Exhibit 2.1
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PURCHASE AND SALE AGREEMENT
AMONG
NORTH STAR STEEL COMPANY,
UNIVERSAL TUBULAR SERVICES, INC.,
XXXXXXX, XXXXXXXXXXXX,
LONE STAR TECHNOLOGIES, INC.,
AND
STAR SEAMLESS, INC.
DATED AS OF AUGUST 16, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.....................................................................1
ARTICLE II SALE AND PURCHASE OF PURCHASED ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS.....................................9
2.1 Purchased Assets......................................................9
2.2 Assignment of Contracts..............................................10
2.3 Procedures for Assets Not Transferable...............................11
2.4 [Reserved]. .........................................................11
2.5 Excluded Assets......................................................11
2.6 Assumed Obligations..................................................12
2.7 Excluded Obligations.................................................12
2.8 Schedule Updates.....................................................13
ARTICLE III PURCHASE PRICE AND PAYMENT.....................................................13
3.1 Payment of Purchase Price............................................13
3.2 Purchase Price Adjustment............................................13
3.3 Allocation of Purchase Price.........................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.......................................14
4.1 Existence, Good Standing, Residency..................................14
4.2 Due Authorization....................................................15
4.3 Consents.............................................................15
4.4 Absence of Conflicts.................................................15
4.5 Financial Statements ................................................16
4.6 Title, Sufficiency and Condition of Assets...........................16
4.7 Compliance with Laws.................................................17
4.8 Taxes...... .........................................................17
4.9 Litigation...........................................................17
4.10 Brokers..............................................................18
4.11 Contracts............................................................18
4.12 Employee Benefit Plans; Affected Employees...........................18
4.13 Environmental Matters................................................18
4.14 Labor Matters........................................................19
4.15 Intellectual Property................................................19
4.16 Inventory............................................................20
4.17 Accounts Receivable..................................................20
4.18 Books and Records....................................................20
4.19 No Material Adverse Effect...........................................20
4.20 Major Customers or Distributors; Major Suppliers.....................21
4.21 Insurance............................................................21
4.22 Affiliate Transactions...............................................21
4.23 Backlog..............................................................22
4.24 Employees............................................................22
4.25 Derivative Contracts.................................................22
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4.26 Disclosure...........................................................22
4.27 Disclaimer...........................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................................23
5.1 Existence and Good Standing..........................................23
5.2 Due Authorization....................................................23
5.3 Consents.............................................................23
5.4 Absence of Conflicts.................................................24
5.5 [Reserved]...........................................................24
5.6 Litigation...........................................................24
5.7 Brokers..............................................................24
ARTICLE VI COVENANTS OF SELLER............................................................24
6.1 Conduct of Business..................................................24
6.2 Negative Covenants Relating to Conduct
of the Business......................................................25
6.3 Delivery of Monthly Financial Reports................................26
6.4 Post-Closing Confidentiality.........................................26
6.5 Financial Disclosure.................................................26
ARTICLE VII COVENANTS OF BUYER AND SELLER..................................................26
7.1 HSR Act Notification; Other Consents.................................26
7.2 Tax Matters..........................................................27
7.3 Access to Information, Inspections, Confidentiality..................28
7.4 Title Commitment and Survey..........................................30
7.5 Motor Vehicles.......................................................31
7.6 Taxes ...............................................................31
7.7 Additional Tax Matters...............................................31
7.8 Bulk Sales Compliance................................................32
7.9 No-Solicitation......................................................32
7.10 Committed Financing..................................................32
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS
OF BUYER.............................................................33
8.1 Accuracy of Representations and Warranties...........................33
8.2 Compliance with Agreements and Covenants.............................33
8.3 Xxxx-Xxxxx-Xxxxxx; Governmental Authorities..........................33
8.4 Consents.............................................................34
8.5 No Injunctions.......................................................34
8.6 Deliveries...........................................................34
8.7 Title and Survey.....................................................34
8.8 No Material Adverse Effect...........................................34
8.9 Committed Financing..................................................34
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER............................................................34
9.1 Accuracy of Representations and Warranties...........................34
9.2 Compliance with Agreements and Covenants.............................35
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9.3 Xxxx-Xxxxx-Xxxxxx....................................................35
9.4 Consents.............................................................35
9.5 No Injunctions.......................................................35
9.6 Deliveries...........................................................35
ARTICLE X EMPLOYEES AND BENEFIT PLANS....................................................35
10.1 Offer of Employment..................................................35
10.2 Severance Benefits...................................................36
10.3 Vacation.............................................................36
10.4 Benefits.............................................................36
10.5 Termination Notice Obligations/WARN Act Notification.................37
10.6 Employment-Related Indemnification...................................37
10.7 Employee Records.....................................................38
10.8 Liabilities Under Benefit Plans......................................38
ARTICLE XI CLOSING........................................................................38
11.1 Closing..............................................................38
11.2 Deliveries by Seller.................................................38
11.3 Deliveries by Buyer..................................................39
ARTICLE XII TERMINATION....................................................................40
12.1 Termination..........................................................40
12.2 Effect of Termination................................................40
12.3 Termination Fee.......................................................41
ARTICLE XIII INDEMNIFICATION................................................................41
13.1 Survival; Remedy for Breach..........................................41
13.2 Indemnification by Seller............................................41
13.3 Indemnification by Buyer.............................................43
13.4 Claims ..............................................................43
13.5 Assumption of Defense................................................44
13.6 Settlement or Compromise.............................................44
13.7 Failure of Indemnifying Person to Act................................44
13.8 Exclusive Remedy/Limitations.........................................45
ARTICLE XIV DISPUTE RESOLUTION.............................................................45
14.1 Mutual Dispute Resolution............................................45
14.2 Mediation............................................................45
14.3 Mediator.............................................................45
14.4 Specifics of Mediation...............................................45
14.5 Procedures...........................................................46
14.6 Confidentiality......................................................46
14.7 Continued Performance................................................46
14.8 Equitable Relief.....................................................46
ARTICLE XV MISCELLANEOUS..................................................................46
15.1 Disclosure Schedules.................................................46
15.2 Expenses.............................................................46
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15.3 Amendment............................................................46
15.4 Interpretation.......................................................46
15.5 Notices..............................................................47
15.6 Waivers..............................................................47
15.7 Successors and Assigns...............................................48
15.8 No Third Party Beneficiaries.........................................48
15.9 Publicity............................................................48
15.10 Further Assurances/Cooperation.......................................48
15.11 Transition Services..................................................49
15.12 Severability.........................................................49
15.13 Entire Understanding.................................................49
15.14 Applicable Law.......................................................49
15.15 Submission to Jurisdiction...........................................49
15.16 Counterparts.........................................................49
EXHIBITS
Exhibit A Assignment and Assumption Agreement
Exhibit B Non-Competition Agreement
Exhibit C Preliminary Purchase Price Allocation
Exhibit D Transition Services Agreement
Exhibit E Trademark License Agreement
Schedule 1.1(b) Knowledge of Seller
Schedule 1.1(c) Knowledge of the Buyer
Schedule 2.1(a) Equipment and Fixed Assets
Schedule 2.1(b) Data Processing Hardware and Software (Owned)
Schedule 2.1(d) Owned Real Property
Schedule 2.2(a) Real Property Leases
Schedule 2.2(b) Personal Property Leases
Schedule 2.2(c) Assigned Contracts
Schedule 2.2(d) Intellectual Property Agreements
Schedule 2.2(e) Data Processing Hardware and Software (Leased)
Schedule 2.5 Excluded Assets
Schedule 4.1 Good Standing
Schedule 4.3 Material Consents of Seller
Schedule 4.5 Business Financial Statements
Schedule 4.6(a) Title to Purchased Assets
Schedule 4.6(b) Adequacy of Assets
Schedule 4.7 Compliance with Laws
Schedule 4.8(b) Tax Matters
Schedule 4.9 Litigation of Seller
Schedule 4.12(c) Employee Benefit Matters
Schedule 4.13 Environmental Matters
Schedule 4.14 Labor Matters
Schedule 4.15 Intellectual Property Exceptions
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Schedule 4.19 Material Adverse Effect
Schedule 4.20(a) Customers
Schedule 4.20(b) Suppliers
Schedule 4.22 Affiliate Transactions
Schedule 4.25 Derivative or Hedging Contracts
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT is made as of the 16th day of
August, 2001, by and among LONE STAR TECHNOLOGIES, INC., ("LSS"), a Delaware
corporation, STAR SEAMLESS, INC., a Delaware corporation ("Star") (LSS and Star
being individually and collectively referred to herein as "Buyer"), XXXXXXX,
XXXXXXXXXXXX, a Delaware corporation ("Cargill"), NORTH STAR STEEL COMPANY
("North Star"), a Minnesota corporation, and UNIVERSAL TUBULAR SERVICES, INC., a
Texas corporation ("UTS") (North Star and UTS being individually and
collectively referred to herein as "Seller").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer substantially all of the assets constituting the Business (as
defined below), and Buyer is willing to assume certain obligations of the
Business, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Certain capitalized terms used herein have the meanings set forth
below.
"Accounts Payable" shall mean all trade and non-trade payables and
accrued expenses of Seller which in any case are payable as a result of goods
sold to, or services provided for or to, Seller exclusively as part of the
Business, excluding any Taxes payable, and excluding any accrued expenses for
which Seller retains the corresponding liability pursuant to the terms of this
Agreement, and excluding amounts due by Seller to its Affiliates for short term
intercompany borrowings.
"Accounts Receivable" shall mean all trade and non-trade receivables
of Seller which in any case are payable as a result of goods sold or services
provided by Seller exclusively as part of the Business, excluding any
intercompany transactions, Tax refunds or credits.
"Affected Employees" shall mean all employees of Seller principally
employed in the Business.
"Affiliate" shall mean, with respect to any specified Person, any
other Person who, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person.
Without limiting the generality of the foregoing, a Person shall be deemed to
"own" another Person if it owns, directly or indirectly, more than 50% of the
capital stock or other equity interest of such other Person generally entitled
to vote, without regard to specified contingencies, for the election of
directors or equivalent governing body of such other Person.
"Agreement" shall mean this Purchase and Sale Agreement, including
all exhibits and schedules hereto, as it may be amended, supplemented or
modified from time to time in accordance with its terms.
"Ancillary Agreements" means the Assignment and Assumption
Agreements, the Non-Competition Agreement, the Transition Services Agreement,
the Trademark License Agreement, the Conveyance Documents and all other
documents to be delivered pursuant to the terms of this Agreement or the terms
of any of the aforementioned agreements.
"Assigned Contracts" has the meaning set forth in Section 2.2(c).
"Assignment and Assumption Agreements" means the Assignment and
Assumption Agreements executed by Seller and Buyer, substantially in the form of
Exhibit A.
"Assumed Obligations" has the meaning set forth in Section 2.6.
"Books and Records" has the meaning set forth in Section 2.1(e).
"Business" shall mean the seamless tubular steel products production
business as presently conducted by Seller at its Youngstown, Ohio and Houston,
Texas facilities, including the production and marketing of the following
seamless tubular steel products: alloy casing, carbon casing, line and standard
pipe, alloy coupling stock, carbon coupling stock and hot finished mechanical
tubing; but excluding the Excluded Businesses.
"Business Day" shall mean any day of the year other than (i) any
Saturday or Sunday or (ii) any other day on which banks located in New York, New
York are generally closed for business.
"Business Financial Statements" shall mean the audited consolidated
financial statements of the Business as of and for the periods ending May 31,
1999, May 31, 2000 and May 31, 2001; consisting of a balance sheet, statements
of earnings, cash flows and stockholder's equity for the years then ended
regarding the Business, together with the notes thereto and the report thereon
of Seller's certified public accountants.
"Buyer" has the meaning set forth in the preamble hereto.
"Buyer Group" has the meaning set forth in Section 13.2.
"Cargill" has the meaning set forth in the preamble hereto.
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"Cash" shall mean all cash, certificates of deposit, bank accounts
and other cash equivalents, together with all accrued but unpaid interest
thereon.
"Claim" has the meaning set forth in Section 13.4.
"Cleanup" shall mean all reasonable and necessary actions required by
a Governmental Authority pursuant to Environmental Law to remove, treat or
remediate the Release or threatened Release of Hazardous Materials.
"Closing" shall mean the consummation of the transactions
contemplated herein in accordance with Article XI.
"Closing Date" has the meaning set forth in Section 11.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Committed Financing" has the meaning set forth in Section 7.10.
"Confidentiality Agreement" shall mean the Confidentiality Agreement
dated as of January 29, 2001 between Buyer and the Seller.
"Consent" has the meaning set forth in Section 4.3.
"Contract" shall mean (a) any contract, lease, easement, license,
sales order, purchase order or supply agreement, whether oral or written, or (b)
any commitment or understanding which is intended to be binding and enforceable,
but shall not include any Employee Plan or Permit.
"Conveyance Documents" has the meaning set forth in Section 11.2(a).
"Dollars" or numbers preceded by the symbol "$" shall mean amounts in
United States Dollars.
"Effective Time" shall mean 12:01 a.m., central time, on the morning
of the Closing Date.
"Employee Plan" means any "employee welfare benefit plan" or
"employee pension benefit plan" within the meaning of Sections 3(1) and 3(2) of
ERISA and any other fringe benefit plan or program, pension, retirement,
savings, disability, medical, dental, health, life (including, without
limitation, any individual life insurance policy under which any Affected
Employee is the named insured and as to which Seller or their ERISA Affiliates
makes premium payments, whether or not Seller is the owner, beneficiary or both
of such policy), death benefit, group insurance, post-retirement insurance,
profit-sharing, deferred compensation, stock option, cash option, stock
purchase, bonus, incentive, vacation pay, severance pay, or other employee
benefit plan, trust, arrangement, Contract, agreement, policy or commitment
(including, without limitation, any pension plan and any welfare plan within the
meaning of any applicable Law), whether or not any of the foregoing is funded or
3
insured and whether written or oral, which is intended to provide or does in
fact provide benefits to any or all Affected Employees or under which any
Affected Employees have accrued and remain entitled to benefits, and (a) to
which Seller is a party or by which Seller, and/or any of the rights, properties
or assets of Seller or any of its Affiliates, is bound; or (b) with respect to
which Seller has any liability (whether or not Seller still maintains such plan,
trust, arrangement, contract, agreement, policy or commitment).
"Environmental Condition" shall mean any violation of Environmental
Laws at the Real Property or any matter that requires remediation under
Environmental Laws at the Real Property based on the current use of the relevant
Real Property, which violation or matter is specifically identified in the Final
Environmental Report (as defined below); provided, however, Environmental
Condition shall not include any matters that are disclosed on Schedule 4.13 as
of the date of execution of this Agreement.
"Environmental Law" shall mean, as of the Closing Date, any
applicable federal, state or local law (including common law), statute, code,
ordinance, rule or regulation relating to the pollution or protection of the
environment, natural resources damages, or public or employee health and safety
applicable to the Business or the Purchased Assets as of the Closing Date, and
includes without limitation, the Clean Air Act, 42 X.X.X.xx. 7401 et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
X.X.X.xx. 9601 et seq.; the Federal Water Pollution Control Act, 33 X.X.X.xx.
1251 et seq.; the Hazardous Material Transportation Act 49 X.X.X.xx. 1801 et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act 7 X.X.X.xx. 136 et
seq.; the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 X.X.X.xx.
6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the
Occupational Safety & Health Act of 1970, 29 X.X.X.xx. 651 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq.; as such laws have been
amended or supplemented prior to the Closing Date and the regulations
promulgated pursuant thereto prior to the Closing Date, and all analogous state
or local statutes enacted prior to the Closing Date.
"Equipment and Fixed Assets" has the meaning set forth in Section
2.1(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means Seller and all other trades or businesses,
whether or not incorporated, which together with Seller would be deemed a
"single employer" within the meaning of Section 414(b), (c) or (m) of the Code.
"Excluded Assets" has the meaning set forth in Section 2.5.
"Excluded Businesses" shall mean all the businesses performed by
Seller and its Affiliates except for the Business, including without limitation
Seller's steel production business with respect to products other than seamless
tubular steel products of alloy casing, carbon casing, line and standard pipe,
alloy coupling stock, carbon coupling stock and hot finished mechanical tubing.
4
"Excluded Employees" has the meaning set forth in Section 10.1.
"Excluded Obligations" has the meaning set forth in Section 2.7.
"Final Purchase Price" has the meaning set forth in Section 3.2(c).
"Final Purchase Price Allocation" has the meaning set forth in
Section 3.3.
"Final Statement" has the meaning set forth in Section 3.2 (b).
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States.
"Governmental Authority" shall mean the government of the United
States, Canada or any other foreign country or any state, provincial or
political subdivision thereof and any entity, body or authority exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Materials" means any substance, material or waste
classified, characterized or otherwise regulated as hazardous, toxic, pollutant,
contaminants or words of similar meaning under Environmental Law, including
without limitation, petroleum and petroleum products or byproducts, asbestos or
asbestos-containing materials and polychlorinated biphenyls.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Indemnified Person" shall mean the Person or Persons entitled to, or
claiming a right to, indemnification under Article XIII.
"Indemnifying Person" shall mean the Person or Persons claimed by the
Indemnified Person to be obligated to provide indemnification under Article
XIII.
"Independent Accounting Firm" has the meaning set forth in Section
3.2(b).
"Intellectual Property" shall mean intellectual property of every
kind and nature, including, without limitation, all inventions, information,
data, samples, specifications, compositions, processes, designs and know-how,
including confidential information and trade secrets (whether or not patentable
or reduced to practice), confidential or proprietary technical and business
information, computer software, domain names and all United States and foreign
patents and xxxxx patents (including continuations, continuations-in-part,
divisions, reissues, re-examinations, extensions and renewals thereof) and
patent applications, registered and unregistered trade names, brand names,
trademarks, service names and service marks, logos and designs (and applications
for registration of the same) and all goodwill symbolized thereby or associated
therewith, and copyrights and copyright registrations (and applications for the
same) relating thereto, and all extensions or renewals thereof, United States
5
and foreign registrations and applications to register copyrights, technical
manuals and documentation made or used in connection with any of the foregoing.
"Inventory" has the meaning set forth in Section 2.1(c).
"Knowledge" shall mean, with respect to Seller, the actual knowledge
of the persons listed on Schedule 1.1(b) and such facts and other matters as
such persons could be expected to become aware of upon reasonable inquiry of
Seller personnel in a position to know, and with respect to Buyer, the actual
knowledge of the persons listed on Schedule 1.1(c) and such facts and other
matters as such persons could be expected to become aware of upon reasonable
inquiry of Buyer personnel in a position to know.
"Law" shall mean, as of the Closing Date, any law, statute, code,
regulation, ordinance, or rule enacted or promulgated by any Governmental
Authority.
"Leased Real Property" has the meaning set forth in Section 4.6(b).
"Liens" shall mean mortgages, liens, charges, restrictions, pledges,
security interests, options, leases or subleases, claims, and any other rights
of any third party, easements, encroachments or encumbrances.
"Litigation" has the meaning set forth in Section 4.9.
"Loss" or "Losses" mean any and all damages, losses, actions,
proceedings, causes of action, obligations, liabilities, claims, encumbrances,
penalties, demands, assessments, judgments, costs and expenses including,
without limitation, removal, remediation or clean-up costs, court costs and
reasonable attorneys' and consultants' fees and costs of litigation but shall
not include consequential, indirect, special, exemplary, punitive or incidental
damages, except with regard to Third Party claims.
"Lowest Cost Response" shall mean (a) the minimum response necessary
to comply with Environmental Laws (including any site-specific, risk-based
standards or the use of engineering or institutional controls or natural
attenuation); (b) based on the current use of the property; (c) that can be
achieved for the lowest financial cost as compared with alternative potential
responses, provided that taking no action shall constitute an acceptable Lowest
Cost Response if taking no action is determined to be consistent with the
foregoing criteria.
"Material Adverse Effect" means any circumstances, change or effect
that has a material and adverse effect on the operations or financial condition
of the Business, taken as a whole; but specifically excluding an effect
resulting from (a) general, financial, economic or industry conditions also
affecting other similarly situated Persons; or (b) business changes due solely
to the announcement of an impending sale of the Business to Buyer.
"Material Contract" has the meaning set forth in Section 4.11.
6
"Non-Competition Agreement" means the Non-Competition Agreement
between Cargill, Seller and Buyer, substantially in the form of Exhibit B.
"Other Current Assets" has the meaning set forth in Section 2.1(g).
"Owned Real Property" means the real property owned by Seller listed
on Schedule 2.1(d).
"Permits" shall mean permits, tariffs, authorizations, licenses,
certificates, variances, interim permits, approvals, franchises and rights under
any Law or otherwise required by any Governmental Authority and any applications
for the foregoing which are necessary for Seller to engage in the Business as
currently conducted.
"Permitted Encumbrances" shall mean (a) Permitted Liens, (b)
easements, covenants, rights-of-way and other encumbrances or restrictions of
record, (c) zoning, building and other similar restrictions, (d) Liens that have
been placed by any developer, landlord or other third party on any Leased Real
Property which do not materially and adversely affect the operation of the
Business, (e) contractual rights of third parties under the Purchased Contracts,
(f) unrecorded easements, covenants, rights-of-way or other restrictions, none
of which unrecorded items have a Material Adverse Effect on the operations of
the Business as presently conducted.
"Permitted Liens" shall mean (a) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business, (b) Liens for Taxes, assessments and other governmental charges which
are not due and payable or which may hereafter be paid without penalty or which
are being contested in good faith by appropriate proceedings and (c) other
imperfections of title or encumbrances, if any, which imperfections of title or
other encumbrances do not individually or in the aggregate, have a Material
Adverse Effect on the operation of the Business as presently conducted.
"Person" shall mean any individual, corporation, proprietorship,
firm, partnership, limited liability company, trust, association or other
entity.
"Personal Property Leases" has the meaning set forth in Section
2.2(b).
"Property Taxes" has the meaning set forth in Section 7.2(a).
"Pre-Transfer Period" has the meaning set forth in Section 7.2(a).
"Post-Transfer Period" has the meaning set forth in Section 7.2(a).
"Purchase Price" has the meaning set forth in Section 3.1.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Purchased Contracts" has the meaning set forth in Section 2.2.
7
"Rail Contract" means the Rail Transportation Contract between North
Star and Norfolk Southern Railway Company effective June 1, 1999 including all
amendments and appendices thereto.
"Real Property" means the Owned Real Property and the Leased Real
Property.
"Real Property Leases" has the meaning set forth in Section 2.2(a).
"Release" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal or leaching into the
environment.
"Retained Off-Site Environmental Liabilities" means the obligations
and liabilities of Seller arising out the (a) Four County Landfill Superfund
Site; (b) 7-7 Merger Superfund Site; and (c) Petroleum Recovery Services
Superfund Site, as each is described in Schedule 4.13.
"Seller" has the meaning set forth in the Preamble hereto.
"Seller Group" has the meaning set forth in Section 13.3.
"Statement of Working Capital" has the meaning set forth in Section
3.2(a).
"Stock Offering" means the issuance by LSS of not less than
$130,000,000.00 of LSS common stock.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means
any federal, state, provincial, county, local or foreign taxes, charges, fees,
duties (including customs duties), levies or other assessments, including
income, gross receipts, net proceeds, ad valorem, turnover, real and personal
property (tangible and intangible), sales, use, franchise, excise, value added,
stamp, leasing, lease, user, transfer, fuel, excess profits, occupational,
interest equalization, windfall profits, license, payroll, environmental,
capital stock, disability, severance, employee's income withholding, other
withholding, unemployment and Social Security taxes, which are imposed by any
Governmental Authority, and such term shall include any interest, penalties or
additions to tax attributable thereto.
"Tax Return" shall mean any report, return or other information
required to be supplied to a Governmental Authority in connection with any
Taxes.
"Termination Fee" has the meaning set forth in Section 12.3.
"Third Party" means a Person other than Buyer, Seller, or their
Affiliates.
"Title Company" has the meaning set forth in Section 7.4.
"Trademark License Agreement" means the Trademark License Agreement
between Seller and Buyer, substantially in the form of Exhibit E.
8
"Transferred Employee" has the meaning set forth in Section 10.1.
"Transition Services Agreement" means the Transition Services
Agreement between Cargill and Buyer, substantially in the form of Exhibit D.
"U.S." means United States of America.
"Working Capital" has the meaning set forth in Section 3.2(a).
ARTICLE II
SALE AND PURCHASE OF PURCHASED ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS
2.1 Purchased Assets. Subject to and upon the terms and conditions
set forth in this Agreement, on the Closing Date, Seller shall sell, assign,
convey, transfer and deliver to Buyer, and Buyer shall purchase, acquire and
take assignment and delivery of all of the right, title and interest of Seller
in and to, the assets, property and rights of every nature, kind and
description, tangible and intangible, whether real, personal or mixed, whether
accrued, contingent or otherwise and whether now existing or hereafter acquired
(excluding the Excluded Assets), which assets are exclusively related to or are
used or held for use exclusively in connection with the Business as the same may
exist on the Closing Date (collectively with the Purchased Contracts described
in Section 2.2, the "Purchased Assets"), including without limitation, all those
items in the following categories that conform to the definition of the term
Purchased Assets:
(a) Equipment and Fixed Assets. All tangible personal
property of every kind and description (other than data processing hardware and
software and inventory), including without limitation all buildings, structures,
improvements, plants, facilities, fixtures, machinery, equipment, fixed assets,
furniture, tools, automobiles, trucks, loaders and other vehicles, maintenance
equipment and materials and all other tangible personal property of every kind
and description (other than data processing hardware and software), as set forth
on Schedule 2.1(a) (collectively, the "Equipment and Fixed Assets");
(b) Data Processing Hardware and Software. All data
processing hardware and software listed on Schedule 2.1(b);
(c) Inventory. All supplies, materials and other
inventories, including, without limitation, scrap steel, additives and alloys,
electrodes, refractories and other consumables used in the steel making process,
packaging, spare parts, warehoused and consigned inventories and inventories
covered by purchase orders or held by distributors, work-in-process, components
and finished goods (collectively, the "Inventory");
(d) Owned Real Property. The Owned Real Property set forth
in Schedule 2.1(d);
9
(e) Information and Records. Specifications, sales records,
service records, customer lists and files, plans and designs of fixtures and
equipment, monitoring and test records and subject to obtaining any necessary
consents, existing confidentiality obligations, other books and records, ("Books
and Records") as are in Seller's care, custody or control; provided that Seller
and Cargill shall be permitted to keep and maintain copies of any Books and
Records which are reasonably necessary or desirable to document, support or
further the Excluded Businesses, Seller's accounting, legal or tax claims and
positions with respect to the Excluded Obligations, Excluded Assets, and other
ongoing obligations under the Agreement with respect to the Business;
(f) Other Intangibles. All goodwill, if any;
(g) Other Current Assets. All prepaid expenses, credits,
deposits (other than deposits of Cash with banks, other financial institutions
or with Seller's Affiliates), claims, prepayments, refunds, rebates and other
similar items ("Other Current Assets");
(h) Permits. All permits and permit applications that are
legally capable of being transferred and are necessary, or required by
applicable Laws, for Seller to own, lease and/or operate the Purchased Assets or
to conduct the Business as it is presently conducted;
(i) Third Party Claims. Except as set forth in Schedule 2.5
and except for the claims and causes of action of Seller in connection within
the litigation matters listed on Schedule 4.9, all rights, claims, causes of
action and rights of set-off against Third Parties including, but not limited
to, all rights against suppliers under warranties covering any of the Inventory
or Equipment and Fixed Assets; and
(j) Accounts Receivable. All Accounts Receivable of the
Business held by Seller as of the Closing Date.
2.2 Assignment of Contracts. Subject to the terms and conditions of
this Agreement and the need to obtain any required consent from any Third Party,
as of the Closing Date, Seller shall assign and transfer to Buyer all of its
right, title and interest in and to, and Buyer shall assume all of the
obligations of Seller under all Contracts of the Seller that relate exclusively
to the Business, as the same may exist on the Closing Date, including but not
limited to, the following:
(a) Real Property Leases. The leases to or by Seller of the
real property which are set forth on Schedule 2.2(a) (collectively, the "Real
Property Leases");
(b) Personal Property Leases. All leases to or by Seller of
personal property, including without limitation, those leases set forth on
Schedule 2.2(b), (collectively, the "Personal Property Leases");
10
(c) Certain Contracts. All Contracts for the purchase or
sale by Seller of Inventory, Equipment and Fixed Assets or other goods,
materials and/or services and all other Contracts to which Seller is a party,
including without limitation, those Contracts listed on Schedule 2.2(c),
(collectively, the "Assigned Contracts");
(d) Intellectual Property Contracts. All Third Party
Intellectual Property confidentiality, research, development and license
Contracts, including without limitation, those listed on Schedule 2.2(d); and
(e) Data Processing Hardware and Software. All leases and
licenses listed on Schedule 2.2(e) relating to the licensed data processing
software and leased data processing hardware.
All of the foregoing are referred to herein collectively as the
"Purchased Contracts." Anything in this Agreement to the contrary
notwithstanding, except as expressly provided in Section 2.3 below, and solely
with respect to any Contract, the unassignability of which would not result in a
Material Adverse Effect, this Agreement shall not constitute an agreement to
assign any Contract or any claim or right or any benefit or obligation
thereunder or resulting therefrom if an assignment thereof, without the Consent
of a Third Party, would constitute a breach or violation thereof and if consent
to such assignment is not obtained on or prior to the Closing Date.
2.3 Procedures for Assets Not Transferable. If any Purchased
Contracts or Permits are not assignable or transferable to Buyer without the
Consent of any Governmental Authority or Third Party, and such Consent has not
been obtained prior to the Closing Date and the Closing occurs:
(a) This Agreement and the Assignment and Assumption
Agreements shall not constitute an assignment or transfer thereof unless and
until such Consent is obtained. In such case, Seller shall use commercially
reasonable efforts to obtain such Consent as soon as possible after the Closing
Date: provided, that Buyer shall cooperate with Seller in that endeavor.
(b) Seller shall use commercially reasonable efforts to
provide Buyer the benefit of any Purchased Contract or Permit (to the extent
legally permissible) that is not assigned prior to the Closing and will
cooperate in any commercially reasonable and lawful arrangement designed to
provide such benefits to Buyer (but with respect to Permits, only for an interim
period not to exceed one hundred and eighty (180) days during which Buyer will
be expected to obtain its own Permits). Seller will keep Buyer informed of its
efforts in obtaining any Consent. There shall be no reduction of the Purchase
Price as a result of any matter described in this Section 2.3.
2.4 [Reserved]
2.5 Excluded Assets. All assets of Seller other than the Purchased
Assets, including, without limitation, the assets listed or described in
Schedule 2.5, are collectively referred to as the "Excluded Assets". All
Excluded Assets shall be retained by Seller or the other Persons owning such
11
assets, and such assets are not being sold, assigned, transferred or conveyed to
Buyer hereunder, and do not constitute Purchased Assets.
2.6 Assumed Obligations. On the Closing Date, Buyer shall
assume, and agree to pay, perform, fulfill and discharge, the following
obligations of Seller (the "Assumed Obligations"):
(a) Contract Obligations. The obligations of Seller under
the Purchased Contracts, except for those Purchased Contracts for which Consent
has not been obtained pursuant to Section 2.3;
(b) Transferred and Affected Employees. All obligations
with respect to Transferred Employees, only to the extent expressly assumed or
otherwise undertaken by Buyer pursuant to Article X;
(c) Warranties and Returns. All obligations and liabilities
with respect to product returns and product warranty claims relating to the
Business;
(d) Accounts Payable. The Accounts Payable of the Business
as of the Closing Date, other than those attributable to the Excluded Assets,
Excluded Obligations or Excluded Businesses; and
(e) Other Liabilities. Unless otherwise specifically
provided herein, all other liabilities and obligations of Seller, known or
unknown, including but not limited to liabilities and obligations arising under
Environmental Laws, to the extent arising out of or relating to the ownership or
operation of the Business, the Real Property, or the Purchased Assets (other
than the Retained Off-Site Environmental Liabilities).
All Assumed Obligations shall be assumed by Buyer at the
Closing. Notwithstanding the foregoing, nothing contained in this Section 2.6
shall affect in any manner Seller's obligations to Buyer under Section 13.2
hereof.
2.7 Excluded Obligations. Buyer shall not assume and Seller
shall expressly retain the following liabilities and obligations with respect to
the Business ("Excluded Obligations");
(a) Taxes for which the Seller is responsible pursuant to
Sections 7.2 and 7.7, and Taxes unrelated to the Business or the Purchased
Assets.
(b) Employment-related Losses for which Seller is
responsible pursuant to Section 10.6(b);
(c) Litigation matters contained on Schedule 4.9;
(d) The ownership and operation of the Excluded Assets or
Excluded Businesses; and
(e) Retained Off-site Environmental Liabilities.
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2.8 Schedule Updates. To the extent Purchased Assets listed on any
schedule referred to in this Article II are sold, transferred, or otherwise
disposed of or terminated in the ordinary course of business prior to the
Closing Date, such Purchased Assets shall be deemed to be deleted from such
schedules and any replacement asset shall be deemed to be added to such
schedules without any action on the part of Seller.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Payment of Purchase Price. On the Closing Date, in consideration
for the sale, assignment, conveyance, transfer and delivery of the Purchased
Assets to Buyer, Buyer shall assume the Assumed Obligations and shall pay to
Seller an amount equal to Four Hundred Thirty Million Dollars ($430,000,000.00),
(hereinafter, the "Purchase Price"), subject to adjustment as provided in
Section 3.2, by wire transfer of immediately available funds to such account of
Seller designated in writing by Seller at least two (2) Business Days prior to
the Closing Date.
3.2 Purchase Price Adjustment. (a) As soon as practicable, but in no
event later than 45 days after the Closing Date, Seller shall provide Buyer with
an audited balance sheet of the Business as of the date immediately preceding
the Closing Date prepared in accordance with GAAP utilizing the same methodology
and adjustments as were used in preparing the Business Financial Statements, and
a statement of Working Capital (the "Statement of Working Capital") setting
forth a true, correct and complete listing of each of the components making up
Working Capital, as of the date immediately preceding the Closing Date and
setting forth in reasonable detail, adjustments, if any, to the Working Capital
set forth in the Business Financial Statements. Buyer and its independent
auditors and other representatives shall have the right to review and to verify
the Statement of Working Capital when received. As used in this Section, the
term "Working Capital" consists of the following items relating to the Business
and the Purchased Assets: (i) Accounts Receivable net of reserves; plus (ii)
Inventory, plus (iii) Other Current Assets transferred to Buyer; plus (iv)
Construction in Progress; plus (v) Deferred Charges; minus (vi) Accounts
Payable; minus (vii) all other Current Liabilities assumed by Buyer.
(b) Buyer shall have 30 days following receipt by it of the
Statement of Working Capital during which to dispute the Statement of Working
Capital in writing. If Buyer fails to notify Seller of any such dispute within
such 30-day period, the Statement of Working Capital shall be the "Final
Statement." If Buyer timely notifies Seller of any such dispute, and Seller and
Buyer cannot resolve any such dispute within 30 days of receipt by Buyer of such
notice, such dispute shall be resolved by a "big five" accounting firm mutually
agreed upon by the parties (the accounting firm so engaged shall act as an
expert and shall hereinafter be referred to as the "Independent Accounting
Firm"); the determination of the Independent Accounting Firm shall be made as
promptly as practicable and shall be final and binding on both Buyer and Seller.
Any expenses relating to engagement of the Independent Accounting Firm shall be
shared equally by Buyer and Seller. In the event of a dispute, the Statement of
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Working Capital, as modified by resolution by Buyer and Seller, or by the
Independent Accounting Firm, shall be the "Final Statement."
(c) If the Working Capital, as set forth in the Final
Statement exceeds the Working Capital as reflected by the May 31, 2001 Business
Financial Statements of Seller, the Purchase Price shall be increased by such
excess, and Buyer shall pay to Seller an amount equal to such excess. If the
Working Capital as set forth in the Final Statement is less than the amount
reflected by the May 31, 2001 Business Financial Statements of Seller, the
Purchase Price shall be decreased by such deficit, and Seller shall pay to Buyer
an amount equal to such deficit. The Purchase Price as adjusted is hereafter
referred to as the "Final Purchase Price."
(d) Any payments to be made by Buyer or Seller, as the case
may be, pursuant to Section 3.2(c) shall be made by wire transfer in immediately
available funds within five (5) Business Days after the date upon which the
Statement of Working Capital becomes the Final Statement (either upon expiration
of the 30-day period referred to in Subsection (b) above or resolution of any
dispute with respect to the Statement of Working Capital), in an amount
determined pursuant to Section 3.2(c), together with interest thereon from the
Closing Date through the date such payment is made at the prime lending rate as
announced as of the date of such payment by Citibank, N.A.
3.3 Allocation of Purchase Price. Prior to Closing, Seller and Buyer
shall mutually agree upon a preliminary allocation of the Purchase Price among
the Purchased Assets in a manner which shall comply with Section 1060 of the
Code. The Purchase Price shall be allocated among the Purchased Assets in
accordance with the relative fair market value of the Purchased Assets. No later
than thirty (30) days after the date upon which the Statement of Working Capital
becomes the Final Statement, Seller and Buyer shall mutually agree upon the
final allocation of the Purchase Price (the "Final Purchase Price Allocation")
among the Purchased Assets to reflect any adjustment in the Purchase Price
provided for in Section 3.2(c). The Final Purchase Price Allocation shall be
made in the manner prescribed in the second preceding sentence. The parties will
each report the federal, state, local and other Tax consequences of the purchase
and sale contemplated hereby (including of the filing of Internal Revenue
Service Form 8594) in a manner consistent with such allocation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of Seller and Cargill, jointly and severally, represent and
warrant as of the date hereof and as of the Closing Date (except as otherwise
provided herein) as follows:
4.1 Existence, Good Standing, Residency. North Star is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota. UTS is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. Cargill is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has all requisite corporate power and authority to
14
own, lease and operate the Purchased Assets and to conduct the Business as it is
presently conducted and is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the Purchased
Assets are owned, leased or operated by it or the nature of the operation of the
Business requires Seller to qualify to transact business as a foreign
corporation, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect. The jurisdictions in which Seller is
so qualified are set forth on Schedule 4.1.
4.2 Due Authorization. Seller and Cargill have all requisite corporate
power and authority to execute, deliver and perform this Agreement and the
Ancillary Agreements to which each is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Seller and Cargill of this Agreement and the Ancillary Agreements to which each
is a party and the consummation by Seller and Cargill of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Seller and Cargill and no other
corporate actions or proceedings on the part of Seller or Cargill are necessary
to authorize the execution, delivery and performance by Seller and Cargill of
this Agreement and by Seller and Cargill of the Ancillary Agreements to which
each is a party or the transactions contemplated hereby and thereby. Seller and
Cargill have duly and validly executed and delivered this Agreement and have
duly and validly executed and delivered (or prior to or at the Closing will duly
and validly execute and deliver) the Ancillary Agreements to which each is a
party. This Agreement constitutes, and upon execution and delivery thereof
(assuming due execution and delivery thereof by all other parties thereto) the
Ancillary Agreements to which Seller and Cargill are a party will constitute,
legal, valid and binding obligations of Seller and Cargill, enforceable against
Seller and Cargill in accordance with their respective terms, except as may be
limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect creditors' rights generally; or (b)
principles of equity including legal or equitable limitations on the
availability of specific remedies.
4.3 Consents. Except as set forth on Schedule 4.3, no material consent,
authorization, order or approval of, or filing or registration with, or
notification to (collectively, a "Consent") any Person not a party to this
Agreement or any Governmental Authority (other than in connection with Permits)
is required in connection with the execution, delivery and performance of this
Agreement and the Ancillary Agreements by Seller or Cargill, the consummation of
the transactions contemplated hereby or thereby or the conduct of the Business
after the Closing, in substantially the same manner presently conducted
(assuming the Buyer needs no Consents other than those needed by Seller).
4.4 Absence of Conflicts. Neither the execution and delivery of this
Agreement or any of the Ancillary Agreements to which Seller or Cargill is a
party, nor the consummation of the transactions contemplated hereby or thereby,
will result in the creation of any Lien (other than Permitted Liens) upon any of
the Purchased Assets, or will violate, conflict with, or result in the breach of
the terms, conditions or provisions of:
15
(a) the charter, by-laws or other organizational documents
of Seller or Cargill;
(b) any judgment, decree or order of any Governmental
Authority to which Seller or Cargill is subject or by which Seller or Cargill is
bound;
(c) any requirements of Laws applicable to Seller or
Cargill, the Business, or the Purchased Assets; or
(d) any Material Contract or Permit or Employee Plan
binding on Seller, Cargill or the Business.
4.5 Financial Statements. Attached hereto as Schedule 4.5 is a true,
complete and correct copy of the Business Financial Statements. The Business
Financial Statements have been prepared in accordance with GAAP, consistently
applied, and fairly present in all material respects the financial position of
the Business as of the dates thereof and the results of the operation and cash
flows of the Business for the periods covered thereby.
4.6 Title, Sufficiency and Condition of Assets.
(a) Except as set forth on Schedule 4.6(a) and other than
Owned Real Property and the Leased Real Property, which are addressed in Section
4.6(b), Seller has and Buyer will have at Closing, good, valid and marketable
title to all of the Purchased Assets and valid leasehold interests in, or other
rights to use, all of the Purchased Assets in each case, free and clear of all
Liens, other than Permitted Liens.
(b) Schedules 2.1(d) and 2.2(a) set forth a complete list
of all Owned Real Property and a complete list of all real property and
interests in real property leased by or licensed to the Seller and used
exclusively in the Business (the "Leased Real Property"). Seller has (i) good,
valid and marketable fee title to the Owned Real Property located in Ohio and
will have on or before the Closing Date good, valid and marketable fee title to
the Owned Real Property located in Texas and (ii) valid leasehold interests in
the Leased Real Property, in each case, free and clear of all Liens, except
Permitted Encumbrances. Seller is not aware of any condemnation or eminent
domain proceeding in respect of the Owned Real Property or the Leased Real
Property.
(c) Except as set forth in Schedule 4.6(c), the Purchased
Assets constitute all of the rights, properties and assets necessary to operate
the Business as currently conducted by Seller. To Seller's Knowledge, all of the
Purchased Assets are in normal operating condition and repair, subject to
ordinary wear, tear and maintenance.
(d) There is no existing agreement with, option or right
of, or commitment to any Person to acquire any of the Purchased Assets or any
interest therein other than Contracts entered into in the ordinary course of
business consistent with past practices for the sale of Inventory.
16
4.7 Compliance with Laws. Except as set forth on Schedules 4.7, 4.9
or 4.13, or as set forth in any Final Environmental Report prepared pursuant to
Section 7.3, Seller has conducted and is conducting the Business in compliance
with all applicable Laws, except where such failure to comply, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
4.8 Taxes.
(a) All material Tax Returns of Seller with respect to the
Business that are required to have been filed through the date hereof have been
properly prepared and duly filed. All Taxes shown to be due on such Tax Returns
or otherwise required to be paid have been paid in full, other than Taxes that
are being contested in good faith and Taxes that, if not paid when due, would
not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 4.8(b), none of the
Purchased Assets is property that is or will be required to be treated as being
(i) owned by any person other than Seller pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954 as in effect immediately prior to
the Tax Reform Act of 1986, (ii) "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code, (iii) "tax-exempt bond finance property" within
the meaning of Section 168(g) of the Code, or (iv) "limited use property" (as
that term is used in Rev. Proc. 76-30). No Purchased Asset is a "United States
real property interest" within the meaning of Section 897 of the Code.
(c) Seller is not a "foreign person" within the meaning of
Section 1445 of the Code.
(d) No claim has been made by a taxing authority in a
jurisdiction where Seller does not file Tax Returns to the effect that Seller is
or may be subject to taxation by that jurisdiction by reason of its ownership of
or activities with respect to the Business and/or the Purchased Assets, nor is
Seller aware that any such claim of jurisdiction is pending or threatened.
(e) No audit report has been issued relating to Taxes due
from or with respect to Seller in respect of the Business or the Purchased
Assets. There are no actions, suits, audits, claims or investigations by any
taxing authority in progress relating to Seller with respect to the Business or
the Purchased Assets, nor has Seller received any notice from any taxing
authority that it intends to conduct such an audit or investigation. No taxing
authority has imposed or assessed (or initiated proceedings to impose or assess)
a Lien in respect of Taxes on or against the Purchased Assets, other than
Permitted Liens. No issue has been raised by a taxing authority in any current
or prior examination which, by application of the same or similar principles,
could reasonably be expected to result in a proposed deficiency for any
subsequent taxable period with respect to the Purchased Assets.
4.9 Litigation. Except for those matters described on Schedules 4.9
and 4.13, there is no legal, administrative or arbitration proceeding, suit,
action of any nature, or order, judgment, writ, injunction, award, or decree,
claim, investigation or inquiry ("Litigation") pending or, to the Knowledge of
Seller, threatened against Seller, by or before any Governmental Authority or by
17
or on behalf of any Third Party which would (a) enjoin, restrict or prohibit the
transfer of any of the Purchased Assets or Purchased Contracts as contemplated
by this Agreement; (b) prevent Seller or Cargill from fulfilling all of its
obligations set out in this Agreement or arising under this Agreement or any
Ancillary Agreement; or (c) reasonably be expected to result in a Material
Adverse Effect.
4.10 Brokers. Except for Xxxxxxx Xxxxx & Co., Inc., Seller has not
used any broker or finder in connection with the transactions contemplated
hereby, and neither Buyer nor any of its Affiliates shall have any liability or
otherwise suffer or incur any Loss as a result of or in connection with any
brokerage or finder's fee or other commission of any Person retained by Seller
in connection with any of the transactions contemplated by this Agreement or any
of the Ancillary Agreements.
4.11 Contracts.All Material Contracts relating to the Business to
which Seller is a party are listed on one or more of the Schedules referred to
in Article II. A "Material Contract" means a Contract that may be expected to
result in future annual expenditures or receipts by the Business at any time of
$1,000,000 or more, and for which the failure to transfer such contract to Buyer
would have a Material Adverse Effect upon the Business. Each Material Contract
is in full force and effect and is the valid and binding obligation of Seller.
Neither Seller nor to the Knowledge of Seller any other party to such Purchased
Contract is in material breach of or in default under any Material Contract.
Other than the Rail Contract, Seller has provided the Buyer with true, complete
and correct copies of or access to all Material Contracts (other than oral
contracts with customers entered into in the ordinary course) and all
extensions, amendments and schedules thereto. Prior to Closing, Seller will
provide Buyer with a written description of all Material Contracts that are not
in writing.
4.12 Employee Benefit Plans; Affected Employees.
(a) Neither Seller nor any ERISA Affiliate is or has been a
participant in, nor do they have any obligation to contribute to, any
multiemployer plan within the meaning of Section 3(37)(A) or 401(a)(3) of ERISA
in which employees of the Business participate or have participated and no
actual or potential liability has been incurred by or could be asserted against
Seller, the Business, or any ERISA Affiliate with respect to any such
multiemployer plan.
(b) Within ten days after the execution of this Agreement,
the Seller shall provide Buyer with a complete and correct list of all Affected
Employees, together with each Affected Employee's name, position, location,
salary or hourly rate and hire date.
(c) Except as set forth in Schedule 4.12(c) or as otherwise
provided by this Agreement, the transactions contemplated hereby shall not
increase or accelerate the timing of any compensation or result in any
additional rights granted to any Affected Employees.
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4.13 Environmental Matters. Except as set forth on Schedule 4.13 or
as set forth in any Final Environmental Report prepared pursuant to Section 7.3,
and except further for such matters which would not reasonably be expected to
have a Material Adverse Effect, (a) Seller's operation of the Business and use
of the Real Property is and has been in compliance with Environmental Laws which
compliance shall include filing all reports and notifications required under
applicable Environmental Laws; (b) Seller possesses and currently maintains all
Permits required under Environmental Laws to operate the Business
("Environmental Permits"), such Environmental Permits are valid and in good
standing, or, if expired, and not yet reissued by the relevant Governmental
Authority, Seller has filed a timely application for renewal, and no proceeding
is pending or threatened which seeks to revoke or suspend any such Environmental
Permit; (c) Seller has not received any written or any oral notice from any
Governmental Authority or Third Party alleging that Seller is responsible or
liable for Cleanup at or about any of the Real Property or other property
utilized by Seller in the operation of the Business and Seller is not liable for
Cleanup at or about any property to which Seller has arranged for the disposal
or treatment of Hazardous Materials from the Real Property; (d) there are no
Hazardous Materials present in, on, or beneath the Real Property which could be
reasonably expected under Environmental Law to result in a Cleanup for which
Seller is responsible or liable; and (e) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, notices of violation,
or to the Knowledge of Seller any investigations or proceedings pending under
any Environmental Laws which relate to the Business or the Real Property.
4.14 Labor Matters. Except as set forth on Schedule 4.14, Seller is
not a party to or bound by any collective bargaining agreement and there are no
labor unions or other organizations representing, purporting to represent or to
Seller's Knowledge, attempting to represent any employees employed in the
operation of the Business. Since June 1, 1999, there has not occurred or, to the
Knowledge of Seller, been threatened any material strike, slowdown, picketing,
work stoppage, concerted refusal to work overtime with respect to any employees
employed in the operation of the Business other than as set forth on Schedule
4.14. There are no labor disputes currently subject to any written grievance
procedure, arbitration or litigation and there is no representation petition
pending or, to the Knowledge of Seller, threatened, with respect to any employee
employed in the operation of the Business. Except as set forth on Schedule 4.14,
and to Seller's Knowledge, Seller has complied with all provisions of Law
pertaining to the employment of the employees of the Business.
4.15 Intellectual Property.
(a) Except as set forth on Schedule 4.15, Seller owns, or
possesses legally enforceable rights to use, free and clear of all Liens, all
Intellectual Property used exclusively in the operation of the Business. --
(b) Except as set forth on Schedule 4.9, the operation of
the Business, including, without limitation, the design, development, use,
import, manufacture and sale of the products, technology and services of the
Seller in the Business does not infringe or misappropriate the Intellectual
Property of any other Person and there is no claim, notice, suit, demand or
action of any nature, currently pending or, to the Knowledge of Seller,
19
threatened, alleging unauthorized use, disclosure, infringement,
misappropriation or other violation by Seller in the conduct of the Business of
any Intellectual Property of any other Person.
(c) Seller has not entered into any arrangements granting
exclusive rights in the Seller Intellectual Property to any Person. To the
Knowledge of Seller, there is no unauthorized use, disclosure, infringement or
misappropriation of any Seller Intellectual Property or breach of any agreement
involving the Seller Intellectual Property and there are no pending, or to the
Knowledge of Seller, threatened claims, suits, demands or actions of any nature
affecting the Seller Intellectual Property. Seller has not brought any action,
suit or proceeding or asserted any claim against any person or entity for
interfering with, infringing upon, misappropriating, or otherwise coming into
conflict with any Intellectual Property or breach of any license or agreement
involving any Intellectual Property.
(d) There are no patents or patent applications,
trademarks, tradenames, or copyrights of Seller used exclusively in the
Business.
(e) Except as set forth on Schedule 2.5 at the Effective
Time, Seller will have transferred to Buyer all Intellectual Property currently
used exclusively in the operation of the Business.
4.16. Inventory. To the Knowledge of Seller, the Inventory was
acquired or produced and has been maintained in the ordinary course of the
conduct of the Business. Except for inventory in transit to Seller, the
Inventory is located on the Real Property. To the Knowledge of Seller, the
Inventory on hand, including, without limitation, the mandrels used in the
Business, is adequate to conduct the Business at Closing in a manner consistent
with past practice and Seller's policies regarding the maintenance and depletion
of Inventory.
4.17. Accounts Receivable. To the Knowledge of Seller, all of the
Accounts Receivable (subject to the reserves stated therein in accordance with
GAAP), are valid and genuine, have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the ordinary course of business consistent with past practice. From May 31, 2001
through the date hereof, there has not been any material adverse change in the
collectability of the Accounts Receivable, taken as a whole. The Accounts
Receivable are not subject to any Liens other than Permitted Liens, claims,
counterclaims, offsets or defenses arising in the ordinary course of business.
4.18. Books and Records. To the Knowledge of Seller, the Books and
Records accurately and fairly reflect the transactions and the assets and
liabilities of Seller with respect to the Business.
4.19. No Material Adverse Effect. To the Knowledge of Seller, except
as set forth on Schedule 4.19, since May 31, 2001 there has not occurred (a) any
Material Adverse Effect, (b) any material damage, destruction or loss of any
kind with respect to the Purchased Assets not covered by valid and collectible
insurance, (c) any material changes in terms of transactions between Seller and
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Seller's Affiliates, (d) any sale, assignment, transfer, or acquisition (or any
agreement so to do) of any material operating asset of the Business, or a
cancellation of, or any agreement to cancel, any material debts or claims of the
Business, except, in each case, in the ordinary course of business, (e) except
as set forth in Schedule 4.12(c), any increase in the rate of compensation or
benefits payable or to become payable by it to any Affected Employee over the
rate being paid to such Affected Employee at December 31, 2000, other than
increases in the ordinary course of business in accordance with past practices,
or any agreement to do so, or (f) any termination or material amendment of, any
Material Contract that has or is expected to result in a Material Adverse
Effect.
4.20. Major Customers or Distributors; Major Suppliers.
(a) Schedule 4.20(a) sets forth (a) the names of all
customers of Seller that ordered goods and services from Seller with an
aggregate value for each such customer of $15,000,000 or more during the twelve
(12) month period ended May 31, 2001, and (b) the amount for which each such
customer was invoiced during such period. As of the execution of this Agreement
and to the Knowledge of Seller no such customer has notified Seller that it (i)
will materially reduce purchases of products from the Business, or (ii) has
ceased, or will cease, to purchase products from the Business.
(b) Schedule 4.20(b) sets forth (a) the names of all
suppliers from which the Business ordered raw materials, supplies, merchandise
and other goods and services with an aggregate purchase price for each such
supplier of $2,000,000 or more during the twelve (12) month period ended May 31,
2001, and (b) the amount for which each such supplier invoiced the Business
during such period. To the Knowledge of Seller no such supplier has notified
Seller that it (i) will materially reduce the amount of raw materials or
equipment available for purchase by the Business, or (ii) has ceased, or will
cease, to sell raw materials or equipment to the Business.
4.21. Insurance. Seller has in place insurance policies with respect
to the Purchased Assets, and all such policies are in full force and effect.
4.22. Affiliate Transactions.
(a) Except as set forth in Schedule 4.9 or 4.22, to the
Knowledge of Seller, no employee, officer, or director of Seller or Cargill or
any Person controlled by any of the foregoing, (i) owns, directly or indirectly,
in whole or in part, any Permits, real property, leasehold interests, or other
property the use of which is necessary for the Business, (ii) has any claim or
cause of action or any other action, suit, or proceeding whatsoever against, or
owes any amount to Seller other than claims in the ordinary course of business,
or (iii) is a party to any Contract or participates in any arrangement, written
or oral, pursuant to which the Business provides to, or receives services of any
nature from, any such Person, except as to any such individual in his capacity
as an employee of the Business.
(b) To the Knowledge of Seller, Seller is not a party to
any agreements that relate exclusively to the Business (i) among Cargill and
Affiliates of Cargill or (ii) among Seller or Cargill, on the one hand, and a
Third Party, on the other hand, in which the terms or conditions of such
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agreement or transaction are materially more favorable to Seller or Cargill or
the Third Party than the terms and conditions that could be achieved in an arm's
length agreement or transaction with a Third Party.
4.23. Backlog. To the Knowledge of Seller, all outstanding customer
or distributor purchase orders for products of the Business have been entered at
prices and upon terms and conditions consistent with the normal practices of the
Business. To the Knowledge of Seller and as of the execution of this Agreement,
Seller has not been informed by any customer or distributor that any material
order included in the Business's backlog is likely to be cancelled or terminated
prior to its completion.
4.24. Employees. As of the date of this Agreement, the Business has
employees, including, without limitation, foremen level and above, sufficient to
operate the Business in the ordinary course consistent with past practices.
During the one-year period prior to the date hereof, other than changes in the
ordinary course of operation of the Business consistent with past practices, no
material changes have occurred in the workforce of the Business, including,
without limitation, material employee terminations, employee transfers in or
out, employee leasing arrangements, secondments, reallocations of duties and
outsourcing of duties or functions.
4.25. Derivative Contracts. Except as set forth on Schedule 4.25, to
the Knowledge of Seller, Seller is not a party to any derivative and/or hedging
contracts relating to the Business.
4.26. Disclosure. To the Knowledge of Seller, no representation or
warranty of Seller or Cargill contained in this Agreement (including the
Exhibits and Schedules attached hereto) or any Ancillary Agreement, contains any
untrue statement of a material fact, or omits to state any material fact
necessary, in light of the circumstances under which it was made, in order to
make the statements herein or therein not otherwise misleading.
4.27 Disclaimer. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY THE
REPRESENTATIONS AND WARRANTIES BY SELLER IN THIS AGREEMENT AND SELLER IN THE
ANCILLARY AGREEMENTS, SELLER EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. In
particular, Seller disclaims any representation or warranty with respect to any
information concerning the Business, Seller or any of its Affiliates not
expressly represented and warranted to in this Agreement or the Ancillary
Agreements, including, without limitation, (a) the information set forth in any
information memoranda distributed by Xxxxxxx Xxxxx & Co., Inc. with respect to
Seller and the Business, (b) except as expressly set forth in Section 4.5, the
Business Financial Statements or any other financial projection or forecast
relating to Seller or the Business, (c) the information included in the data
room established by Seller or otherwise delivered to Buyer or its
representatives, and (d) all verbal or written communications by Seller,
employees thereof, or its representatives (including, without limitation,
Xxxxxxx Xxxxx & Co., Inc.). In the absence of fraud, Buyer shall have no claim
22
against Seller, and Seller shall have no liability to Buyer, with respect to any
such disclaimed information. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY THE
REPRESENTATIONS, WARRANTIES AND COVENANTS IN THIS AGREEMENT, BUYER IS ACQUIRING
THE PURCHASED ASSETS ON AN "AS IS, WHERE IS" BASIS OTHER THAN FOR MANUFACTURERS'
WARRANTIES, IF ANY, INCLUDED IN THE PURCHASED ASSETS.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of Buyer, jointly and severally represent and warrant to the
Seller and to Cargill as follows:
5.1 Existence, Good Standing, Residency. Star is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. LSS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each Buyer is duly qualified
to transact business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the assets owned, leased or operated by
Buyer or the conduct of its business makes such qualification necessary, except
where the failure to be so qualified and in good standing would not reasonably
be expected to have a Material Adverse Effect on the business, operations or
financial condition of each Buyer.
5.2 Due Authorization. LSS and Star have all requisite corporate
power and authority to execute, deliver and perform this Agreement and the
Ancillary Agreements to which each is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Buyer of this Agreement and the Ancillary Agreements to which each is a party
and the consummation by Buyer of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of Buyer and no other corporate actions or proceedings on the part
of Buyer are necessary to authorize the execution, delivery and performance by
Buyer of this Agreement and by Buyer of the Ancillary Agreements to which each
is a party or the transactions contemplated hereby and thereby. Buyer has duly
and validly executed and delivered this Agreement and has duly and validly
executed and delivered (or prior to or at the Closing will duly and validly
execute and deliver) the Ancillary Agreements to which each is a party. This
Agreement constitutes, and upon execution and delivery thereof (assuming due
execution and delivery thereof by all other parties thereto) the Ancillary
Agreements to which Buyer is a party will constitute, legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except as may be limited by (a) applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which affect
creditors' rights generally; or (b) principles of equity including legal or
equitable limitations on the availability of specific remedies.
5.3 Consents. Other that Xxxx-Xxxxx-Xxxxxx approvals or receipt of
any required stockholder approvals, no Consent of any Person not a party to this
Agreement or any Governmental Authority (other than in connection with Permits)
is required in connection with the execution, delivery and performance of this
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Agreement and the Ancillary Agreements by Buyer, or the consummation of the
transaction contemplated hereby or thereby.
5.4 Absence of Conflicts. Neither the execution and delivery of this
Agreement nor any of the Ancillary Agreements to which Buyer is a party nor the
consummation of any of the transactions contemplated hereby or thereby will
violate, conflict with, or result in a breach of the terms, conditions or
provisions of:
(a) The charter, by-laws or other organizational documents
of Buyer;
(b) Any judgment, decree or order of any Governmental
Authority to which Buyer is a party or by which Buyer is bound; or
(c) Any requirements of Laws affecting Buyer.
5.5 [Reserved]
5.6 Litigation. As of the date of this Agreement there is no
Litigation of any nature pending or, to the Knowledge of Buyer, threatened
against Buyer by or before any Governmental Authority or by or on behalf of any
Third Party which questions or challenges the validity of this Agreement or any
Ancillary Agreements or any of the transactions contemplated hereby or thereby
or which, if adversely determined, would adversely affect the ability of Buyer
to consummate the transactions contemplated hereby.
5.7 Brokers. Other than Xxxxxxx Sachs & Company, Buyer has not used
any broker or finder in connection with the transactions contemplated hereby,
and neither Seller nor any of its Affiliates has or shall have any liability or
otherwise suffer or incur any Loss as a result of or in connection with any
brokerage or finder's fee or other commission of any Person retained by Buyer in
connection with any of the transactions contemplated by this Agreement or any of
the Ancillary Agreements.
ARTICLE VI
COVENANTS OF SELLER
Seller and Cargill, jointly and severally, hereby covenant with Buyer
as follows:
6.1 Conduct of Business. Except as otherwise contemplated by this
Agreement, and except as otherwise consented to by Buyer (which consent shall
not be unreasonably withheld or delayed), from the date hereof until the Closing
Date, Seller shall and Cargill shall cause Seller to conduct the Business in the
usual and ordinary course in accordance with past practice including, without
limitation, the maintenance of inventory levels, the payment of Accounts Payable
and compliance with Seller's product warranty policies, and Seller shall and
Cargill shall cause Seller to use commercially reasonable efforts, consistent
with Seller's current business practices, to preserve the goodwill of the
Business, including to preserve its current relationships with customers,
suppliers, agents and employees of the Business; provided, that nothing in this
Section 6.1 shall require Seller to make any capital expenditures other than
budgeted capital expenditures, above and beyond routine maintenance and repair.
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The parties understand and acknowledge that the matters referred to in this
Section 6.1 may be adversely affected by the public announcement of the
transactions contemplated hereby, and any such adverse effect shall not be
considered a breach of this covenant by Seller or Cargill.
6.2 Negative Covenants Relating to Conduct of the Business. Except as
otherwise contemplated by this Agreement, and except as consented to by Buyer
(which consent shall not be unreasonably withheld or delayed) from the date
hereof until the Closing Date, Seller shall not, and Cargill shall cause Seller
not to, with respect to the Business:
(a) Enter into, terminate or amend in any material respect
any Material Contract except in the ordinary course of business and except for
such amendments to the Material Contracts, the effect of which could reasonably
be expected to be advantageous to the Business;
(b) Other than pursuant to this Agreement, sell, lease or
otherwise dispose of any of the Purchased Assets except (i) pursuant to existing
Contracts or commitments, or (ii) sales of Inventory in the ordinary course of
business.
(c) Increase the rate of compensation of, or pay or agree
to pay any benefit to, its directors, officers or employees, except in the
ordinary course of business or as may be required by the terms of any existing
Employee Plan, agreement or arrangement;
(d) Enter into, adopt or amend any Employee Plan, or
employment or severance agreement affecting the Business, except in the ordinary
course of business;
(e) Incur any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a Material Adverse Effect;
(f) Sell, transfer, lease to others, encumber or otherwise
dispose of any of the Purchased Assets, except in the ordinary course of
business, or forgive, cancel or compromise any material debt or material claim,
or intentionally waive or release any material right of substantial value;
(g) Make any material changes in policies or practices
relating to selling practices, returns, discounts or other terms of sale or
accounting therefor;
(h) Make any prepayment of any accounts payable, delay
payment of any trade payables or other obligations other than in the ordinary
course of business consistent with past practice, or make any other cash
payments other than in the ordinary course of business;
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(i) Fail to maintain all of the tangible Purchased Assets
in normal operating repair, working order and operating condition, in accordance
with its usual and customary maintenance schedule and practices, subject to
ordinary wear and tear;
(j) Acquire any assets that would constitute Purchased
Assets except in the ordinary course of business;
k) Change any accounting policies or principles of Seller
or the methods of applying such policies or principles; or
(l) Agree, whether in writing or otherwise, to do any of
the foregoing.
6.3 Delivery of Monthly Financial Reports. For the month of June 30,
2001 and for each full calendar month thereafter until the Closing, Seller shall
provide Buyer with an unaudited balance sheet and statement of earnings with
respect to the Business. Such monthly statements will be prepared in such manner
as they are customarily prepared by Seller in the ordinary and normal course of
business, with such statements to be provided by Seller to Buyer within 20 days
following the end of each respective monthly period, together with current
backlog and Accounts Receivable aging.
6.4 Post-Closing Confidentiality. The Confidentiality Agreement shall
terminate as of the Closing Date. For a period of five years after the Closing
Date and except as otherwise required by Law, each Party to this Agreement shall
and shall cause their respective officers, directors, employees, agents and
representatives to hold in confidence (and not disclose to any Person other than
its authorized representatives) (a) any proprietary or other confidential and
non-public information regarding the Buyer or the Seller disclosed to the other
in connection with the negotiation or preparation of this Agreement; and (b) the
nature or resolution of any disputes arising hereunder after the Closing;
provided, however, the confidential and non-public information shall not include
any information publicly known through no fault of the covenanting party. Seller
and Cargill shall and shall cause their respective officer, directors,
employees, agents and representatives to hold in confidence any proprietary or
other confidential non-public information relating to the Purchased Assets or
the Business that remains in the possession of the Seller or Cargill after the
Closing Date, except for disclosures which may be necessary in connection with
the proposed sale by Seller or its Affiliates of their steel related business
assets (other than the Business) to Third Parties who have agreed in writing to
keep such information confidential and to use such information solely for the
purpose of evaluating such potential transaction with Seller or in connection
with the consummation of this transaction or the management and resolution of
any retained or Excluded Obligations relating to the Business.
6.5 Financial Disclosure. Seller hereby consents to the inclusion of
the Business Financial Statement in any required filing of the Buyer made with
the Securities and Exchange Commission.
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ARTICLE VII
COVENANTS OF BUYER AND SELLER
7.1 HSR Act Notification; Other Consents.
(a) Each of Buyer and Seller shall cause to be filed as
promptly as practicable with the Federal Trade Commission and the Department of
Justice the notification and report form required for the transactions
contemplated by this Agreement, the Ancillary Agreements and the agreements,
documents and instruments contemplated herein and therein and shall use
reasonable best efforts to provide any supplemental information that may be
reasonably requested in connection therewith, which notification and report form
and supplemental information will comply with the requirements of the HSR Act.
The filing fee shall be borne by Buyer.
(b) As promptly as practicable following the date hereof
the Seller shall use commercially reasonable efforts to obtain the Consents of
all Third Parties required in connection with the consummation of the
transactions contemplated hereby; and ) to disclose to Buyer any of the
Purchased Contracts that are subject to confidentiality or non-disclosure
limitations. Seller and Buyer will coordinate and cooperate with each other in
exchanging information and assistance in connection with obtaining such Consents
and in making all filings or notifications necessary to transfer any Permits to
Buyer, or in connection with any applications for new Permits relating to the
Business.
7.2 Tax Matters.
(a) At the Closing, or as soon as practicable thereafter,
all state and local real and personal property Taxes and assessments ("Property
Taxes") which are past due or have become due and payable in the normal course
of business upon any of the Purchased Assets on or before the Effective Time
will be paid by Seller together with any penalty or interest thereon. All
Property Taxes imposed by any Tax authority with respect to the Purchased Assets
that are due and payable with respect to a Taxable period beginning before the
Effective Time and ending after the Effective Time (taking into account whether
such Property Taxes are payable in advance or in arrears) shall be apportioned
between (i) the period beginning before and ending at the Effective Time (the
"Pre-Transfer Period") and (ii) the period beginning on the day immediately
after the Effective Time and ending on the last day of the relevant Taxable
period (the "Post-Transfer Period"). In performing such apportionment, all
Property Taxes shall be prorated on the assumption that an equal amount of
Property Tax applies to each day of the relevant Taxable period regardless of
how installment payments are billed or made. Seller shall be liable for all such
Property Taxes apportioned to the Pre-Transfer Period. Buyer shall be liable for
all such Property Taxes apportioned to the Post-Transfer Period.
(b) At the Closing, or as soon as practicable thereafter,
the party responsible for Property Taxes shall pay to the other party the amount
of any Property Taxes for which the party responsible for the Property Taxes is
liable under Section 7.2(a). The responsible party shall pay all Property Taxes
27
which become due and payable after the Effective Time with respect to a Taxable
period beginning before the Effective Time and ending after the Effective Time.
(c) After the Closing Date, Seller shall make available to
Buyer and its representatives such records as Buyer may reasonably require for
the preparation of any Tax Returns or other similar governmental reports or
forms required to be filed by Buyer and such records as Buyer may reasonably
require for the defense of any audit, examination, administrative appeal or
litigation of any such Tax Return or other similar governmental report or form,
in each case relating to the Business. Seller agrees to timely sign and deliver
such certificates or forms as may be necessary or appropriate to establish an
exemption from (or otherwise reduce) the Taxes referred to in Section 7.2(a).
(d) At or before Closing, Seller shall certify to Buyer, in
the form prescribed by Treasury regulations under Section 1445 of the Code, that
Seller is not a foreign Person within the meaning of Section 1445 of the Code
and the Treasury regulations thereunder.
7.3 Access to Information, Inspections; Confidentiality.
(a) During the period from the date of this Agreement
through the Closing Date, Seller will give Buyer and its authorized
representatives reasonable access during regular business hours and upon
reasonable notice, to all plants, office, warehouses, facilities, employees and
Books and Records of Seller relating to the Business as they may reasonably
request.
(b) Seller and Buyer will jointly through legal counsel
retain a mutually agreed-upon environmental consultant (the "Environmental
Consultant"), at Buyer's expense, to conduct an environmental audit regarding
the Real Property . The environmental audit shall consist of a Phase I
environmental audit and, if requested by the Parties, a Phase II environmental
audit (collectively, the "Environmental Audit"). The Phase I environmental audit
shall consist of a non-intrusive Phase I environmental audit, including a
regulatory compliance review. Upon conclusion thereof, the Environmental
Consultant shall be directed by the Parties to prepare and deliver a draft
written environmental report in customary form and substance, which shall
identify areas of potential concern (the draft "Phase I Report"). The draft
Phase I Report shall be completed no later than 20 days following the date of
this Agreement.
(c) Buyer and Seller shall consult with each other and the
Environmental Consultant promptly upon receipt of the draft Phase I Report and
shall in any event within 10 days after receipt of the draft Phase I Report
determine jointly whether to request a Phase II environmental audit. If
requested, such Phase II environmental audit shall be conducted with respect to
any areas of potential concern identified in the draft Phase I Report. The
Parties, in consultation with the Environmental Consultant, shall mutually agree
upon the scope of work for the Phase II environmental audit. The Phase II
environmental audit, if requested, shall be completed as promptly as practicable
and in any event no later than 60 days following the date of this Agreement.
Upon the conclusion thereof, the Environmental Consultant shall be directed by
28
the Parties to prepare and deliver a draft written environmental report
presenting in customary form and substance the results of the Phase II
environmental audit (the draft "Phase II Report").
(d) Upon completion of the draft Phase II Report, or if the
Parties did not request a Phase II environmental audit, the draft Phase I
Report, the Environmental Consultant shall prepare and deliver a draft written
environmental report ("Draft Environmental Report") setting forth (i) the draft
Phase I Report and, if prepared by the Environmental Consultant, the draft Phase
II Report; (ii) all Environmental Conditions identified in the Environmental
Audit; and (iii) reasonable estimated costs of remediating or correcting any
such Environmental Conditions (consistent with the Lowest Cost Response)
("Environmental Remedial Costs"). The Environmental Consultant shall be directed
by the Parties to provide the Draft Environmental Report to Seller and Buyer as
promptly as practicable but in no event later than 10 days after completion of
the draft Phase II Report or if the Parties did not request a Phase II
environmental audit, 20 days after the draft Phase I Report. Buyer and Seller
shall have the opportunity to comment on the Draft Environmental Report and
shall provide any comments to the Environmental Consultant and each other within
10 days after the receipt of such draft report. The Parties shall cooperate and
use best efforts to resolve any inconsistent comments or disputes concerning the
Draft Environmental Report as expeditiously as possible. To the extent the
Parties cannot resolve any such disputes within 10 days after the Parties'
exchange of comments, the Environmental Consultant shall resolve such disputes
based on its best professional judgment, consistent with this Agreement. The
Parties shall direct the Environmental Consultant to issue the Final
Environmental Report no later than 10 days after receipt of the Parties'
comments, or such other date mutually agreed by the Parties.
(e) Buyer and Seller shall have the right to: (i) receive
copies of all reports generated in the course of the Environmental Audit; (ii)
receive and comment on any reports or other documents prepared by the
Environmental Consultant in draft form; and (iii) jointly participate in all
substantive telephone calls or meetings with the Environmental Consultant;
provided, however that any and all information in any such report or document
shall be treated as confidential information subject to the Confidentiality
Agreement. Buyer shall coordinate the Environmental Audit with Seller and Seller
shall cooperate with Buyer in undertaking the Environmental Audit. The
Environmental Audit shall not unreasonably interfere with Seller's operation of
the Real Property. Buyer shall indemnify Seller from any Losses directly caused
by the Phase II environmental audit. A Seller representative shall be present at
all site visits and inspections and Buyer's representatives shall, at all times
while on the premises of Seller, comply with all directions and requests
relating to safety, security and confidentiality.
(f) Until Closing, Buyer will hold and will cause its
Affiliates, consultants and advisors to hold any information which they receive
in connection with the transactions contemplated by this Agreement in strict
confidence in accordance with and subject to the terms of the Confidentiality
Agreement.
29
(g) Buyer shall, at and after the Closing Date, afford
promptly to Seller and its respective agents reasonable access during normal
business hours, upon due notice, to the properties, employees and Books and
Records of the Business, to the extent reasonably necessary to permit Seller to
determine any matter relating to or arising during any period ending on or
before the Closing Date. If Buyer proposes to destroy or otherwise dispose of
any records relating to the Business on or before the 10th anniversary of the
Closing Date, other than in the ordinary course of business, consistent with its
document retention policy, Buyer shall first notify Seller in writing, and
afford Seller the opportunity, for a period of at least ninety (90) days
following the date of such notice, to take custody of such records or make
extracts therefrom or copies thereof.
(h) Seller shall, at and after the Closing Date, afford
promptly to Buyer, and its respective agents reasonable access during normal
business hours, upon due notice, to the employees and Books and Records of the
Business, to the extent reasonably necessary to permit Buyer to determine any
matter relating to or arising during any period ending on or before the Closing
Date, including the Litigation assumed by Buyer (provided that the parties take
any actions deemed appropriate to maintain any attorney client privilege). If
Seller proposes to destroy or otherwise dispose of any records relating to the
Business on or before the 10th anniversary of the Closing Date, other than in
the ordinary course of business, consistent with its written document retention
policy, Seller shall first notify Buyer in writing, and afford Seller the
opportunity, for a period of at least ninety (90) days following the date of
such notice, to take custody of such records or make extracts therefrom or
copies thereof.
7.4 Title Commitment and Survey. (a) As evidence of title to the
Owned Real Property and the Leased Real Property, Seller will cause to be
prepared and delivered to Buyer, as soon as reasonably practicable after
execution of this Agreement, the following:
(i) in respect of each parcel of Owned Real Property, a
commitment from Chicago Title Insurance Company (the "Title Company") to issue
to Buyer at Closing an ALTA Owner's Policy of Title Insurance Form B-1987 (or
equivalent policy), in such amount as Buyer reasonably may determine to be the
fair market value of such Owned Real Property (including all improvements
located thereon), insuring title to such Owned Real Property in Buyer as of the
Closing subject only to Permitted Encumbrances;
(ii) with respect to all Leased Real Property used in the
operation of the Business and assigned to Buyer hereunder, if available, a
commitment from the Title Company to issue to Buyer at Closing an ALTA Leasehold
Lessee's Policy of Title Insurance -- 1987 (or equivalent policy), insuring
title to the leasehold or subleasehold estate to be in Buyer as of the Closing
subject only to Permitted Encumbrances;
(iii) Each title insurance policy delivered pursuant to the
commitments required under subsection (i) and, if available, subsection (ii)
above shall: (A) insure title to the Real Property and all recorded easements
benefiting such Real Property; (B) contain an "extended coverage endorsement"
30
insuring over the general exceptions contained customarily in such policies; (C)
contain an ALTA Zoning Endorsement 3.1 (or equivalent); (D) contain an
endorsement insuring that the Real Property described in the title insurance
policy is the same real estate as shown on the Survey (as hereinafter defined)
delivered with respect to such property; (E) contain an endorsement insuring
that each street adjacent to the Real Property is a public street and that there
is direct and unencumbered access to such street from the Real Property; and (F)
contain such other endorsements as may be required by Buyer's lender(s)
providing the Committed Financing. The cost of such title insurance (including
premiums) will be borne by Buyer.
(b) Seller shall deliver to Buyer, as soon as practicable
after the date hereof, any survey with respect to each Owned Real Property
currently in the possession of Seller or its Affiliates. At Closing, with
respect to each parcel of Real Property and as to which a title insurance policy
is to be procured pursuant hereto, if the survey, if any, delivered by Seller is
inadequate to remove the survey exception on the title insurance, or otherwise
at Buyer's option, Buyer may, at its expense, obtain a current ALTA survey of
the Real Property (the "Survey"), prepared by a licensed surveyor, disclosing
the location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, and other matters shown customarily on such surveys, and showing
access affirmatively to public streets and roads, which survey shall not
disclose any material survey defect or encroachment from or onto the Real
Property which has not been cured or insured over prior to the Closing.
7.5 Motor Vehicles. Seller shall take all actions and prepare all
documents necessary to effect the transfer to Buyer of all motor vehicle
licenses and registrations pertaining to automobiles, trucks and other motor
vehicles of whatever kind used in the Business in compliance with the motor
vehicle registration, licensing and other applicable Laws of any jurisdictions
where such motor vehicles are registered or licensed. All transfer taxes related
to the sale of motor vehicles in connection with the consummation of the
transactions contemplated hereby shall be borne by Buyer.
7.6 Taxes. Buyer shall pay all value-added and similar Taxes with
respect to the Business and the Purchased Assets except to the extent that Buyer
as a matter of Law would not be able to recover such Taxes from the appropriate
Governmental Authority, in which case, upon written notice by Buyer to Seller,
Seller shall pay one-half of such value added and similar Taxes to Buyer. Buyer
and Seller shall share equally all sales, use, stamp, transfer, registration,
and similar Taxes, but excluding income and capital gains Taxes of Seller, which
may become due and payable and are required to be paid in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements. Buyer
and Seller shall share equally all fees in the nature of recording, filing,
transfer and other similar fees (and the fees and costs of any agent retained to
effect any such recordations, filings or transfers) required to be paid in
connection with the transfer of the Purchased Assets and the assumption of the
Assumed Obligations pursuant to this Agreement, any Ancillary Agreement or any
agreement, document or instrument contemplated herein or therein.
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7.7 Additional Tax Matters.
(a) Buyer shall promptly notify Seller in writing upon
receipt by Buyer or any Affiliates thereof, of notice of any pending or
threatened Tax liabilities which relate to any period prior to the Effective
Time. Seller shall have the sole right to control any Tax audit or
administrative or court proceeding with respect to Taxes for periods ending on
or prior to the Effective Time and Buyer agrees that it will cooperate fully
with Seller and its counsel in the defense against or compromise of any claim in
any said proceeding. After the Closing Date, Buyer shall make available to
Seller such records as Seller may reasonably require for the preparation of any
Tax Returns or other similar governmental reports or forms, and the preparation
and defense of any audit or administrative or court proceeding. All refunds of
Taxes paid by Seller or Seller's Affiliates shall be for the account of Seller.
Buyer shall take such actions as reasonably requested by Seller to obtain such
refunds and shall deliver to Seller any such refunds immediately upon receipt
thereof. All refunds of Taxes paid by Buyer or Buyer's Affiliates shall be for
the account of Buyer.
(b) Seller shall be responsible for (and shall indemnify
and hold Buyer and the Affiliates of Buyer that own and/or operate the Business
and/or the Purchased Assets harmless from and against) all Taxes with respect to
the Business and the Purchased Assets regardless of when due and payable, (i)
with respect to all taxable periods ending on or prior to the Effective Time,
(ii) with respect to all taxable periods beginning before the Closing Date and
ending after the Closing Date, but only with respect to the portion of such
period up to and including the Effective Time and (iii) with respect to any
Taxes for which Seller is liable under Sections 7.2 and 7.7. Notwithstanding any
other provision of this Agreement, Seller shall have no obligation to indemnify
Buyer or Buyer Group for any Taxes (including as a result of a breach of the
representation contained in Section 4.8) except as provided in these Sections
7.2 and 7.7.
(c) Buyer and the Affiliates of Buyer that own and/or
operate the Business and/or the Purchased Assets shall be responsible for (and
shall indemnify and hold Seller harmless from and against) all Taxes with
respect to the Business and the Purchased Assets, regardless of when due and
payable, (i) with respect to all taxable periods beginning after the Effective
Time, and (ii) with respect to all taxable periods beginning before the Closing
Date and ending after the Closing Date, but only with respect to the portion of
such periods commencing after the Effective Time and (iii) with respect to any
Taxes for which Buyer is liable under Section 7.7.
(d) Indemnification under this Section 7.7 shall be subject
to the procedures set forth in Section 13.4 through Section 13.7.
7.8 Bulk Sales Compliance. Buyer and Seller waive compliance with the
provisions of any applicable statutes relating to bulk transfers or bulk sales.
Seller shall indemnify, hold harmless and defend Buyer from and against any and
all Losses which it may sustain by reason of the parties' failure to comply with
such bulk transfer or bulk sales provisions.
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7.9 No Solicitation. During the term of this Agreement, neither
Seller nor any Affiliate of Seller or any Person acting on their behalf shall
solicit or encourage any inquiries or proposals for, or enter into any
discussions with respect to, the acquisition of the Business or all or any
portion of the Purchased Assets.
7.10 Committed Financing. Buyer has secured and executed letters of
commitment from Xxxxxxx Xxxxx Credit Partners L.P. (the "Committed Financing"),
dated as of August 16, 2001, copies of which have been delivered to Buyer, for
amounts, which together with the Stock Offering, will be sufficient to enable
Buyer to consummate the transactions contemplated hereby. The Commitment Letters
are in full force and effect on the date hereof, have not been modified by the
parties thereto, and reflect the entire agreement of Buyer and Xxxxxxx with
respect to such financing. Buyer shall act in good faith to comply with its
obligations under the terms of the Committed Financing and to finalize the Stock
Offering (subject to the fiduciary obligations of its board of directors under
Delaware law) on an expeditious basis. If all or any portion of the Committed
Financing is terminated by Xxxxxxx, unless Buyer has replaced the terminated
portion with financing from its senior secured lender, Buyer shall provide
prompt written notice to Seller and shall have 15 Business Days from the date of
such notice to seek and secure an alternate funding source as evidenced by a
signed commitment letter, with terms evidencing Buyer's ability to obtain the
funds necessary to close this transaction. If Buyer is unable to secure
alternate funding within the time period provided above, Seller shall have the
right to terminate this Agreement pursuant to Section 12.1(f).
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated
hereby are subject to the satisfaction or waiver by Buyer (to the extent
permitted by applicable Law) of the following conditions precedent on or before
the Closing Date:
8.1 Accuracy of Representations and Warranties. The representations
and warranties of Seller contained herein and in any certificate or other
writing delivered by Seller pursuant to this Agreement or the Ancillary
Agreements (a) that are not qualified as to materiality or Material Adverse
Effect shall be true in all material respects at and as of the Closing Date, as
if made at and as of such date (unless any such representation or warranty
refers specifically to a specified date, in which case such representation or
warranty shall be true in all respects, accurate and correct in all material
respects on and as of such specified date), and (b) that are qualified as to
materiality or Material Adverse Effect shall be true at and as of the Closing
Date, as if made at and as of such date (unless any such representation or
warranty refers specifically to a specified date, in which case such
representation or warranty shall be true, accurate and correct in all material
respects on and as of such specified date), with only such exceptions (for this
purpose disregarding any qualification as to materiality or Material Adverse
Effect) as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Buyer shall have received a certificate
signed by an executive officer of Seller to the foregoing effect.
8.2 Compliance with Agreements and Covenants. Seller shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement to be performed and
complied with by it on or prior to the Closing Date.
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8.3 Xxxx-Xxxxx-Xxxxxx; Governmental Authorities. All waiting periods
under the HSR Act shall have expired or been earlier terminated without action
by the Justice Department or the Federal Trade Commission to prevent the
consummation of each of the transactions contemplated by this Agreement and the
Ancillary Agreements.
8.4 Consents. Buyer and Seller, as the case may be, shall have
received, each in form and substance satisfactory to Buyer, all Third Party
Consents necessary to transfer all Material Contracts to Buyer.
8.5 No Injunctions. There shall not be in effect any temporary
restraining order, preliminary injunction, injunction or other pending or
threatened action by any Third Party or any order of any court or Governmental
Authority restraining or prohibiting the Closing of the transactions
contemplated by this Agreement or the Ancillary Agreements.
8.6 Deliveries. Seller shall have made, or be prepared to make at the
Closing, all of the deliveries set forth in Section 11.2.
8.7 Title and Survey. Buyer shall have received the commitments for
title insurance described in Section 7.4 and the Survey (as defined in Section
7.4).
8.8 No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist or come to
exist since the date of this Agreement that, individually or in the aggregate,
has constituted or resulted in a Material Adverse Effect.
8.9 Committed Financing. Buyer shall have received funds pursuant to
the Stock Offering and Committed Financing or from substitute sources in the
same aggregate amount and on terms not substantially less favorable than those
set forth in the commitment letters.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
hereby are subject to the satisfaction or waiver (to the extent permitted by
applicable Law) by Seller of the following conditions precedent on or before the
Closing Date:
9.1 Accuracy of Representations and Warranties. The representations
and warranties of Buyer contained herein and in any certificate or other writing
delivered by Buyer pursuant to this Agreement or the Ancillary Agreements (a)
that are not qualified as to materiality or Material Adverse Effect shall be
true in all material respects at and as of the Closing Date, as if made at and
as of such date (unless any such representation or warranty refers specifically
to a specified date, in which case such representation or warranty shall be true
in all respects, accurate and correct in all material respects on and as of such
specified date), and (b) that are qualified as to materiality or Material
Adverse Effect shall be true at and as of the Closing Date, as if made at and as
of such date (unless any such representation or warranty refers specifically to
a specified date, in which case such representation or warranty shall be true,
accurate and correct in all material respects on and as of such specified date),
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with only such exceptions (for this purpose disregarding any qualification as to
materiality or Material Adverse Effect) as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Seller
shall have received a certificate signed by an executive officer of Buyer to the
foregoing effect.
9.2 Compliance with Agreements and Covenants. Buyer shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement to be performed and
complied with by it on or prior to the Closing Date.
9.3 Xxxx-Xxxxx-Xxxxxx. All waiting periods under the HSR Act shall
have expired or been earlier terminated without action by the Justice Department
or the Federal Trade Commission to prevent the consummation of each of the
transactions contemplated by this Agreement and the Ancillary Agreements.
9.4 Consents. Buyer and Seller, as the case may be, shall have
received, each in form and substance satisfactory to Seller, all third party
Consents necessary to transfer all Material Contracts to Buyer.
9.5 No Injunctions. There shall not be in effect any temporary
restraining order, preliminary injunction, injunction or other order of any
court or Governmental Authority restraining or prohibiting the Closing of the
transactions contemplated by this Agreement and the Ancillary Agreements.
9.6 Deliveries. Buyer shall have made, or be prepared to make at the
Closing all of the deliveries set forth in Section 11.3.
ARTICLE X
EMPLOYEES AND BENEFIT PLANS
10.1 Offer of Employment. Within ten (10) days after the date of this
Agreement, Seller shall provide Buyer with a list of all Affected Employees. As
of the Closing Date, Seller will terminate the employment of all of the Affected
Employees. Not more than thirty (30) days after the signing of this Agreement,
and subject to Section 10.4, Buyer will offer employment, effective as of the
Effective Time, to all persons who are Affected Employees on the day immediately
preceding the Closing Date (including persons on vacation, temporary layoff,
approved leave of absence, sick leave, Family Medical Leave under the Family
Medical Leave Act or short-term disability) but excluding, at Buyer's option,
Affected Employees on long-term disability under Seller's Long-Term Disability
Plan ("Excluded Employees"). Each Affected Employee who accepts any such offer
of employment shall be referred to herein as a "Transferred Employee." The offer
of employment, including, without limitation, wages, salaries and benefits,
shall be upon substantially the same or better terms and conditions as those
under which the Transferred Employees were employed immediately prior to the
Closing Date; provided however, that Buyer shall not be obligated to establish
an employee stock ownership plan ("ESOP"), any pension or post-retirement health
plan in order to comply with the foregoing. Except as limited above, for a
period of twelve (12) months immediately following the Closing Date, Transferred
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Employees shall be provided total compensation and benefit packages that are
substantially comparable in the aggregate to those provided to them immediately
preceding the Closing Date.
10.2 Severance Benefits.
(a) Buyer shall pay as and when due, if applicable, and
shall defend, indemnify and hold harmless Seller from and against, all severance
obligations to Affected Employees (excluding Excluded Employees) not offered
employment with Buyer.
(b) In the event that, during the twelve (12) month period
immediately following the Closing Date, the employment of a Transferred Employee
is terminated by Buyer "without cause" (in accordance with the terms of Buyer's
written policies, as applicable (for the purposes of this Agreement, reductions
in force, job eliminations and the refusal of a Transferred Employee to relocate
shall not constitute a "for cause" termination), such Transferred Employee will
be entitled to receive from Buyer severance pay as calculated at the time of
termination under Seller's severance policy or plan as in effect on the date
hereof (which benefits shall be paid in the form of salary continuation). Any
Transferred Employee terminated "without cause" by Buyer within said twelve
month period, will be entitled to continued coverage under Buyer's welfare and
pension benefit plans, as applicable, during such Severance Period.
10.3 Vacation. Seller agrees to be solely responsible and liable for
all earned and, as applicable, accrued or banked vacation for all Transferred
Employees and hereby agrees to provide a cash payment to all such Transferred
Employees in an amount equal to the cash equivalent of all earned and, as
applicable, accrued or banked vacation based upon the Transferred Employee's
wage or salary on the day prior to the Closing Date. After the Closing Date,
Buyer shall be responsible for any vacation of all Transferred Employees.
10.4 Benefits.
(a) Effective as of the Closing Date, Buyer shall give past
service credit to all the Transferred Employees for purposes of determining
vesting, eligibility under all employee benefit programs, including, without
limitation, pension, vacation, severance, bonus, incentive, compensation and
employee welfare benefit plans of Buyer, with the sole exception of benefit
accruals for pension and profit sharing plans, except as otherwise stated in
this Section 10.4(a), equal to that which such Transferred Employees were
credited with by Seller as of the Closing Date for service with Seller or any
predecessor employer.
(b) Seller shall retain all assets in the pension and
retirement funds of Seller, and shall distribute pension and retirement benefits
which the Transferred Employees shall become entitled to receive from Seller in
accordance with the applicable plan document and the Transferred Employees'
election as applicable.
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(c) Seller will retain all Incentive Savings Plan (401(k)
plan) benefits held in the name of Transferred Employees, if any, unless
otherwise directed by a Transferred Employee. Buyer agrees to accept qualified
direct and indirect rollovers from Seller's Incentive Savings Plan.
(d) Welfare benefit plan coverage of Seller for Transferred
Employees will cease as of the Closing Date and welfare benefit plan coverage
will immediately commence under Buyer's plans for Transferred Employees. Seller
shall be solely responsible for any continuation coverage required by COBRA for
those terminated employees of Seller who are not Transferred Employees. To the
extent permitted under any applicable plan, Buyer shall waive all pre-existing
conditions, limitations or exclusions and waiting periods for the Transferred
Employees under all pension, profit sharing, employee welfare plans and fringe
benefits programs of Buyer, including, without limitation, vacation, bonus and
other incentive programs. As of the effective date of a Transferred Employee's
enrollment, the welfare benefit plans of Buyer shall be responsible for all
coverage on a claims incurred basis.
10.5 Termination Notice Obligations/WARN Act Notification. The Buyer
shall be responsible for sending timely and appropriate notices to all persons
required under all applicable Laws relating to plant or facility closings or
otherwise regulating the termination of employees.
10.6 Employment-Related Indemnification.
(a) The Buyer shall indemnify and hold harmless Seller for
any employment-related Losses relating to the Transferred Employees that arise
out of actions taken by Buyer after the Effective Time. Specifically, Buyer
shall indemnify, defend and hold harmless Seller and Seller Group from all
Losses arising out of (i) the failure of Buyer to make a comparable offer of
employment to an Affected Employee (other than an Excluded Employee), (ii)
Buyer's employment, or termination of employment, on or after the Effective
Time, of any Transferred Employee, (iii) any claim made by any Transferred
Employee that he did not receive from Buyer, during the 12-month period after
the Closing (a) substantially the same wage or salary as he received from Seller
immediately prior to the Closing Date (or severance benefits pursuant to Section
10.2(b)) and/or (b) Employee Benefits that are substantially similar in the
aggregate to those which he/she previously received from Seller immediately
prior to the Closing (other than participation in ESOP, pension, or post
retirement health plan), (iv) any claim made by any Transferred Employee based
on any agreement between such employee and the Buyer, (v) Buyer's failure to
provide notices under applicable Laws relating to plant or facility closings
after the Closing Date, (vi) any breach of any covenant in this Article X; and
(vii) any action taken by Buyer after the Effective Time in reliance on
personnel information provided by Seller prior to Closing.
(b) Seller shall indemnify and hold harmless Buyer from (i)
any employment-related Losses relating to Affected Employees and other than
those set forth on Schedule 4.10, that arise out of actions taken by Seller or
its Affiliates at or prior to the Closing Date, including the employment and/or
termination of such Affected Employee by Seller or its Affiliates at or prior to
the Closing Date, (ii) any claim made by any Affected Employee based on any
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agreement between such Affected Employee and Seller or its Affiliates (other
than Purchased Contracts) and (iii) any breach by Seller of its covenants under
this Article X. (c) Indemnification under this Section 10.6 shall be subject to
the procedures set forth in Section 13.4 through Section 13.7. 10.7 Employee
Records. Seller shall make available to Buyer personnel records for each of the
Transferred Employees (other than medical records) containing names, Social
Security numbers, performance ratings and evaluations, disciplinary actions,
dates of birth, date of hire, number of hours worked each calendar year and
salary histories. 10.8 Liabilities Under Benefit Plans and Buyer's Plans. Except
as specifically provided herein, Seller shall retain all, and Buyer shall not
assume and shall not be deemed to have assumed any, liability or responsibility
for obligations or liabilities under, with respect to or arising in connection
with any of Seller's Employee Plans, and Buyer shall have all, and Seller shall
not assume and shall not be deemed to have assumed any liability or
responsibility for obligations or liabilities under, with respect to or arising
in connection with any of Buyer's Employee Plans put in place after the Closing.
ARTICLE XI
CLOSING
11.1 Closing. The Closing shall take place at Seller's offices in
Minneapolis, Minnesota, at 9 a.m. within 5 Business Days following the
satisfaction or waiver of the closing conditions set forth in Articles VIII and
IX. The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date." The Closing shall be effective as of the Effective Time.
11.2 Deliveries by Seller. At or prior to the Closing, Seller shall
deliver to Buyer the following, each dated the Closing Date and duly executed by
Seller:
(a) One or more Assignment and Assumption Agreements,
together with special warranty deeds for each parcel of Owned Real Property,
bills of sale and other conveyance documents (collectively, the "Conveyance
Documents") with respect to tangible property included in the Purchased Assets,
in form reasonably acceptable to Buyer;
(b) Possession of the Purchased Assets, including, without
limitation, the Real Property Leases, the Personal Property Leases and all other
Purchased Contracts listed in any schedule hereto;
(c) Certificates of title for all vehicles included in the
Purchased Assets, duly endorsed for transfer to Buyer;
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(d) Other instruments of transfer reasonably required by
Buyer to evidence the transfer of the Purchased Assets to Buyer and consummation
of the transactions contemplated hereby, including assignments with respect to
any transferred Intellectual Property to be registered, recorded or filed with
any Governmental Authority, in a form suitable for registration, recordation or
filing with such Governmental Authority, in each case duly executed by Seller;
(e) An officer's certificate, dated the Closing Date, of
Seller certifying as to the compliance by Seller with Sections 8.1 and 8.2;
(f) A certificate of the Secretary of Seller certifying
resolutions of the board of directors of Seller approving and authorizing the
execution, delivery and performance of this Agreement by Seller and the
Ancillary Agreements to which Seller is a party and the consummation by Seller
of the transactions contemplated hereby and thereby (together with an incumbency
and signature certificate regarding the officer(s) signing on behalf of Seller);
(g) Preliminary Price Allocation pursuant to Section 3.3
substantially in the form set forth in Exhibit C;
(h) The Non-Competition Agreement;
(i) The Transition Services Agreement;
(j) The Trademark License Agreement;
(k) A correction deed to deliver insurable title and ALTA
or TLTA survey on the Owned Real Property described as Tract I on Schedule
2.1(d); and
(l) Such other documents and instruments as may be
reasonably required to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements.
11.3 Deliveries by Buyer. At the Closing, Buyer shall make the
payment described in Section 3.1 and shall deliver to Seller the following, each
dated the Closing Date and duly executed by Buyer:
(a) One or more Assignment and Assumption Agreements;
(b) An officer's certificate, dated the Closing Date, of
Buyer, certifying as to compliance by Buyer with Sections 9.1 and 9.2;
(c) A certificate of the Secretary of Buyer certifying
resolutions of the boards of directors of Buyer approving and authorizing this
Agreement by Buyer and the Ancillary Agreements to which Buyer is a party and
the consummation by Buyer of the transactions contemplated hereby and thereby
(together with an incumbency and signature certificate regarding the officer(s)
signing on behalf of Buyer);
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(d) Preliminary Purchase Price Allocation pursuant to
Section 3.3, substantially in the form set forth in Exhibit C;
(e) The Non-Competition Agreement; and
(f) Such other documents and instruments as may be
reasonably required to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated at any
time on or prior to the Closing:
(a) By the mutual written agreement of Seller and Buyer;
(b) By Seller or Buyer if the Closing shall not have taken place on or before
December 15, 2001, except in the event the closing conditions contained in
Section 8.3 and 9.3 are the only conditions that have not been satisfied, in
which case, this date shall be extended to February 1, 2002 (assuming all other
conditions remain satisfied).
(c) By Seller or Buyer, if any court of competent
jurisdiction or other Governmental Authority shall have issued a final and
non-appealable order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; or
(d) By Buyer or by Seller if a material breach of any
provision of this Agreement (other than Articles IV and V) has been committed by
the other party and such breach has not been cured within fifteen (15) days
after the notice of such breach provided that such breach has not been waived by
the non-breaching party.
(e) By Seller if the Environmental Remedial Costs set forth
in the Final Environmental Report exceed $20,000,000.
(f) By Seller if Buyer fails to meet its obligations under
Section 7.10.
(g) By Buyer if Seller withholds its consent to the Phase
II Environmental Audit as contemplated by Section 7.3.
In the event of any termination pursuant to this Section 12.1 (other
than pursuant to clause (a)), written notice setting forth the reasons therefor
shall forthwith be given by the terminating party to the other party.
12.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 12.1, all obligations of the parties hereunder shall terminate,
except for the obligations set forth in Section 6.4, Section 12.3, Article XIV
and Sections 15.2, 15.9, 15.14 and 15.15 which shall survive the termination of
40
this Agreement, and except that no such termination shall relieve any party from
liability for any prior breach of this Agreement.
12.3 Termination Fee. If this Agreement is terminated pursuant to
Section 12.1(f), Buyer shall pay Seller as liquidated damages and not as a
penalty, the sum of Ten Million Dollars ($10,000,000) ("Termination Fee"). The
parties agree that the damages that Seller would incur as a result of such
termination would be difficult to estimate with precision, but that the amount
provided for in this Section 12.3 is a fair and reasonable estimate of such
damages and shall be in lieu of all claims, costs, losses and liabilities
arising from such termination. The Termination Fee shall be paid no later than
five Business Days after notice of termination has been issued by Seller. The
Termination Fee shall be made by wire transfer of immediately available funds to
an account designated by Seller.
ARTICLE XIII
INDEMNIFICATION
13.1 Survival; Remedy for Breach. The representations, warranties,
covenants contained in this Agreement, and indemnity obligations contained in
Section 13.2(a)(i), (ii) and (iii) shall survive for limitation purposes only,
until the twelfth month anniversary of the Closing Date except that the title
representation contained in Section 4.6(a), (b) and (d) which shall survive
until the fourth anniversary of the Closing Date. The indemnification obligation
under Section 13.2(a)(iv) shall survive for limitation purposes only, until the
fourth anniversary of the Closing Date provided that any claim for indemnity
under Section 13.2(a)(iv) may be asserted only with respect to Losses incurred
by Buyer prior to such date. The indemnification obligations under Section
13.2(a)(v) shall survive indefinitely. No claim regarding a breach of any such
representation or warranty or made pursuant to an indemnity obligation shall be
made after the expiration of the applicable survival period set forth herein and
any claim made within such period shall be deemed to be timely made. The
foregoing shall not limit the rights of any Person with respect to covenants to
be performed after the Closing Date, which shall survive until the expiration of
the applicable statute of limitations period.
13.2 Indemnification by Seller.
(a) Subject to Sections 13.1, 13.2(b), and 13.2(c), Seller
and Cargill, jointly and severally, agree to indemnify, defend and hold harmless
Buyer, its stockholders, officers, directors, employees, Affiliates, agents,
representatives, successors and assigns (the "Buyer Group") from and against any
and all Losses incurred or suffered by any of them arising out of or relating to
any of the following:
(i) any breach of any representation, warranty or covenant
(other than the covenants contained in Article VI, Section 3.2 and Section
2.3(a) and (b) of this Agreement), made by Seller or Cargill in this Agreement
or the Ancillary Agreements; provided however that for purposes of this clause
(i), such representation, warranties and covenants contained in this Agreement
shall not be deemed to be qualified or limited in any way by any materiality
qualification contained therein;
41
(ii) any breach of or failure by Seller to perform any
covenant or obligation set forth in Article VI, Section 3.2 and Section 2.3(a)
and (b) of this Agreement ;
(iii) the operation of the Business by Seller, or operation
of the Purchased Assets by Seller prior to the Effective Time that are not (A)
specific matters identified on any Schedules hereto; (B) identified as
Environmental Conditions in the Final Environmental Report; (C) a breach of
representation or warranty made by Seller or Cargill in this Agreement or
Ancillary Agreement; or (D) a breach of or failure by Seller to perform any
covenant or obligation set forth in Article VI, Section 3.2 or Section 2.3(b) of
this Agreement or the Ancillary Agreements or (E) an Excluded Obligation;
(iv) Environmental Conditions; and
(v) Excluded Obligations.
(b) The liability of Seller and Cargill to provide
indemnification pursuant to Section 13.2(a)(i), (iii) and (iv) shall be limited
as follows: Seller and Cargill shall not be liable with respect to any matter
referred to in Section 13.2(a)(i) except to the extent (and only to the extent)
that the aggregate Losses thereunder exceed $20,000,000 and Seller's and
Cargill's aggregate liability under Section 13.2(a)(i) shall not exceed
$50,000,000. Seller and Cargill shall not be liable with respect to any matter
referred to in Section 13.2(a)(iii) except to the extent (and only to the
extent) that the aggregate Losses thereunder exceed $10,000,000 and Seller's and
Cargill's aggregate liability under Section 13.2(a)(iii) shall not exceed
$100,000,000. With respect to any matter referred to in Section 13.2(a)(iv),
Seller and Cargill shall be responsible for fifty (50) percent of the first $10
million of any such Losses (with Buyer responsible for the remaining fifty (50)
percent) and one hundred (100) percent of any such Losses in excess of the first
$10 million. The Buyer and each member of Buyer Group shall in good faith use
commercially reasonable efforts to minimize the amount of such Losses consistent
with Buyer's practices regarding claims of liability for which the Buyer would
be wholly liable. Notwithstanding anything to the contrary in this Agreement,
Seller's and Cargill's indemnification obligation relating to any breach of the
representations or warranties contained in Section 4.13, any Environmental
Condition or otherwise relating to Environmental Laws or Hazardous Substances,
shall be limited to and be deemed satisfied by, the implementation or
achievement of the Lowest Cost Response.
(c) The amount for which Seller and Cargill shall be liable
with respect to any Loss pursuant to Section 13.2(a) shall be reduced to the
extent that Buyer or any other member of Buyer Group shall realize any net
proceeds recovered from non-affiliated insurers or other Third Parties with
respect to such Loss. If Buyer or any other Person entitled to indemnity under
Section 13.2(a) shall have received or shall have had paid on its behalf an
indemnity payment with respect to a Loss and shall subsequently receive,
directly or indirectly, such proceeds, then Buyer shall promptly pay to Seller
the net amount of such proceeds or, if less, the amount of such indemnity
payment. Buyer shall (and shall cause each other Person entitled to indemnity
under Section 13.2(a)) to promptly recover insurance proceeds that may be due to
Buyer or any such Person. Buyer agrees that it will use commercially reasonable
42
efforts to recover any Losses which are subject to that certain Land Lease with
Option to Purchase dated as of April 26, 1985 by and between the Director of
Development of the State of Ohio, Acting on Behalf of the State of Ohio, and
North Star Steel Company prior to seeking indemnification by Seller or Cargill
under Section 13.2(a) ("Ohio Indemnification"). Buyer agrees that it will assign
its rights under the Ohio Indemnification to Seller and Cargill in the event and
to the extent that Seller or Cargill indemnifies Buyer for any Losses that are
subject to the Ohio Indemnification.
13.3 Indemnification by Buyer.
(a) Subject to Section 13.1 and 13.3(b), Buyer agrees to
indemnify, defend and hold harmless Seller and its stockholders, officers,
directors, employees, Affiliates, agents, representatives, successors and
assigns (the "Seller Group"), from and against any and all Losses incurred or
suffered by them arising out of any of the following:
(i) any breach of any representation or warranty made by
Buyer in this Agreement or the Ancillary Agreements;
(ii) any breach of or failure by Buyer to perform any
covenant or obligation of Buyer set forth or contemplated in this Agreement or
the Ancillary Agreements;
(iii) any of the Assumed Obligations; and
(iv) any liability or obligation arising from the operation
of the Business, or the Purchased Assets by Buyer or any of its Affiliates,
successors or assigns from and after the Effective Time.
(b) The amount for which Buyer shall be liable with respect
to any Loss pursuant to Section 13.3(a) shall be reduced to the extent that
Seller or any other member of Seller Group shall realize any net proceeds
recovered from non-affiliated insurers or other Third Parties with respect to
such Loss. If Seller or any other Person entitled to indemnity under Section
13.3(a) shall have received or shall have had paid on its behalf an indemnity
payment with respect to a Loss and shall subsequently receive, directly or
indirectly, such proceeds, then Seller shall promptly pay to Buyer the net
amount of such proceeds or, if less, the amount of such indemnity payment.
Seller shall (and shall cause any other Person entitled to indemnity under
Section 13.3(a)) to promptly recover insurance proceeds that may be due to
Seller or such Person.
13.4 Claims. As soon as is reasonably practicable after becoming
aware of the commencement of any claim, suit, action or proceeding (each a
"Claim") brought by a Third Party, with respect to which indemnity may be
claimed pursuant to the terms of this Agreement, the Indemnified Person shall
promptly give notice to the Indemnifying Person of such claim or the
commencement of any such suit, action or process, and a good faith estimate of
the amount the Indemnified Person will be entitled to receive hereunder from the
Indemnifying Person; provided, that the failure of the Indemnified Person to
43
give notice shall not relieve the Indemnifying Person of its obligations under
this Article XIII except to the extent (if any) that the Indemnifying Person
shall have been actually prejudiced thereby. A Claim for indemnification for any
matter not involving a Third-Party claim may be asserted by notice to the party
from whom indemnification is sought without the need to comply with Sections
13.5 through 13.7.
13.5 Assumption of Defense. The Indemnifying Person may, at its own
expense (a) participate in the defense of any Claim, and (b) upon notice to the
Indemnified Person and the Indemnifying Person's delivering to the Indemnified
Person a written agreement that the Indemnified Person is entitled to
indemnification pursuant to Section 13.2 or 13.3 for all Losses arising out of
such Claim, at any time during the course of any such Claim, assume the defense
thereof; provided, that (i) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person and (ii) the Indemnifying Person shall
thereafter consult with and update the Indemnified Person upon the Indemnified
Person's reasonable request for such consultation or update from time to time
with respect to such Claim. If the Indemnifying Person assumes such defense, the
Indemnified Person shall have the right (but not the obligation) to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Indemnifying Person. Whether or not the Indemnifying
Person chooses to defend or prosecute any such Claim, all of the parties hereto
shall reasonably cooperate in the defense or prosecution thereof.
13.6 Settlement or Compromise. Any settlement or compromise made or
caused to be made by the Indemnified Person or the Indemnifying Person, as the
case may be, of any such Claim, shall also be binding upon the Indemnifying
Person or the Indemnified Person, as the case may be, in the same manner as if a
final judgment or decree had been entered by a court of competent jurisdiction
in the amount of such settlement or compromise; provided, that subject to
Section 13.7 hereof no obligation, restriction or Loss shall be imposed on the
Indemnified Person or the Business, as the case may be, as a result of such
settlement without the prior written consent of such Indemnified Person. The
Indemnified Person or the Indemnifying Person, as the case may be, will give the
other party hereto at least thirty (30) days' prior written notice of any
proposed settlement or compromise of any Claim it is defending, during which
time such other party may reject such proposed settlement or compromise;
provided, that from and after such rejection, such other party shall be
obligated to assume the defense of, and full and complete liability and
responsibility for, such Claim, and any and all Losses in connection therewith
in excess of the amount of Losses which the Indemnified Person would have been
obligated to pay under the proposed settlement or compromise.
13.7 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any Claim, then (a)
the Indemnified Party shall (upon further notice to the Indemnifying Party) have
the right to undertake the defense, compromise or settlement of such Claim on
behalf of and for the account and risk of the Indemnifying Party, subject to the
Indemnifying Party's election to assume the defense of such Claim at any time
prior to settlement, compromise or final determination thereof; and (b) any
failure of the Indemnified Person to defend or to participate in the defense of
44
any such Claim or to cause the same to be done, shall not relieve the
Indemnifying Person of its obligations hereunder.
13.8 Exclusive Remedy/Limitations. Except as provided in Section
14.8, or otherwise expressly provided by the Ancillary Agreements, the rights
and remedies set forth in this Article XIII shall, from and after the Closing
constitute the sole and exclusive rights and remedies of (a) Seller Group
against Buyer or Buyer Group and (b) Buyer Group against Seller or Seller Group,
in each case with respect to the Purchased Assets, the Assumed Obligations, the
Business, this Agreement or the Ancillary Agreements. The parties hereby waive,
release and agree not to assert any other right, whether arising by statute,
common law, equity or otherwise, including without limitation contribution or
cost recovery claims under Environmental Laws including the Comprehensive
Environmental Response, Compensation, and Liability Act and similar state laws,
in connection therewith or otherwise relating to the Purchased Assets, the
Assumed Obligations, the Business, this Agreement or the Ancillary Agreements.
In no event shall either party be liable for any punitive, exemplary or other
non-compensatory damages.
ARTICLE XIV
DISPUTE RESOLUTION
14.1 Mutual Dispute Resolution. Any dispute or difference arising out
of or in connection with this Agreement or the formation of this Agreement after
Closing (other than disputes arising under Section 3.2 but including, without
limitation, any contested claim for indemnification pursuant to Article XIII
above), shall be first submitted for resolution pursuant to the following
procedure. First, an executive officer of each party will meet to resolve the
dispute. If such executive officers were unable to resolve the dispute, the
Chief Executive Officers of each party or a designee will attempt to resolve the
dispute. If the Chief Executive Officers are unable to resolve the dispute
within 60 days following the original notice of such claim or dispute, such
dispute shall be submitted to mediation pursuant to the remaining provisions of
this Article XIV.
14.2 Mediation. If the parties are unable to resolve, pursuant to
Section 14.1, any dispute or differences arising out of or in connection with
this Agreement, (including, without limitation, any contested claim for
indemnification pursuant to Article XIII), the dispute or differences shall be
submitted to non-binding mediation in accordance with this Article XIV.
14.3 Mediator. Mediation of each dispute shall be facilitated by a
single licensed or certified mediator, selected by the parties, knowledgeable
and experienced in the matter and in resolution of commercial disputes. If the
parties are unable to reach agreement on a single mediator, each of Buyer and
Seller shall designate a representative of its own choosing, and the two persons
so designated shall select a third mediator who shall mediate the dispute.
14.4 Specifics of Mediation. The mediation shall take place in
Minneapolis, Minnesota or in such other place as the parties may agree, within
sixty (60) days following the date one or both of the Chief Executive Officers
45
conclude that they are unable to resolve the matter pursuant to Section 14.1
(the "Mediation Period").
14.5 Procedures. If the mediation is unsuccessful in resolving the
dispute or any person fails or refuses to participate in the mediation, then at
the expiration of the Mediation Period either party may bring an action for
relief in any court having jurisdiction thereof.
14.6 Confidentiality. All proceedings under this Article XIV, and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all parties in accordance with Section 6.4.
14.7 Continued Performance. The fact that the dispute resolution
procedure specified in this Article XIV shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement, and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party.
14.8 Equitable Relief. Nothing contained in this Article XIV shall
limit the right of any party to seek or obtain specific performance, injunctive
relief or other non-monetary remedies in any court of competent jurisdiction.
ARTICLE XV
MISCELLANEOUS
15.1 Disclosure Schedules. The inclusion of any matter on any
Schedule shall not constitute an admission by Seller that such matter is
material or would reasonably be expected to have a Material Adverse Effect.
Seller may update any Schedules referred to in this Agreement prior to or at the
Closing by giving notice to Buyer in accordance with the terms of this
Agreement. Such updates will be effective to cure and correct, for all purposes,
any breach of any representation, warranty, agreement or covenant which would
have existed if Seller had not made such update, so long as such update(s)
individually or in the aggregate do not have a Material Adverse Effect on the
Business. All references to any Schedule which is updated pursuant to this
Section 15.1 shall, for all purposes, be deemed to be a reference to such
Schedule as updated.
15.2 Expenses. Except as otherwise provided herein, each party hereto
shall bear its own expenses with respect to the transactions contemplated
hereby.
15.3 Amendment. This Agreement may be amended, modified or
supplemented only by a writing signed by Buyer and Seller.
15.4 Interpretation. The headings preceding the text of articles and
sections included in this Agreement and the headings to schedules and exhibits
attached to this Agreement are for convenience only and shall not be deemed part
of this Agreement or be given any effect in interpreting this Agreement. The
terms as set forth in this Agreement have been arrived at after mutual
negotiation and, therefore, it is the intention of the parties that its terms
46
may not be construed against any of the parties by reason of the fact that it
was prepared by one of the parties.
15.5 Notices. Any notice, request, instruction or other document to
be given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (a) when received if given in person or by courier or a courier
service, (b) on the date of transmission if sent by telex, facsimile or other
wire transmission (receipt confirmed) or (c) five (5) Business Days after being
deposited in the mail, certified or registered, postage prepaid:
If to Seller or Cargill, addressed as follows:
General Counsel
Cargill Law Department
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
00000 XxXxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (612) 742- 4671
If to Buyer, addressed as follows:
Lone Star Technologies, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
15.6 Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
47
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
15.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective permitted
successors and assigns; provided, however, that neither this Agreement, nor any
Ancillary Agreements nor any right or obligation hereunder or thereunder may be
assigned by any party hereto other than to an Affiliate of such party without
the prior written consent of the other parties; provided further, that no such
assignment shall relieve a party from its obligations under this Agreement or
any Ancillary Agreement; provided further, that Buyer may make a collateral
assignment of its rights under this Agreement or any Ancillary Agreement to any
lender who provides working capital or other financing to the Buyer. Buyer may
designate one or more Affiliates to take title to certain of the Purchased
Assets, but no such designation shall relieve Buyer from any obligation under
this Agreement or any Ancillary Agreement.
15.8 No Third Party Beneficiaries. Except as otherwise expressly
provided in Article XIII, this Agreement is solely for the benefit of the
parties hereto and, to the extent provided herein, their respective Affiliates,
and no provision of this Agreement shall be deemed to confer upon any other
third parties any remedy, claim, liability, reimbursement, cause of action or
other right, including without limitation, rights in any Affected Employee in
respect of any right to contract or any right to employment or continued
employment with Buyer.
15.9 Publicity. Prior to the Closing Date, except as required by Law
or the rules of any stock exchange, no public announcement or other publicity
regarding the transactions referred to herein shall be made by Buyer or Seller
or any of their respective Affiliates, officers, directors, employees,
representatives or agents, without the prior written agreement of Seller and
Buyer, respectively. Any announcement or disclosure required by Law or the rules
of any stock exchange shall be made only after consultation with the other party
as to the contents of any such announcement or disclosure. Any announcement
shall be agreed to by the parties as to form, content, timing and manner of
distribution or publication. Nothing in this Section 15.9 shall prevent such
parties from discussing such transactions with those Persons whose Consent,
approval, agreement or opinion, as the case may be, is required for consummation
of such transactions. Such parties shall exercise all reasonable efforts to
assure that such Persons keep confidential any information relating to this
Agreement or any agreement, document or instrument contemplated herein.
15.10 Further Assurances/Cooperation. Seller, Cargill and Buyer agree
to cooperate fully with each other in connection with obtaining the satisfaction
of the conditions set forth in Articles VIII and IX. Seller, Cargill and Buyer
agree to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be reasonable, necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and any agreement, document or instrument
contemplated herein. After the Closing, Buyer will cooperate with Seller in
48
providing copies of any Books and Records and access to Transferred Employees
for the purpose of managing and resolving any matters arising from the Excluded
Obligations.
15.11 Transition Services. For a six month period immediately
following the Closing, Seller shall provide certain transition services to Buyer
to assist in the transition of the Business from Seller to Buyer. Services will
be provided on reasonable terms and conditions to be negotiated by the parties
prior to Closing and pursuant to the Transition Services Agreement substantially
in the form attached hereto as Exhibit D.
15.12 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
15.13 Entire Understanding. This Agreement and the Ancillary
Agreements set forth the entire agreement and understanding of the parties
hereto with respect to the transactions contemplated hereby and thereby and
supersede any and all prior agreements, arrangements and understandings among
such parties relating to the subject matter hereof.
15.14 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof.
15.15 Submission to Jurisdiction
(a) Each party hereto irrevocably agrees that the courts of
the State of Delaware or the United States of America for the District of
Delaware are to have jurisdiction to settle any claims, differences or disputes
which may arise out of or in connection with this Agreement.
(b) Each party hereto irrevocably waives any objection it
may now or hereafter have to the laying of the venue of any proceedings in any
court referred to in subsection (a) of this Section 15.15 and any claim that any
proceedings brought in any such court have been brought in an inconvenient forum
and further irrevocably agrees that a judgment in any proceedings brought in a
court of the State of Delaware or of the United States of America for the
District of Delaware shall be conclusive and binding upon Buyer and may be
enforced in the courts of any other jurisdiction.
15.16 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same original instrument.
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
SELLER: NORTH STAR STEEL COMPANY
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
UNIVERSAL TUBULAR SERVICES, INC.
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
BUYER: LONE STAR TECHNOLOGIES, INC.
By: /s/ Rhys J. Best
------------------------------------
Name: Rhys J. Best
Title: Chairman of the Board,
President and
Chief Executive Officer
STAR SEAMLESS, INC.
By: /s/ Rhys J. Best
------------------------------------
Name: Rhys J. Best
Title: President
CARGILL: XXXXXXX, XXXXXXXXXXXX
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice Chairman and
Chief Financial Officer
50
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), is
entered into and made effective as of this _____ day of __________, 2001, by and
between NORTH STAR STEEL COMPANY, a Minnesota corporation and UNIVERSAL TUBULAR
SERVICES, INC., a Texas corporation (individually and collectively the
"Seller"), and STAR SEAMLESS, INC., a Delaware corporation ("Buyer").
RECITALS:
This Agreement is made with reference to the following facts and
objectives:
(a) Seller and Buyer entered into a Purchase and Sale
Agreement, dated ____________, 2001, (the "Purchase Agreement")
pursuant to which Seller agreed to sell to Buyer and Buyer agreed to
purchase from Seller certain assets and real property of Seller (the
"Assets").
(b) Pursuant to the Purchase Agreement, Seller agreed to
assign to Buyer all of its right, title and interest in and to the
Purchased Assets (as defined in the Purchase Agreement) set forth on
Exhibit A attached hereto.
(c) Capitalized terms used in this Agreement but not
defined herein shall have the respective meanings assigned to such
terms in the Purchase Agreement.
AGREEMENT:
In consideration of the foregoing recitals which are incorporated
herein and are made a part of this Agreement, and in consideration of the mutual
agreements, provisions and covenants herein contained, the parties hereby agree
as follows:
1. EFFECTIVE DATE OF ASSIGNMENT AND ASSUMPTION. The assignment and
assumption in this Agreement shall take effect as of the date first above
written.
2. ASSIGNMENT. Seller hereby assigns and transfers to Buyer all of
its right, title and interest in and to the Purchased Assets set forth on
Exhibit A attached hereto.
3. ASSUMPTION. Buyer hereby assumes and agrees to pay, perform and
discharge when due all Assumed Obligations which arise on or after the effective
date of this Agreement.
Except as otherwise provided in the Purchase Agreement, upon the
execution of this Assignment and Assumption Agreement, Assignor shall have no
further obligation or duty with respect to the Assumed Obligations.
This Assignment and Assumption Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof and
shall be binding on Assignor and shall inure to the benefit of Assignee, and
Assignee's successors and assigns.
Nothing contained herein is intended to or shall be construed to
modify, alter, amend, expand, interpret, supersede or otherwise change any of
the terms, conditions, covenants, warranties, representations or any other
provisions of the Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Assumption Agreement to be executed on the date first written above.
NORTH STAR STEEL COMPANY
By:
---------------------------------------
Print name:
-------------------------------
Its:
--------------------------------------
UNIVERSAL TUBULAR SERVICES, INC.
By:
---------------------------------------
Print name:
-------------------------------
Its:
--------------------------------------
STAR SEAMLESS, INC.
By:
---------------------------------------
Print name:
-------------------------------
Its:
--------------------------------------
2
EXHIBIT A
[ATTACHED LIST OF FIXED ASSETS FROM THE PURCHASE AGREEMENT]
3
EXHIBIT B
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement) is made and entered
into as of ________________, 2001, by and between North Star Steel Company, a
Minnesota corporation ("North Star"), and Universal Tubular Services, Inc., a
Texas Corporation ("UTS") (North Star and UTS being referred to individually and
collectively herein as "Seller"), Xxxxxxx, Xxxxxxxxxxxx, a Delaware corporation
("Cargill"), and Lone Star Technologies, Inc., a Delaware corporation ("Parent")
and Star Seamless, Inc., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Buyer").
WHEREAS, the Buyer, Parent, Cargill and the Seller have entered into
a Purchase and Sale Agreement, dated as of _________________, 2001 (the
"Purchase Agreement") (capitalized terms used but not otherwise defined herein
shall have the meanings given in the Purchase Agreement) which provides, as a
closing condition, that the Seller, Cargill, Parent, and the Buyer execute and
deliver this Agreement;
WHEREAS, as a material inducement to each of the Buyer, Parent,
Seller and Cargill to enter into the Purchase Agreement and in order to preserve
the value of the Business, which is being purchased by the Buyer pursuant to the
Purchase Agreement, the Seller and Cargill has agreed to refrain, and to cause
its Affiliates to refrain, from competing with the Buyer, Parent and their
Affiliates under the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in order to induce the Buyer and Parent to proceed
with the Closing and in consideration of the mutual agreements contained herein
and in the Purchase Agreement, the parties hereto agree as follows:
1. Non-competition. (a) Each of Seller and Cargill hereby expressly
covenants and agrees that for a period of five (5) years from and after the
Closing Date, it shall not, nor shall it permit its Affiliates, to compete
directly or indirectly with the Buyer, Parent, or any of their Affiliates in the
design, marketing, production, distribution, finishing, heat treating,
threading, manufacture or sale, anywhere in the world, of (i) seamless tubular
steel products, or (ii) welded tubular steel products designed, produced,
distributed, finished, heat-treated, threaded, sold, manufactured, or marketed
by Buyer, Parent, or any of their Affiliates as of the date hereof (the
"Affected Business").
(b) Notwithstanding the foregoing, nothing in this Section 1
shall limit, prohibit or restrict the Seller, Cargill or any of its Affiliates
from any of the following:
(i) owning or operating any of the Excluded
Assets or any of the Excluded Businesses, or
(ii) engaging in any activity outside the
Affected Business, or
(iii) in the ordinary course of business, owning
(i) less than a ten percent interest of any entity whose
securities are publicly traded on a recognized stock
exchange and who is engaged in any business that competes,
directly or indirectly, with the Affected Business or (ii)
less than a majority interest of any entity whose
securities are not publicly traded on a recognized stock
exchange and who is engaged in any business that competes
directly or indirectly with the Affected Business, provided
that the Seller and Cargill or its Affiliates does not have
the power to control or direct the management or affairs of
such entity, or
(iv) engaging in any business that does not
violate the provisions of the first sentence of this
Section, notwithstanding that such business competes
directly or indirectly with any other business of the Buyer
or any Affiliate of the Buyer, or
(v) owning any interest of any entity engaged in
any business that competes, directly or indirectly, with
the Affected Business, as a result of or in connection with
the sale, disposition or transfer of Seller, Cargill or
their Affiliates' steel manufacturing, steel processing or
steel trading businesses, or
(vi) owning any interest of any entity engaged in
any business that competes, directly or indirectly, with
the Affected Business, as a result of or in connection with
the conversion of debt to equity through bankruptcy,
reorganization or restructuring, or
(vii) acting as an advisor to third parties with
respect to any investment funds, or having any ownership
interest in such funds.
(c) Except only as provided in Section 1(b)(vii), each of
Seller and Cargill hereby expressly covenants and agrees that during the five
(5) year period referred to in Section 1(a) it shall not, nor shall it permit
its Affiliates, to compete directly or indirectly with the Buyer, Parent, or any
of their Affiliates in the Affected Business through the direct equity
investment in idled facilities formerly engaged in the Affected Business.
(d) To the extent that any part of this Section 1 may be
invalid, illegal or unenforceable for any reason, it is intended that such part
shall be enforceable to the extent that a court of competent jurisdiction shall
determine that such part if more limited in scope would have been enforceable
and such part shall be deemed to have been so written and the remaining parts
shall as written be effective and enforceable in all events.
2. Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (a) when received if given in person or by courier or a courier
service, (b) on the date of transmission if sent by telex, facsimile or other
wire transmission (receipt confirmed) or (c) five (5) Business Days after being
deposited in the mail, certified or registered, postage prepaid:
2
If to Seller or Cargill, addressed as follows:
General Counsel
Cargill Law Department
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
00000 XxXxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (612) 742- 4671
If to Buyer, addressed as follows:
Lone Star Technologies, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or such other individual or address as a party hereto may designate for itself
by notice given as herein provided.
3. Amendment. This Agreement may be amended, modified or supplemented
only by a writing signed by the Buyer and the Seller.
4. Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
5. Successors. This Agreement shall inure to the benefit of the
Buyer, the Affiliates of the Buyer and their permitted successors and assigns.
3
6. No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
person.
7. Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware
without giving effect to the principles of conflicts of law thereof.
8. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same original instrument.
9. Entire Understanding. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and this Agreement supersedes any and all prior agreements,
arrangements and understandings among such parties.
10. No Third Party Beneficiaries. Except as otherwise provided
herein, this Agreement is solely for the benefit of the parties hereto, and no
provision of this Agreement shall be deemed to confer upon any other third
parties any remedy, claim, liability, reimbursement, cause of action or other
right.
11. Non-Solicitation. Each of Seller and Cargill agree that during
the five year period referred to Section 1, (i) it will not solicit for
employment any of the then current employees of Buyer or Parent, except through
means of general solicitation such as but not limited to general advertisements;
and (ii) in respect of employees at the superintendent level or above (other
than any such employees terminated by Buyer or Parent), for a period of 30 days
after such employee's termination of employment with Buyer or Parent, it will
not hire such employees.
12. Acknowledgements. Each of Cargill and the Seller acknowledges
that the scope of the prohibited activities, the geographic boundaries, and the
duration of the obligations set forth in this Agreement (i) are reasonable and
no broader than necessary to protect the legitimate business interests of Buyer,
Parent, and their respective Affiliates, and (ii) do not and will not impose an
unreasonable burden upon Cargill or Seller.
4
IN WITNESS THEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the day and year first above
written.
NORTH STAR STEEL COMPANY
By: __________________________________
Name: ________________________________
Title: _______________________________
UNIVERSAL TUBULAR SERVICES, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
XXXXXXX, XXXXXXXXXXXX
By: __________________________________
Name: ________________________________
Title: _______________________________
LONE STAR TECHNOLOGIES, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
STAR SEAMLESS, INC.
By: __________________________________
Name:_________________________________
Title:________________________________
5
EXHIBIT C
PURCHASE PRICE ALLOCATION
HOUSTON, TX
-------------------------------------------------------------------------------
PURCHASE PRICE
ASSETS TAX LIFE ALLOCATION
-------------------------------------------------------------------------------
Inventory N/A
-------------------------------------------------------------------------------
Accounts Receivable N/A
-------------------------------------------------------------------------------
Land N/A
-------------------------------------------------------------------------------
Land Improvements 15.00
-------------------------------------------------------------------------------
Buildings 39.00
-------------------------------------------------------------------------------
Machinery & Equipment Varies
-------------------------------------------------------------------------------
Furniture & Fixtures 7.00
-------------------------------------------------------------------------------
Vehicles 5.00
-------------------------------------------------------------------------------
Other Assets Varies
-------------------------------------------------------------------------------
Subtotal
-------------------------------------------------------------------------------
Intangible Assets 15.00
(Goodwill, noncompete, patents, etc.)
-------------------------------------------------------------------------------
TOTAL ASSETS
-------------------------------------------------------------------------------
By: By:
--------------------------- --------------------------
Print name: Print name:
------------------- ------------------
Its: Its:
-------------------------- -------------------------
EID No.: EID No.:
---------------------- ---------------------
Date: , 2001 Date: , 2001
------------------- ------------------
PURCHASE PRICE ALLOCATION
YOUNGSTOWN, OH
--------------------------------------------------------------------------------
PURCHASE PRICE
ASSETS TAX LIFE ALLOCATION
--------------------------------------------------------------------------------
Inventory N/A
--------------------------------------------------------------------------------
Accounts Receivable N/A
--------------------------------------------------------------------------------
Land N/A
--------------------------------------------------------------------------------
Land Improvements 15.00
--------------------------------------------------------------------------------
Buildings 39.00
--------------------------------------------------------------------------------
Machinery & Equipment Varies
--------------------------------------------------------------------------------
Furniture & Fixtures 7.00
--------------------------------------------------------------------------------
Vehicles 5.00
--------------------------------------------------------------------------------
Other Assets Varies
--------------------------------------------------------------------------------
Subtotal
--------------------------------------------------------------------------------
Intangible Assets 15.00
(Goodwill, noncompete, patents, etc.)
--------------------------------------------------------------------------------
TOTAL ASSETS
--------------------------------------------------------------------------------
By: By:
----------------------------- ---------------------------
Print name: Print name:
--------------------- -------------------
Its: Its:
---------------------------- --------------------------
EID No.: EID No.:
------------------------ ----------------------
Date: , 2001 Date: , 2001
--------------------- -------------------
2
EXHIBIT D
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement ("Agreement") is dated as of
____________, 2001 by and between, Lone Star Technologies, Inc., a Delaware
corporation ("LST"), Star Seamless, Inc., a Delaware corporation ("Star,"
together with LST, the "Buyer"); Xxxxxxx, Xxxxxxxxxxxx, a Delaware corporation
("Cargill"), North Star Steel Company, a Minnesota corporation ("North Star"),
and Universal Tubular Services, Inc., a Texas corporation ("UTS") (Cargill,
North Star and UTS being individually and collectively referred to herein as
"Seller").
WITNESSETH:
WHEREAS, pursuant to the terms of a Purchase and Sale Agreement dated
as of ________________, 2001, to which Seller and Buyer are parties (the
"Purchase and Sale Agreement"), Buyer will, contemporaneously with the
effectiveness of this Agreement, acquire the Business (the "Acquisition"); and
WHEREAS, Buyer has requested that Seller provide Buyer with those
certain transition services described on Schedule A (or the individual Addendums
thereto) attached hereto and made a part hereof (the "Transition Services", and
each a "Transition Service"), for a period of time after the Closing Date.
NOW, THEREFORE, and in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Agreement shall
have the meanings given those terms in the Purchase and Sale Agreement.
2. TRANSITION SERVICES; LIMITATIONS.
A. Subject to the terms and provisions of this Agreement, Seller
shall provide to Buyer the Transition Services as described on Schedule A or the
Addendums thereto. Detailed costs and precise services (including additional
services as may be agreed to by the parties) are reflected to the extent
presently possible on Schedule A or the Addendums thereto, or shall be
negotiated in good faith subsequent to the Closing by the Parties.
B. The provider of a Transition Service hereunder (Seller or a
particular Affiliate of Seller, as the case may be) shall be referred to as
"Service Provider" and the recipient of a Transition Service hereunder (Buyer or
an Affiliate of Buyer, as the case may be) shall be referred to as "Service
User". The Service Provider shall provide the Transition Services to Buyer in
good faith, in substantially the same manner, at substantially the same quality,
and with substantially the same degree of care the Service Provider has provided
such Transition Services to the Business during the 12-month period immediately
prior to the execution of the Purchase and Sale Agreement. Service Provider
shall have no obligation to supply Transition Services hereunder (i) that are
not of the type presently being supplied by Seller to the Business and (ii) if a
third party's consent is necessary for Service Provider to provide such
Transition Services and such third party's consent has not been obtained after
Service Provider has notified Service User of the failure to obtain such consent
within ten (10) days prior to the Closing, and the reasons therefor, if known to
Service Provider, and shall have used best efforts (to the extent legally
possible) to obtain such consent.
C. In providing the Transition Services, Service Provider, as deemed
necessary or appropriate in its reasonable discretion, may (i) use its own
personnel, or (ii) employ the services of third parties (at the market rates
charged by such third parties, and without further markup by Service Provider)
to the extent such third party services are routinely utilized to provide
similar services to Service Provider's own businesses or are reasonably
necessary for the efficient performance of any Transition Service. Prior to
entering into any new agreement with any third party service provider for the
provision of Transition Services, Service Provider shall give not less than ten
(10) business days written notice to Service User.
D. As needed from time to time during the term of this Agreement, and
upon termination of any Transition Service or this Agreement, the Service
Provider will provide Buyer all records, whether such are in written electronic
or other format, related to the provision of the Transition Services hereunder
in such format, whether written, electronic or other, as may be reasonably
requested by Buyer. Upon termination of this Agreement, each party hereto shall,
at the request of the other party, promptly return to such requesting party or
its designated representatives or otherwise dispose of as the requesting party
may instruct all materials that contain confidential or proprietary information
in written, recorded, or other tangible form that such party may have in its
possession, custody, or under its direct or indirect control.
E. Buyer and Seller shall designate a representative to act as their
primary contact person with respect to the provision of all Transition Services
(each such person being a "Responsible Person"). The initial Responsible Person
for Buyer shall be _______________ and for Seller shall be Xxxxx Xxxxxxx.
3. TERM OF AGREEMENT/TRANSITION SERVICES. The obligation of Service Provider to
provide each Transition Service will commence on the Closing Date and, unless
otherwise specified in Schedule A or a particular Addendum thereto, will
terminate on the "Service Termination Date" for such Transition Service, which
shall be the earliest to occur of (i) the date specified on the applicable
Addendum, which shall in no event be a date later than six (6) months after the
Closing Date, or (ii) the date on which Service User, by notice to Service
Provider at any time prior to the termination of such Transition Service set
forth on the applicable addendum, terminates such Transition Service.
Notwithstanding the foregoing, (i) either Buyer or Seller may, by giving written
notice, terminate this Agreement if the other party is in material breach of its
obligations hereunder and has failed to cure said breach within thirty (30) days
after receipt of written notice of such breach from the other party. Each
2
Service User shall use reasonable commercial efforts to transition and terminate
the Transition Services as soon as possible after the Closing Date.
4. COSTS. In consideration for the performance of each Transition Service,
Service User agrees to pay to Service Provider the amounts set forth Schedule A
or the Addendums thereto ("Costs"). Any Taxes (other than income Taxes of
Seller) assessed on the provision of Transition Services hereunder, shall be
paid by Service User.
5. INVOICE. Service Provider shall invoice Service User monthly for Transition
Services provided during the preceding month and all invoices shall reflect in
reasonable detail the nature and quantity of the Transition Services rendered
during the previous month and the charges therefor. Service User agrees to pay
to the invoicing entity each invoice within thirty (30) days after Service
User's receipt of each such invoice.
6. COOPERATION. The parties will use good faith efforts to cooperate with each
other in all matters relating to the provision and receipt of Transition
Services. Each party will provide such facilities, information, books, records,
files, supplies, etc., as may be necessary or desirable for Service Provider to
provide the Transition Services and Service User shall provide, from time to
time, timely decisions on such matters as required for the performance of the
Transition Services by Service Provider.
7. CONFIDENTIALITY. The parties each acknowledge and agree that the
confidentiality provisions of Section 6.4 of the Purchase and Sale Agreement
apply with respect hereto.
8. COMPLIANCE WITH LAWS AND REGULATIONS. Service User will use the Transition
Services and Service Provider shall perform or provide the Transition Services
only in accordance with all applicable Laws. Each party reserves the right to
take all actions, including termination of any particular Transition Service,
upon not less than twenty (20) days written notice to the other party, without
penalty or liability to the other party, that is reasonably believed, based upon
the advice of counsel, to be necessary to assure compliance with applicable Laws
or to avoid being subjected to regulation as a common carrier or utility. No
such termination or refusal to perform shall be deemed a breach hereunder.
9. NO WARRANTIES; INDEMNIFICATION.
A. SERVICE PROVIDER MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR ANY OTHER MATTER WITH RESPECT TO ANY TRANSITION SERVICE
OR THE PERFORMANCE THEREOF.
B. Service User shall indemnify and hold harmless Service Provider
and its Affiliates and their respective directors, officers, employees and
agents (collectively, "DOEAs") from and against any and all Losses incurred by
Service Provider, its Affiliates or their respective DOEAs as a result of the
performance of the Transition Services; provided, however, the foregoing
3
indemnity shall not apply to any such Losses to the extent caused by acts or
omissions of Service Provider, its Affiliates or their respective DOEAs
constituting gross negligence or willful misconduct. The above indemnity
includes, but is not limited to, (a) any injury to or death of any persons or
damage to or loss or destruction of any property, (b) any contamination of or
injury or damage to or adverse effect upon persons, vegetation, air, land, water
or the environment, and (c) any governmental agency related claims, losses,
liabilities, damages and expenses.
C. Service Provider shall indemnify and hold harmless Service User,
its Affiliates and their respective DOEA's from and against any and all Losses
actually incurred by Service User, its Affiliates or their respective DOEA's to
the extent but only to the extent arising out of any acts or omissions of
Service Provider or its Affiliates constituting willful misconduct. However, in
no event shall Service Provider be liable to Service User for special,
consequential, punitive or exemplary damages. Service Provider and its
Affiliates shall have no liability to Service User or any of its Affiliates or
any of their respective DOEA's for any Losses arising out of this Agreement
except as expressly provided in the Section 9(c).
D. Notwithstanding anything to the contrary contained herein, to the
extent that Service Provider utilizes third parties to provide Transition
Services hereunder, Service Provider shall not have any liability to Service
User or their respective DOEAs for the acts and omissions of such Third Party
Suppliers; provided, however, if Service User, any of its Affiliates or any of
their respective DOEAs suffer Losses, due to an act or omission of a Third Party
Supplier which constitutes gross negligence or willful misconduct, Service
Provider will first present a claim to the Third Party Supplier on behalf of
Service User to the extent permitted under Service Provider's agreement with the
Third Party Supplier and will pursue the claim in the same manner as Service
Provider would pursue a claim with respect to its other businesses and any
recovery shall be remitted to the affected indemnitee(s). Nothing contained
herein shall require Service Provider to institute any litigation or other
proceeding against such Third Party Supplier. Service Provider will use
commercially reasonable efforts to cause Service User to be a third party
beneficiary under any contracts with third party service providers providing
Transition Services.
E. Notwithstanding anything to the contrary herein, Service User
hereby waives for itself and its Affiliates any and all rights of recovery,
claims, actions or causes of action for any and all Losses to the extent it
receives insurance proceeds with respect thereto.
F. The provisions of this Section 9 shall survive the termination of
this Agreement.
10. FORCE MAJEURE. Service Provider shall not be liable for any failure to
perform or delay in performing its obligations pursuant to this Agreement to the
extent its failure to do so is caused by or results from any act of God; war,
riot, fire; explosion; accident; flood; sabotage, lack of (despite reasonable
efforts of such party to obtain) adequate fuel, power, raw materials, labor,
containers or transportation facilities; compliance with Laws, national defense
4
requirements; or any other cause or circumstances beyond the reasonable control
of the affected party. The Service Provider which is rendered unable to perform
its obligations as a result of the foregoing shall notify the Service User as
soon as reasonably possible to discuss the circumstances and potential solutions
of such force majeure event, including reasonable efforts as to mitigation of
such force majeure event and provision of substitute Transition Services by a
Third Party Supplier at Service User's sole cost and expense and the parties
shall reasonably cooperate in respect thereto.
11. THIRD PARTY SUPPLIERS.
A. Service User understands that the provision of some Transition
Services may involve services historically provided by a third party (a "Third
Party Supplier") to Service Provider or the lease or license of property
(including, without limitation, computer software) to Service Provider by a
Third Party Supplier. If permitted by the agreement governing the provision of
such services or property by a Third Party Supplier (a "Third Party Agreement"),
Service Provider will provide, or arrange for such Third Party Supplier to
provide, such Transition Service for Service User in accordance with the terms
of this Agreement; provided, however, if the provision of such Transition
Service would result in the breach of the terms of such Third Party Agreement,
then Service Provider shall be relieved of its obligation to provide such
Transition Service and shall instead use its commercially reasonable best
efforts to assist Service User in obtaining an amendment to such Third Party
Agreement or such other authorization from such Third Party Supplier which would
allow Service Provider to provide such Transition Service in accordance with the
terms of this Agreement. In the event that Service Provider is unable to obtain
an amendment of such Third Party Agreement or an authorization from such Third
Party Supplier that would allow Service Provider to provide such Transition
Service to Service User, Service Provider shall use its commercially reasonable
efforts to assist Service User in obtaining a similar service (in both quality
and quantity) from another Third Party Supplier. Service User shall be solely
responsible for the cost of any such Third Party Supplier Transition Services.
B. At its option and upon reasonable notice to Service User, Service
Provider may terminate or fail to renew any Third Party Agreement and contract
with another Third Party Supplier to provide the affected Transition Service or,
alternatively, perform such Transition Service itself.
12. AMENDMENT; ADDITIONAL SERVICES. This Agreement may be amended, modified or
supplemented only by a writing signed by the parties. The parties agree to amend
this Agreement to add additional services as Transition Services hereunder so
long as the parties agree such services would have been included as Transition
Services hereunder had the parties given consideration to such services as of
the date hereof.
13. NOTICES. Any notice, request, instruction or other document to be given
hereunder by a party hereto shall be in writing and shall be deemed to have been
given (a) when received if given in person or by courier or a courier service,
(b) on the date of transmission if sent by telex, facsimile or other wire
5
transmission (receipt confirmed) or (c) five (5) Business Days after being
deposited in the mail, certified or registered, postage prepaid:
If to Seller, addressed as follows:
General Counsel
Cargill Law Department
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
00000 XxXxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Buyer, addressed as follows:
Lone Star Technologies, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
14. WAIVERS. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
6
15. SUCCESSORS. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective permitted successors and assigns,
provided, however, that neither this Agreement nor any right or obligation
hereunder or thereunder may be assigned by a party without the prior written
consent of the other party (which shall not be unreasonably withheld or
delayed); provided further that Buyer may assign this Agreement to its
controlled affiliates. Buyer and Seller shall remain responsible for the full
and timely performance of this Agreement by their respective Affiliates.
16. APPLICABLE LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same original instrument.
18. ENTIRE UNDERSTANDING. This Agreement sets forth the entire agreement and
understanding of Buyer and Seller with respect to the transactions contemplated
hereby and thereby and supersede any and all prior agreements, arrangements and
understandings among such parties relating to the subject matter hereof.
19. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of
the parties hereto and, to the extent provided herein, their respective
Affiliates, and no provision of this Agreement shall be deemed to confer upon
any other third parties any remedy, claim, liability, reimbursement, cause of
action or other right.
20. SEVERABILITY. If any provision of this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality or enforceability of the other
provisions hereof shall not be affected thereby, and there shall be deemed
substituted for the provision at issue a valid, legal and enforceable provision
as similar as possible to the provision at issue.
21. SPECIFIC PERFORMANCE. The parties hereto recognize that if the Service
Provider fails or refuses to perform under this Agreement, monetary damages
alone will not be adequate to compensate Buyer for its injuries. The Buyer
shall, therefore, be entitled, in addition to any other remedies that may be
available, to obtain specific performance of this Agreement. If any action is
brought by the Buyer to enforce this Agreement, the Service Provider shall waive
the defense that there is an adequate remedy at law and waive the requirement in
respect of posting a bond.
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized representatives as of the day
and year first above written.
LONE STAR TECHNOLOGIES, INC.
By:______________________________
Name:____________________________
Title:___________________________
XXXXXXX, XXXXXXXXXXXX
By:______________________________
Name:____________________________
Title:___________________________
NORTH STAR STEEL COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
UNIVERSAL TUBULAR SERVICES, INC.
By:_____________________________
Name:___________________________
Title:__________________________
STAR SEAMLESS, INC.
By:_____________________________
Name:___________________________
Title:__________________________
8
SCHEDULE A TO TRANSITION SERVICES AGREEMENT
Services to be provided as set forth in attached Addendums to be mutually agreed
upon by the parties, but to be limited to the following areas:
1. Information Technology Services
2. General Human Resources Support Services
3. General Ledger System and Accounts Payable Support
4. Accounts Payable and Expense Report Processing
5. Such other items as the parties may mutually agree
9
EXHIBIT E
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is entered as of this ___ day
of _________, 2001, by and between North Star Steel Company, a Minnesota
corporation ("Licensor"), Lone Star Technologies, Inc. a Delaware corporation,
("LSS"), and Star Seamless, Inc., a Delaware corporation ("SSI") (LSS and SSI
being referred to individually and collectively hereinafter as "Licensee").
WHEREAS, Licensor is the owner of the trade names and
trademarks "NORTH STAR STEEL" and its corporate symbol registered and used in
the United States in connection with the Business and shown on Attachment I
hereto (such marks and derivations therefrom as currently used by Licensor in
connection with the Business are hereinafter referred to collectively as the
"Trademarks"); and
WHEREAS, Licensor and Licensee have entered into a Purchase
and Sale Agreement with respect to the Business dated as of ___________, (which,
together with the exhibits and schedules thereto, is hereinafter referred to as
the "Purchase and Sale Agreement"); and
WHEREAS, Licensor utilizes the Trademarks in marking its
Inventory, Equipment and Fixed Assets and upon purchase orders, invoices, and
other business documents (such use of the Trademarks are referred to herein as
the "Current Use"); and
WHEREAS, the sale of the Business to Licensee contemplates
the licensing of the Trademarks within their Current Use to Licensee on an
interim basis to facilitate the transition of the Business from Licensor to
Licensee.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Definitions.
Any capitalized terms used but not defined in this
Agreement, shall have the meaning given those terms in the Purchase and Sale
Agreement.
2. Grant of License.
Subject to existing licenses, if any, in the Purchased
Contracts, Licensor hereby grants a non-exclusive, non-transferable,
royalty-free license (the "License") to use the Trademarks within their Current
Use in connection with the Business, in the United States, for the term of this
Agreement in order to facilitate Licensee to sell, distribute and otherwise
dispose of the Inventory bearing the Trademarks and to utilize the Trademarks
within their Current Use.
1
3. Limitations on Use of the Trademarks.
3.1 Title to and ownership of the Trademarks is and shall
always be vested solely in Licensor. It is understood that the present license
will not in any way affect the ownership by Licensor of the Trademarks, which
shall continue to be the exclusive property of the Licensor and Licensee shall
not represent that it has any right, title or interest in the Trademarks other
than the rights expressly granted by this Agreement.
4. Covenants by Licensor.
4.1 Licensor need not maintain the registrations, if any,
of the Trademarks if, in Licensor's sole discretion, Licensor determines not to
do so.
4.2 Should it become necessary to record Licensee as a
registered user of the Trademarks in any country, Licensor shall prepare and
file the appropriate documents to effectuate such recording. Licensee shall
cooperate in the completion of such documentation. Expenses incurred by
Licensor, or the Licensee in the process of documentation and completion of said
recording shall be for the account of Licensee.
4.3 Licensor makes no representation or warranty with
respect to the Trademarks and the use thereof other than those expressly set
forth in the Purchase and Sale Agreement.
5. Term and Termination.
5.1 Unless such rights are otherwise terminated in
accordance with this Section 5, the Licensee's rights to use the Trademarks
under this Agreement shall terminate with respect to Inventory upon the earlier
of (i) the two year anniversary of the Closing Date or (ii) the sale or other
disposal of all Inventory, and shall terminate with respect to other items
bearing the Trademarks upon the earlier of (i) the ninth month anniversary of
the Closing Date or (ii), the sale disposal or remarking of other items bearing
the Trademarks. Licensee agrees to remove the Trademarks from all Equipment and
Fixed Assets and to utilize or replace other consumable items which bear the
Trademarks with items which do not bear the Trademarks as expeditiously as
reasonably possible after the Closing Date.
5.2 In the event that the Licensee is, in Licensor's sole
judgment, in material breach of any provision of this Agreement, or in the
event, in Licensor's sole judgment, the use by the Licensee of the Trademarks,
does not comply in all material respects with the terms of this Agreement,
Licensee shall have thirty (30) days after receipt of written notice from
Licensor to fully cure, to Licensor's satisfaction, such breach, failure or
deficiency. If Licensee does not so cure, Licensor shall notify Licensee in
writing that the License has been terminated.
5.3 This Agreement shall also be terminated in the
following events: (i) dissolution or liquidation of the Licensee; (ii) mutual
written agreement of the parties or (iii) Licensee makes an assignment for the
2
benefit of creditors, experiences bankruptcy or any proceeding under the law
pertaining to the relief of debtors.
5.4 Upon the termination of this Agreement, Licensee agrees
that it will immediately cease using the Trademarks, make no further shipments
of Inventory bearing the Trademarks, destroy all unsold Inventory bearing any of
the Trademarks and have no further rights, interest or claims to any of the
Trademarks. Licensee shall thereafter not use any of the Trademarks (or any
trademarks confusingly similar to the Trademarks) for any purpose whatsoever.
6. Assignment.
The Licensee shall not have any right to assign this
Agreement or to sublicense any of its rights hereunder (other than to an
Affiliate) without the express written consent of Licensor, which consent may be
withheld for any reason.
7. Infringement Actions.
In the event that the Trademarks and/or the Trademarks
registration shall be infringed by any third party, Licensor shall have the sole
right to bring any action for infringement, at Licensor's cost and expense, and
to recover and retain any and all damages. The Licensee shall give Licensor
prompt notice of any such infringement that comes to its attention and provide
all cooperation and documentation requested by Licensor.
8. Goodwill.
Licensee recognizes and acknowledges that the Trademarks
and all rights therein and goodwill pertaining thereto belong exclusively to
Licensor and Licensor's Affiliates, that the Trademarks have a secondary meaning
in the mind of the public, and that the use by Licensee pursuant to this
Agreement shall inure to the benefit of Licensor and its Affiliates.
9. Miscellaneous.
9.1 Notices. Any notice, request, instruction or other
document to be given hereunder by a party hereto shall be in writing and shall
be deemed to have been given (a) when received if given in person or by courier
or a courier service, (b) on the date of transmission if sent by telex,
facsimile or other wire transmission (receipt confirmed) or (c) five (5)
Business Days after being deposited in the mail, certified or registered,
postage prepaid:
If to Licensor, addressed as follows:
General Counsel
Cargill Law Department
X.X. Xxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
00000 XxXxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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If to Licensee, addressed as follows:
Lone Star Technologies, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or at such other address as the Licensor or Licensee may from time to time
designate by notice duly given in accordance with the provisions of this
paragraph 9.1.
9.2 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof.
9.3 Entire Understanding. This Agreement sets forth the
entire agreement and understanding of the Licensor and Licensee with respect to
the subject matter hereof, and this Agreement supersedes any and all prior
agreements, arrangements and understandings among such parties relating to the
subject matter hereof.
9.4 Amendment. This Agreement may be amended, modified or
supplemented only by a writing signed by Licensee and Licensor.
9.5 Waivers. The failure of a party hereto at any time or
times to require performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No waiver by a party of any
condition or of any breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing, and no waiver
in any one or more instances shall be deemed to be a further or continuing
waiver of any such condition or breach in other instances or a waiver of any
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other condition or breach of any other term, covenant, representation or
warranty.
9.6 Successors and Assigns. This Agreement shall be binding
and shall inure to the benefit of the parties and their respective permitted
successors and assigns as contemplated by and in accordance with the provisions
of the Purchase and Sale Agreement.
9.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same original instrument.
9.8 Severability. If any provision of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the
provision at issue.
9.9 Interpretation. The headings preceding the text of
sections and paragraphs included in this Agreement are for convenience only and
shall not be deemed part of this Agreement or be given any effect in
interpreting this Agreement.
9.10 Expenses. Except as otherwise provided herein, each
party hereto shall bear its own expenses with respect to the transactions
contemplated hereby.
9.11 Indemnification. Licensee shall indemnify and hold
Licensor and its Affiliates harmless from and against all Losses that Licensor
and any of its Affiliates incur arising out of the Licensee's breach of this
Trademark License Agreement, or the use of the Trademarks by the Licensee or
services rendered by the Licensee association with which the Trademarks are used
by the Licensee. The procedures set forth in Article XIII of the Purchase and
Sale Agreement shall apply to any Losses for which indemnity is owed hereunder.
9.12 No Third Party Beneficiaries. This Agreement is solely
for the benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, and no provision of this Agreement shall be deemed to
confer upon any other third parties any remedy, claim, liability, reimbursement,
cause of action or other right.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, the day and year above written.
NORTH STAR STEEL COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
STAR SEAMLESS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
LONE STAR TECHNOLOGIES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
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ATTACHMENT I
COUNTRY TRADEMARK REGN NO.
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United States NORTH STAR STEEL
United States NORTH STAR STEEL CORPORATE SYMBOL