually
convenient basis to provide additional information and explanation of any
materials provided hereunder. Notwithstanding the foregoing, the Indemnified
Party shall have the right to participate in any matter through counsel of its
own choosing at its own expense (unless there is a conflict of interest that
prevents counsel for the Indemnifying Party from representing the Indemnified
Party, in which case the Indemnifying Party will reimburse the Indemnified Party
for the reasonable expenses of its counsel). After the Indemnifying Party has
notified the Indemnified Party of its intention to undertake to defend or settle
any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability, except to the extent
such participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses and out-of-pocket expenses, and except in the case of
a Third Party Claim relating to an actual or potential Loss to which Section
10.3(e) applies in which Buyer is the Indemnified Party.
45
(c) No Indemnifying Party shall, without the written consent of
the Indemnified Party, effect the settlement or compromise of, or consent to
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the Indemnified Party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the Indemnified Party from all Liability arising out of
such action or claim, (ii) does not include a statement as to, or an admission
of, fault, culpability or a failure to act by or on behalf of any Indemnified
Party, and (iii) does not include any injunctive or non-monetary relief.
(d) If the Indemnifying Party does not assume the defense of
any Third Party Claim, then the Indemnified Party may defend against such Third
Party Claim in such manner as it reasonably deems appropriate at the expense of
the Indemnifying Party.
(e) Notwithstanding anything to the contrary in this Article
10, if at any time, in the reasonable opinion of Buyer as the Indemnified Party
(notice of which opinion shall be given in writing to the Indemnifying Party),
any Third Party Claim seeks material, prospective, non-monetary relief against
Buyer, its operation of the Business or its use or operation of the Acquired
Assets, then such Indemnified Party shall have the right to control or assume
(as the case may be) the defense of any such Third Party Claim and the amount of
any judgment or settlement and the reasonable costs and expenses of defense
(including, but not limited to, fees and disbursements of counsel and experts)
shall be included as part of the indemnification obligations of the Indemnifying
Party hereunder. If the Indemnified Party elects to exercise such right, then
the Indemnifying Party shall have the right to participate in, but not control,
the defense of such Third Party Claim at the sole cost and expense of the
Indemnifying Party.
(f) Notice given by Buyer to the Company shall constitute valid
Notice to all Seller Indemnitees, and with respect to any Third Party Claim with
respect to which more than one Seller Indemnitee is an indemnified party or a
potential indemnified party, all such Seller Indemnitees shall select a single
Seller Indemnitee to act as representative for all such Seller Indemnitees with
respect to such Third Party Claim, and (i) such representative shall be
authorized to make authorizations and consents on behalf of each such Seller
Indemnitee, and (ii) Buyer shall, with respect to all matters relating to such
Third Party Claim, be entitled to rely on the statements, authorizations and
consents of such representative as being the statement, authorization or consent
of each such Seller Indemnitee.
(g) In the event an Indemnified Party has indemnification claim
against any Indemnifying Party under the Agreement that does not involve a Third
Party Claim being asserted against or sought to be collected from such
Indemnified Party, the Indemnified Party shall deliver Notice of such claim with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability that it may have to such Indemnified Party, except to
the extent that the Indemnifying Party has been actually prejudiced by such
failure. Such notice shall state the nature and the basis of such claim, and, if
estimable, a reasonable estimate of the amount thereof. If the Indemnifying
Party notifies the Indemnified Party that it does not dispute the claim
described in such Notice or does not respond to such claim within 60 days of
receipt thereof, the Loss arising from the claim specified in such Notice will
be conclusively deemed a
46
liability of the Indemnifying Party and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand following the final
determination thereof. In the event of any dispute of a claim, the Indemnifying
Party and the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations within a
period of thirty (30) days, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
10.4 Survival of Representations and Warranties. The representations
and warranties made in this Agreement shall survive for a period of 12 months
from the Closing Date and shall not be extinguished by the Closing or any
investigation made by or on behalf of any party hereto.
10.5 Termination of Indemnification. The obligations to indemnify and
hold harmless any party pursuant to Section 10.1 or Section 10.2 shall terminate
on the date that is 12 months after the Closing Date (the "Indemnity Termination
Date"). If, prior to the Indemnity Termination Date, an Indemnified Party shall
have given notice to the Indemnifying Party of a claim for indemnification then
the right to indemnification with respect to such claim shall remain in effect
without regard to when such matter shall have been finally determined.
10.6 Limitations on Indemnification. The indemnification provided for
in Sections 10.1 and 10.2 shall be subject to the following limitations:
(a) Sellers shall not be obligated to pay any amounts for
indemnification under Section 10.1(a) until the aggregate indemnification
payments equal $1.25 million (the "Basket Amount"), whereupon Sellers shall be
obligated to pay all amounts in excess of the Basket Amount up to the Indemnity
Escrow. Sellers shall be obligated to pay any amounts for indemnification under
Sections 10.1(b) and 10.1(c) from the first dollar of Loss in full up to the
Indemnity Escrow. Buyer shall not be obligated to pay any amounts for
indemnification under Section 10.2(a) until the aggregate indemnification
payments equal the Basket Amount, whereupon Buyer shall be obligated to pay all
amounts in excess of the Basket Amount up to $25 million. Buyer shall be
obligated to pay any amounts for indemnification under Sections 10.2(b) and
10.2(c) from the first dollar of Loss in full up to $25 million.
(b) The Indemnity Escrow (as such may be reduced from time to
time by disbursements in accordance with Section 4.2 herein) shall be the Buyer
Indemnitees' sole and exclusive recourse for the satisfaction of any
indemnification obligations of Sellers pursuant to Section 10.1 and in no event
shall Sellers' indemnification obligations in the aggregate exceed the amount of
the Indemnity Escrow. In no event shall Buyer's indemnification obligations
under this Agreement exceed $25 million.
(c) The indemnification provided for in this Article 10 shall
be the exclusive right and remedy with respect to any claim or cause of action
based upon, relating to or arising out of this Agreement or otherwise in respect
of the transactions contemplated hereby, whether such claim or cause of action
arises out of any contract, tort or otherwise and no such claim or cause of
action shall be enforceable unless made in accordance with the procedures, and
within the time periods, set forth in this Article 10. Notwithstanding the
foregoing sentence, either party shall be entitled to any additional remedies
that may be available under law or equity for a breach of a representation or
warranty to the extent such party can demonstrate fraud or willful
47
or knowing misrepresentation by the other party in a non-appealable final action
before a court of competent jurisdiction.
(d) (i) Notwithstanding any other provision of this Agreement,
Sellers shall be obligated for Losses in respect of Liabilities and obligations
arising under any Environmental Law under this Article 10 only to the extent
that:
(x) investigation and/or remediation of any Hazardous
Substance is required under an applicable Environmental Law
or by a Governmental Entity or pursuant to a claim brought
by any third party;
(y) the remediation standards selected under the
applicable Environmental Law are cost-effective and
reasonable under the circumstances; and
(z) the methods selected for conducting the
investigation and/or remediation are cost-effective and
reasonable under the circumstances.
(ii) If any claim arising under this Article 10 involves
contamination that occurred both before and after the Closing Date, the cost of
remediation shall be allocated between Buyer and Sellers in proportion to each
party's contribution to the contamination to the extent such contribution can be
determined and otherwise in proportion to the period of time each party has
owned or had an interest in the property.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses. Except as set forth in this Agreement and whether or
not the transactions contemplated hereby are consummated, each party hereto
shall bear all costs and expenses incurred or to be incurred by such party in
connection with this Agreement and the consummation of the transactions
contemplated hereby. As between Buyer and Sellers, Sellers shall bear all costs
of any Persons (other than Buyer, its agents or Affiliates), entitled to
reimbursement by the Bankruptcy Court.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Sellers without the prior written
consent of Buyer, or by Buyer without the prior written consent of Sellers,
provided, that Buyer may assign its rights hereunder to one or more wholly-owned
Subsidiaries of Buyer, which assignment shall not relieve Buyer of its
obligation hereunder. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
11.3 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of Seller and Buyer, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement except as expressly set forth herein. Without limiting the
48
foregoing, no direct or indirect holder of any equity interests or securities of
either Seller or Buyer (whether such holder is a limited or general partner,
member, stockholder or otherwise), nor any Affiliate of either Seller or Buyer,
nor any Representative, or controlling Person of each of the parties hereto and
their respective Affiliates, shall have any liability or obligation arising
under this Agreement or the transactions contemplated hereby.
11.4 Notices. All notices, demands, requests, consents, approvals or
other communications (collectively, "Notices") required or permitted to be given
hereunder or that are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by a nationally recognized overnight
delivery service with charges prepaid, or transmitted by hand delivery, or
facsimile, addressed as set forth below, or to such other address as such party
shall have specified most recently by written Notice. Notice shall be deemed
given on the date of service or transmission if personally served or transmitted
by facsimile with confirmation of receipt; provided, that if delivered or
transmitted on a day other than a Business Day or after normal business hours,
notice shall be deemed given on the next Business Day. Notice otherwise sent as
provided herein shall be deemed given on the next Business Day following timely
deposit of such Notice with an overnight delivery service:
If to any Seller: National Steel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and Chief Financial
Officer
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
With copies to: National Steel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President,
General Counsel and Secretary
Tel: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
(Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
If to Buyer: AK Steel Corporation
49
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice
President and Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Rejection of or refusal to accept any Notice, or the inability to deliver any
Notice because of changed address of which no Notice was given, shall be deemed
to be receipt of the Notice as of the date of such rejection, refusal or
inability to deliver.
11.5 Choice of Law. This Agreement shall be construed and interpreted,
and the rights of the parties shall be determined, in accordance with the
substantive laws of the State of Delaware, without giving effect to any
provision thereof that would require the application of the substantive laws of
any other jurisdiction, except to the extent that such laws are superseded by
the Bankruptcy Code.
11.6 Entire Agreement; Amendments and Waivers. This Agreement, the
Confidentiality Agreement and all agreements entered into pursuant hereto and
all certificates and instruments delivered pursuant hereto and thereto
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties. This
Agreement may be amended, supplemented or modified, and any of the terms,
covenants, representations, warranties or conditions may be waived, only by a
written instrument executed by the Buyer and the Company, or in the case of a
waiver, by the party waiving compliance. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), and no such waiver shall constitute a
continuing waiver unless otherwise expressly provided.
11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Counterparts to this
Agreement may be delivered via facsimile. In proving this Agreement, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
11.8 Invalidity. If any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, the
parties shall use their reasonable efforts, including the amendment of this
Agreement, to ensure that this Agreement shall reflect as closely as practicable
the intent of the parties hereto on the date hereof.
50
11.9 Headings. The table of contents and the headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of, or to affect the meaning or interpretation of, this
Agreement.
11.10 Exclusive Jurisdiction. Without limiting any party's right to
appeal any order of the Bankruptcy Court, (a) the Bankruptcy Court shall retain
exclusive jurisdiction to enforce the terms of this Agreement and to decide
(insofar as they relate to Sellers) any claims or disputes which may arise or
result from, or be connected with, this Agreement, any breach or default
hereunder, or the transactions contemplated hereby, and (b) any and all claims,
actions, causes of action, suits and proceedings related to the foregoing shall
be filed and maintained only in the Bankruptcy Court, and the parties hereby
consent to and submit to the jurisdiction and venue of the Bankruptcy Court and
shall receive Notices at such locations as indicated in Section 11.4.
11.11 WAIVER OF RIGHT TO TRIAL BY JURY. SELLERS AND BUYER HEREBY WAIVE
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
11.12 Beneficiaries. Nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
under or by reason of this Agreement, except as expressly provided herein.
11.13 Counting. If the due date for any action to be taken under this
Agreement (including the delivery of Notices) is not a Business Day, then such
action shall be considered timely taken if performed on or prior to the next
Business Day following such due date.
11.14 Preparation of this Agreement. Buyer and Sellers hereby
acknowledge that (i) Buyer and Sellers jointly and equally participated in the
drafting of this Agreement and all other agreements contemplated hereby, (ii)
Buyer and Sellers have been adequately represented and advised by legal counsel
with respect to this Agreement and the transactions contemplated hereby, and
(iii) no presumption shall be made that any provision of this Agreement shall be
construed against either party by reason of such role in the drafting of this
Agreement and any other agreement contemplated hereby.
[Remainder of Page Intentionally Left Blank]
51
IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly
executed and delivered by the duly authorized officers of Sellers and Buyer as
of the date first above written.
AK STEEL CORPORATION
By: _____________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and Chief Financial
Officer
NATIONAL STEEL CORPORATION
By: _____________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and Chief Executive
Officer
D. W. PIPELINE COMPANY
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
GRANITE INTAKE CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL ACQUISITION CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
i
NATIONAL CASTER ACQUISITION CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL CASTER OPERATING COMPANY
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL CASTING CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL COATING LIMITED CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL COATING LINE CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
ii
NATIONAL MATERIALS PROCUREMENT CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NATIONAL PICKLE LINE CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
NS HOLDINGS CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
PROCOIL CORPORATION
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
iii
NATIONAL STEEL PELLET COMPANY
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
▇▇▇▇▇ ORE MINING COMPANY
By: _____________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
iv
